Preface | p. vii |

Overview of Financial Statements | p. 1 |

Introduction to Business Activities and Overview of Financial Statements and the Reporting Process | p. 2 |

Overview of Business Activities | p. 4 |

Principal Financial Statements | p. 8 |

Problem 1.1 for Self-Study | p. 18 |

Other Items in Annual Reports | p. 19 |

Financial Reporting Issues | p. 20 |

The Financial Reporting Process in the United States | p. 25 |

An International Perspective | p. 27 |

Summary | p. 28 |

Solution to Self-Study Problem | p. 28 |

Key Terms and Concepts | p. 30 |

Questions, Exercises, Problems, and Cases | p. 31 |

Accounting Concepts and Methods | p. 43 |

Balance Sheet: Presenting the Investments and Financing of a Firm | p. 44 |

Underlying Concepts | p. 46 |

Problem 2.1 for Self-Study | p. 53 |

Problem 2.2 for Self-Study | p. 56 |

Accounting Procedures for Preparing the Balance Sheet | p. 57 |

Problem 2.3 for Self-Study | p. 64 |

An Overview of the Accounting Process | p. 65 |

Balance Sheet Account Titles | p. 68 |

Problem 2.4 for Self-Study | p. 71 |

Analysis of the Balance Sheet | p. 72 |

An International Perspective | p. 76 |

Summary | p. 80 |

Solutions to Self-Study Problems | p. 81 |

Key Terms and Concepts | p. 85 |

Questions, Exercises, Problems, and Cases | p. 85 |

Income Statement: Reporting the Results of Operating Activities | p. 108 |

The Accounting Period Convention | p. 110 |

Accounting Methods for Measuring Performance | p. 110 |

Problem 3.1 for Self-Study | p. 116 |

Measurement Principles of Accrual Accounting | p. 116 |

Problem 3.2 for Self-Study | p. 120 |

Overview of Accounting Procedures | p. 120 |

Illustration of the Accounting Process for a Merchandising Firm | p. 124 |

Problem 3.3 for Self-Study | p. 127 |

Problem 3.4 for Self-Study | p. 135 |

Problem 3.5 for Self-Study | p. 143 |

Interpreting and Analyzing the Income Statement | p. 144 |

Summary | p. 146 |

Solutions to Self-Study Problems | p. 148 |

Key Terms and Concepts | p. 151 |

Questions, Exercises, Problems, and Cases | p. 151 |

Statement of Cash Flows: Reporting the Effects of Operating, Investing, and Financing Activities on Cash Flows | p. 178 |

Need for a Statement of Cash Flows | p. 179 |

Overview of the Statement of Cash Flows | p. 180 |

Problem 4.1 for Self-Study | p. 184 |

Preparing the Statement of Cash Flows | p. 185 |

Problem 4.2 for Self-Study | p. 192 |

Problem 4.3 for Self-Study | p. 195 |

Problem 4.4 for Self-Study | p. 204 |

An International Perspective | p. 209 |

Problem 4.5 for Self-Study | p. 209 |

Using Information in the Statement of Cash Flows | p. 210 |

Summary | p. 213 |

Problem 4.6 for Self-Study | p. 214 |

Solutions to Self-Study Problems | p. 215 |

Key Terms and Concepts | p. 220 |

Questions, Exercises, Problems, and Cases | p. 220 |

Introduction to Financial Statement Analysis | p. 246 |

Objectives of Financial Statement Analysis | p. 248 |

Analysis of Profitability | p. 250 |

Problem 5.1 for Self-Study | p. 259 |

Problem 5.2 for Self-Study | p. 266 |

Analysis of Risk | p. 268 |

Problem 5.3 for Self-Study | p. 272 |

Problem 5.4 for Self-Study | p. 275 |

Limitations of Ratio Analysis | p. 276 |

An International Perspective | p. 276 |

Summary | p. 277 |

Problem 5.5 for Self-Study | p. 277 |

Pro Forma Financial Statements and Valuation | p. 279 |

Solutions to Self-Study Problems | p. 292 |

Key Terms and Concepts | p. 294 |

Questions, Exercises, Problems, and Cases | p. 295 |

Measuring and Reporting Assets and Equities Using Generally Accepted Accounting Principles | p. 313 |

