About Our Author | p. ix |
About Research & Education Association | p. ix |
Acknowledgments | p. x |
Preface | p. xi |
Passing the CLEP Financial Accounting Exam | p. 1 |
Getting Started | p. 3 |
The REA Study Center | p. 4 |
An Overview of the Exam | p. 5 |
All About the CLEP Program | p. 5 |
Options for Military Personnel and Veterans | p. 7 |
SSD Accommodations for Candidates with Disabilities | p. 7 |
6-Week Study Plan | p. 8 |
Test-taking Tips | p. 9 |
The Day of the Exam | p. 10 |
Online Diagnostic Test.. www.rea.com/studycenter | |
Getting Started | p. 11 |
Balloon Party, Lauren's New Business | p. 13 |
Lauren's First Accounting | p. 14 |
The Balance Sheet Introduced | p. 16 |
Analyzing the Balance Sheet | p. 19 |
Operating Cycle and Fiscal Year | p. 20 |
Making Money | p. 25 |
Operating the Business | p. 27 |
Making Adjustments | p. 29 |
The Income Statement Refined | p. 31 |
The Statement of Owner's Equity | p. 34 |
Keeping Track of Numbers in Accounts | p. 35 |
Using T-Accounts | p. 37 |
How Operations Affect the Balance Sheet | p. 38 |
Watching Over Cash | p. 45 |
Lauren Decides She Needs to Watch Over Cash | p. 47 |
Cash from Operations | p. 49 |
Cash from Investing Activities | p. 50 |
Cash from Financing Activities | p. 51 |
The Direct Method of Presenting the Cash Flow Statement | p. 52 |
Accounting Reports and the Outside World | p. 57 |
Other Users of Lauren's Financial Statements | p. 59 |
Making Sure the Statements Are Accurate | p. 60 |
Debits and Credits | p. 67 |
Introducing Debits and Credits | p. 69 |
Posting the Start-Up Transactions in the T-Accounts | p. 70 |
T-Accounts for Income and Expenses | p. 72 |
Posting Operations to T-Accounts | p. 73 |
Closing Temporary Accounts | p. 76 |
Correcting Errors | p. 78 |
Normal Balances of Accounts | p. 78 |
Journals and Ledgers | p. 83 |
The General Journal | p. 85 |
The General Ledger | p. 88 |
Specialized Journals | p. 90 |
How to Write Vertical Journal Entries | p. 90 |
Controls and Ethics | p. 97 |
Why Balloon Party Should Have Internal Controls | p. 99 |
Lauren Designs Balloon Party's Internal Controls | p. 100 |
Ethics | p. 102 |
All Internal Controls Are Imperfect | p. 103 |
This Chapter Has Not Told Everything | p. 104 |
Cash and Short-Term Investments | p. 107 |
Reconciling the Bank Statement | p. 109 |
Setting Up a Petty Cash System | p. 114 |
Investing in Short-Term Securities | p. 116 |
Accounts Receivable | p. 123 |
Accrual Accounting for Accounts Receivable | p. 125 |
Cash Basis Accounting for Sales on Account | p. 131 |
The Direct Write-Off Method for Bad Debts | p. 132 |
Other Receivables | p. 139 |
Discounting a Note Receivable at the Bank | p. 141 |
Accruing Interest Receivable | p. 145 |
A Customer Dishonors a Note | p. 145 |
Loans Receivable | p. 146 |
Analysis of Current Assets | p. 146 |
Merchandise Inventories | p. 153 |
Two Methods for Handling Inventory | p. 155 |
The Perpetual Inventory Method | p. 156 |
Following the Trail of Debits | p. 161 |
The Periodic Inventory Method | p. 161 |
Comparing the Four Inventory Systems and Two Methods | p. 164 |
Analyzing How Well a Business Handles Inventory | p. 167 |
Supplies and Prepaids | p. 175 |
Accounting for Prepaid Assets | p. 177 |
Two Methods to Account for Operating Supplies | p. 179 |
Buying and Selling Plant Assets | p. 185 |
Balloon Party Buys a Group of Machines | p. 187 |
Repairs or Improvements | p. 189 |
Disposing of Fixed Assets | p. 189 |
Vertical Journal Entries for Fixed Assets | p. 190 |
The Cash Flow Statement and Fixed Assets | p. 19 |
Depreciation | p. 199 |
Depreciation: Allocating the Cost of Plant Assets | p. 201 |
The Depreciation Expense Formula | p. 202 |
Depreciation Conventions | p. 208 |
The Depreciation Schedule | p. 209 |
Changing Accounting Estimates | p. 212 |
Land, Natural Resources, and Intangible Assets | p. 217 |
Land or Land Improvement? | p. 219 |
Assets You Cannot Grab Hold Of | p. 220 |
Natural Resources | p. 222 |
Vertical Journal Entries for Intangible Assets | p. 223 |
Current Liabilities | p. 229 |
What Does It Mean to "Accrue" a Liability? | p. 231 |
Adjusting Entries at the End of the Period | p. 235 |
Make Sure Wages Get Counted at the End of the Period | p. 236 |
Estimating Warranty Expense | p. 237 |
Loan Amortization Schedules | p. 238 |
Accruing Interest Expense | p. 241 |
Reversing EntriesùMaking Adjusting Entries Easier | p. 242 |
Long-Term Liabilities | p. 247 |
What Are Bonds? | p. 249 |
Recording the Money Received When Issuing Bonds | p. 250 |
Making the Periodic Cash Payments for Bonds | p. 255 |
Deferring the Recognition of Revenues | p. 258 |
The Equity Section | p. 265 |
The Sole Proprietorship Becomes a Partnership | p. 267 |
What Is a Corporation? | p. 271 |
Balloon Party Partnership Incorporates | p. 275 |
Paying a Dividend | p. 276 |
Treasury Stock | p. 278 |
Closing Entries for a Corporation | p. 279 |
The Final Word on Financial Statements | p. 285 |
The Complete Income Statement | p. 287 |
The Complete Statement of Stockholders' Equity | p. 295 |
The Comprehensive Balance Sheet | p. 297 |
The Complete Cash Flow Statement | p. 300 |
Financial Analysis Methods | p. 302 |
Practice Test 1 (also available online at www.rea.com/studycenter) | p. 311 |
Answer Key | p. 337 |
Detailed Explanations of Answers | p. 338 |
Practice Test 2 (also available online at www.rea.com/studycenfer) | p. 351 |
Answer Key | p. 379 |
Detailed Explanations of Answers | p. 380 |
Anser Sheets | p. 393 |
Index | p. 397 |
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