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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