Receivables and Revenue Recognition | p. 314 |

Financial Reporting Environment | p. 316 |

Quality of Earnings | p. 317 |

Review of Income Recognition Principles | p. 318 |

Application of Income Recognition Principles | p. 320 |

Problem 6.1 for Self Study | p. 321 |

Revenue Recognition at Time of Sale | p. 322 |

Problem 6.2 for Self-Study | p. 332 |

Analyzing Information on Accounts Receivable | p. 334 |

Income Recognition at Times Different from Sale | p. 336 |

Summary Illustration of Income Recognition Methods | p. 341 |

Problem 6.3 for Self-Study | p. 343 |

Format and Classification within the Income Statement | p. 343 |

An International Perspective | p. 345 |

Summary | p. 346 |

Effects on the Statement of Cash Flows of Transactions Involving Accounts Receivable | p. 346 |

Solutions to Self-Study Problems | p. 347 |

Key Terms and Concepts | p. 350 |

Questions, Exercises, Problems, and Cases | p. 350 |

Inventories: The Source of Operating Profits | p. 364 |

A Review of Fundamentals | p. 365 |

Costs Included in Inventory | p. 367 |

Problem 7.1 for Self-Study | p. 372 |

Valuation Subsequent to Acquisition | p. 374 |

Cost Flow Assumptions | p. 376 |

Problem 7.2 for Self-Study | p. 381 |

Problem 7.3 for Self-Study | p. 385 |

Analyzing Inventory Disclosures | p. 385 |

Problem 7.4 for Self-Study | p. 389 |

Problem 7.5 for Self-Study | p. 390 |

An International Perspective | p. 391 |

Summary | p. 391 |

Effects on the Statement of Cash Flows of Transactions Involving Inventory | p. 392 |

Solutions to Self-Study Problems | p. 393 |

Key Terms and Concepts | p. 397 |

Questions, Exercises, Problems, and Cases | p. 397 |

Long-Lived Tangible and Intangible Assets: The Source of Operating Capacity | p. 416 |

Capitalization versus Immediate Expensing | p. 418 |

Measurement of Acquisition Cost | p. 422 |

Problem 8.1 for Self-Study | p. 425 |

Treatment of Acquisition Cost Over Life of Asset | p. 426 |

Depreciation and Amortization: Fundamental Concepts | p. 427 |

Depreciation and Amortization: Measurement | p. 428 |

Problem 8.2 for Self-Study | p. 434 |

Impact of New Information about Long-Lived Assets | p. 436 |

Problem 8.3 for Self-Study | p. 438 |

Problem 8.4 for Self-Study | p. 440 |

Problem 8.5 for Self-Study | p. 444 |

Retirement of Assets | p. 444 |

Financial Statement Presentation | p. 446 |

Analyzing Financial Statement Disclosures of Long-Lived Assets | p. 447 |

Problem 8.6 for Self-Study | p. 451 |

An International Perspective | p. 451 |

Summary | p. 452 |

Effects on the Statement of Cash Flows of Transactions Involving Plant and Intangible Assets | p. 453 |

Solutions to Self-Study Problems | p. 455 |

Key Terms and Concepts | p. 458 |

Questions, Exercises, Problems, and Cases | p. 458 |

Liabilities: Introduction | p. 474 |

Basic Concepts of Liabilities | p. 475 |

Current Liabilities | p. 481 |

Problem 9.1 for Self-Study | p. 484 |

Long-Term Liabilities | p. 485 |

Problem 9.2 for Self-Study | p. 489 |

Problem 9.3 for Self-Study | p. 491 |

Problem 9.4 for Self-Study | p. 499 |

Problem 9.5 for Self-Study | p. 505 |

Problem 9.6 for Self-Study | p. 509 |

Summary | p. 509 |

Effects on the Statement of Cash Flows of Transactions Involving Long-Term Liabilities | p. 510 |

Solutions to Self-Study Problems | p. 511 |

Key Terms and Concepts | p. 518 |

Questions, Exercises, Problems, and Cases | p. 519 |

Liabilities: Off-Balance-Sheet Financing, Leases, Deferred Income Taxes, Retirement Benefits, and Derivatives | p. 534 |

