Cover
Title Page
Copyright
Dedication
Acknowledgements
Brief Contents
Contents
1 Accounting in Action
Accounting Keeps Aritzia Fashionably in the Black
Why Is Accounting Important?
Using Accounting Information
Objective of Financial Reporting
Forms of Business Organization
Proprietorship
Partnership
Corporation
Generally Accepted Accounting Principles
Ethics in Financial Reporting
Conceptual Framework
Accounting Standards
The Accounting Model
Financial Statements
The Expanded Accounting Equation
Transaction Analysis
Preparing Financial Statements
Income Statement
Statement of Owner’s Equity
Balance Sheet
Cash Flow Statement
Understanding the Information in the Financial Statements
2 The Recording Process
Slaying the Dragons to Brew Up Sales
The Account
Debits and Credits
Double-Entry Accounting
Analyzing and Recording Transactions
The Accounting Cycle and Steps in the Recording Process
The Journal
The Ledger
Posting
The Recording Process Illustrated
Summary Illustration of Journalizing and Posting
The Trial Balance
Limitations of a Trial Balance
Locating Errors
Some Process Explanations
3 Adjusting the Accounts
Advance Sports Revenue Is Just the Ticket
Timing Issues
Accrual Versus Cash Basis Accounting
Revenue and Expense Recognition
Adjusting Entries and Prepayments
The Basics of Adjusting Entries
Adjusting Entries for Prepayments
Adjusting Entries for Accruals
The Adjusted Trial Balance and Financial Statements
Preparing the Adjusted Trial Balance
Preparing Financial Statements
4 Completion of the Accounting Cycle
Getting a Good “Handle” on Accounting Information
Closing the Books
Preparing Closing Entries
Posting Closing Entries
Preparing a Post-Closing Trial Balance
Summary of the Accounting Cycle
Steps in the Accounting Cycle
Correcting Entries—An Avoidable Step
Classified Balance Sheet
Standard Balance Sheet Classifications
Alternative Balance Sheet Presentation
Using the Information in the Financial Statements
Working Capital
Current Ratio
Acid-Test Ratio
Appendix 4A: Work Sheets
Steps in Preparing a Work Sheet
Preparing Financial Statements from a Work Sheet
Appendix 4B: Reversing Entries
Accounting with and Without Reversing Entries
5 Accounting for Merchandising Operations
A “Frank” Look at Tracking Inventory
Merchandising Operations
Inventory Systems
Recording Purchases of Merchandise
Subsidiary Inventory Records
Freight Costs
Purchase Returns and Allowances
Discounts
Summary of Purchase Transactions
Recording Sales of Merchandise—Earnings Approach
Revenue Recognition
Freight Costs
Sales Returns and Allowances
Discounts
Summary of Sales Transactions
Sales Taxes
Completing the Accounting Cycle
Adjusting Entries
Closing Entries
Post-Closing Trial Balance
Summary of Merchandising Entries in a Perpetual Inventory System
Merchandising Financial Statements
Single-Step Income Statement
Multiple-Step Income Statement
Classified Balance Sheet
Using the Information in the Financial Statements
Gross Profit Margin
Profit Margin
Appendix 5A: Periodic Inventory System
Recording Purchases of Merchandise
Recording Sales of Merchandise
Comparison of Entries—Perpetual versus Periodic
Calculating Cost of Goods Sold
Multiple-Step Income Statement
Completing the Accounting Cycle
Appendix 5B: Recording Sales of Merchandise—Contract-Based Approach
Recording Sales with Sales Returns
Recording Sales with Sales Discounts
Freight Costs
Summary of Sales Transactions
Sales Taxes
Adjusting Entries
Financial Statements
Completing the Accounting Cycle
6 Inventory Costing
A Fresh Approach to Costing Inventory
Determining Inventory Quantities
Taking a Physical Inventory
Determining Ownership of Goods
Inventory Cost Determination Methods
Specific Identification
Cost Formulas: FIFO and Weighted Average
Financial Statement Effects
Choice of Cost Determination Method
Inventory Errors
Presentation and Analysis of Inventory
Valuing Inventory at the Lower of Cost and Net Realizable Value
Reporting and Analyzing Inventory
Presenting Inventory in the Financial Statements
Appendix 6A: Inventory Cost Formulas in Periodic Systems
Periodic System—First-In, First-Out (FIFO)
Periodic System—Weighted Average
Appendix 6B: Estimating Inventories
Gross Profit Method
Retail Inventory Method
7 Internal Control and Cash
Keeping a Tight Lid on Cash
Cash and Internal Control
What Is Cash?
Internal Control
Control Activities
Limitations of Internal Control
Cash Controls
Internal Control over Cash Receipts
Internal Control over Cash Payments
Petty Cash Fund
Establishing the Fund
Making Payments from the Fund
Replenishing the Fund
Bank Accounts
Use of a Bank Account
Reconciling the Bank Account
Reporting Cash
8 Accounting for Receivables
Last Call for Customer Payments
Accounts Receivable
Types of Receivables
Recognizing Accounts Receivable
Valuing Accounts Receivable
Notes Receivable
Recognizing Notes Receivable
Disposing of Notes Receivable
Statement Presentation and Management of Receivables
Presentation
Analysis
Accelerating Cash Receipts from Receivables
9 Long-Lived Assets
Capitalizing on Education
Property, Plant, and Equipment
Determining the Cost of Property, Plant, and Equipment
Depreciation
Factors in Calculating Depreciation
Depreciation Methods
Comparison of Depreciation Methods
Partial Period Depreciation
Depreciation and Income Tax
Revising Periodic Depreciation
Capital Expenditures During Useful Life
Impairments
Cost Model Versus Revaluation Model
Changes in Depreciation Method, Estimated Useful Life, or Residual Value
Revised Depreciation Calculations
Disposal of Property, Plant, and Equipment
Steps in Recording Disposals of Property, Plant, and Equipment
Retirement of Property, Plant, and Equipment
Sale of Property, Plant, and Equipment
Exchanges of Property, Plant, and Equipment
Natural Resources
Cost
Depletion
Disposal
Intangible Assets and Goodwill
Accounting for Intangible Assets
Intangible Assets with Finite Lives
Intangible Assets with Indefinite Lives
Goodwill
Statement Presentation and Analysis
Presentation
Analysis
10 Current Liabilities and Payroll
Butterflies Bring About Better Banknotes
Determinable (Certain) Current Liabilities
Accounts Payable
Unearned Revenues
Operating Line of Credit and Bank Overdraft
Short-Term Notes Payable
Sales Taxes
Property Taxes
Current Maturities of Long-Term Debt
Uncertain Liabilities
Provisions
Contingencies
Payroll
Employee Payroll Costs
Employer Payroll Costs
Recording the Payroll
Financial Statement Presentation
Appendix 10A: Payroll Deductions
Mandatory Payroll Deductions
Using Payroll Deduction Tables
APPENDIX A Specimen Financial Statements: Aritzia Inc.
APPENDIX B Sales Taxes
APPENDIX C Subsidiary Ledgers and Special Journals
COMPANY INDEX
SUBJECT INDEX
EULA