Off-Balance-Sheet Financing | p. 535 |

Problem 10.1 for Self-Study | p. 538 |

Leases | p. 539 |

Problem 10.2 for Self-Study | p. 546 |

Income Tax Accounting and Deferred Income Taxes | p. 547 |

Problem 10.3 for Self-Study | p. 551 |

Problem 10.4 for Self-Study | p. 552 |

Deferred Compensation: Pension Benefits and Other Deferred Compensation | p. 556 |

Deferred Compensation: Health Care and Other Benefits | p. 558 |

Derivative Instruments | p. 558 |

Problem 10.5 for Self-Study | p. 571 |

An International Perspective | p. 572 |

Summary | p. 572 |

Effects on the Statement of Cash Flows of Transactions Involving Liabilities | p. 572 |

Solutions to Self-Study Problems | p. 574 |

Key Terms and Concepts | p. 580 |

Questions, Exercises, Problems, and Cases | p. 581 |

Marketable Securities and Investments | p. 596 |

Overview of the Accounting and Reporting of Investments in Securities | p. 597 |

Minority, Passive Investments | p. 599 |

Problem 11.1 for Self-Study | p. 601 |

Problem 11.2 for Self-Study | p. 606 |

Minority, Active Investments | p. 608 |

Problem 11.3 for Self-Study | p. 611 |

Majority, Active Investments | p. 612 |

Problem 11.4 for Self-Study | p. 619 |

An International Perspective | p. 621 |

Summary | p. 621 |

Preparing Consolidated Financial Statements | p. 623 |

Problem 11.5 for Self-Study | p. 628 |

Accounting for Corporate Acquisitions | p. 629 |

Problem 11.6 for Self-Study | p. 633 |

Effects on the Statement of Cash Flows of Investments in Securities | p. 634 |

Solutions to Self-Study Problems | p. 635 |

Key Terms and Concepts | p. 640 |

Questions, Exercises, Problems, and Cases | p. 641 |

Shareholders' Equity: Capital Contributions, Earnings, and Distributions | p. 670 |

Capital Contributions | p. 673 |

Issuing Capital Stock | p. 675 |

Problem 12.1 for Self-Study | p. 683 |

Reporting Operating Transactions | p. 683 |

Problem 12.2 for Self-Study | p. 695 |

An International Perspective | p. 695 |

Corporate Distributions | p. 696 |

Problem 12.3 for Self-Study | p. 700 |

Problem 12.4 for Self-Study | p. 702 |

Earnings and Book Value per Share | p. 703 |

Disclosure of Changes in Shareholders' Equity | p. 703 |

An International Perspective | p. 706 |

Summary | p. 709 |

Effects on the Statement of Cash Flows of Transactions Involving Shareholders' Equity | p. 709 |

Solutions to Self-Study Problems | p. 710 |

Key Terms and Concepts | p. 713 |

Questions, Exercises, Problems, and Cases | p. 713 |

Statement of Cash Flows: Another Look | p. 734 |

Review of Concepts Underlying the Statement of Cash Flows | p. 735 |

Review of T-Account Procedure for Preparing the Statement of Cash Flows | p. 736 |

Comprehensive Illustration of the Statement of Cash Flows | p. 737 |

Problem 13.1 for Self-Study | p. 754 |

Interpreting the Statement of Cash Flows | p. 754 |

Solution to Self-Study Problem | p. 756 |

Problems and Cases | p. 757 |

Synthesis | p. 777 |

Significance and Implications of Alternative Accounting Principles | p. 778 |

Establishing Acceptable Accounting Principles | p. 779 |

Review of Generally Accepted Accounting Principles | p. 782 |

An Illustration of the Effects of Alternative Accounting Principles on a Set of Financial Statements | p. 788 |

Assessing the Effects of Alternative Accounting Principles on Investment Decisions | p. 792 |

The Firm's Selection of Alternative Accounting Principles | p. 797 |

Summary | p. 800 |

Problem 14.1 for Self-Study | p. 800 |

Solution to Self-Study Problem | p. 805 |

Key Terms and Concepts | p. 810 |

Questions, Exercises, Problems, and Cases | p. 810 |

Appendix | p. 830 |

Compound Interest, Annuity, and Bond Tables | p. 857 |

Glossary | p. 865 |

Index | p. 953 |

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