Financial Accounting
v. 1.0
Table of Contents
Licensing Information
Chapter 1: Why Is Financial Accounting Important?
Chapter Introduction
Making Good Financial Decisions about an Organization
Incorporation and the Trading of Capital Shares
Using Financial Accounting for Wise Decision Making
End-of-Chapter Exercises
Chapter 2: What Should Decision-makers Know So That Good Decisions Can Be Made about an Organization?
Chapter Introduction
Creating a Portrait of an Organization That Can Be Used by Decision Makers
Dealing with Uncertainty
The Need for Generally Accepted Accounting Principles
Four Basic Terms Found in Financial Accounting
End-of-Chapter Exercises
Chapter 3: In What Form Is Financial Information Actually Delivered to Decision Makers Such as Investors and Creditors?
Chapter Introduction
The Construction of an Income Statement
Reported Profitability and the Principle of Conservatism
Increasing the Net Assets of a Company
Reporting a Balance Sheet and a Statement of Cash Flows
End-of-Chapter Exercises
Chapter 4: How Does an Organization Accumulate and Organize the Information Necessary to Prepare Financial Statements?
Chapter Introduction
The Essential Role of Transaction Analysis
The Effects Caused by Common Transactions
An Introduction to Double-Entry Bookkeeping
Preparing Journal Entries
The Connection of the Journal and the Ledger
End-of-Chapter Exercises
Chapter 5: Why Must Financial Information Be Adjusted Prior to the Production of Financial Statements?
Chapter Introduction
The Need for Adjusting Entries
Preparing Various Adjusting Entries
Preparing Financial Statements Based on Adjusted Balances
Chapter Appendix
End-of-Chapter Exercises
Chapter 6: Why Should Decision Makers Trust Financial Statements?
Chapter Introduction
The Need for the Securities and Exchange Commission
The Role of the Independent Auditor in Financial Reporting
Performing an Audit
The Need for Internal Control
The Purpose and Content of an Independent Auditor’s Report
End-of-Chapter Exercises
Chapter 7: In a Set of Financial Statements, What Information Is Conveyed about Receivables?
Chapter Introduction
Accounts Receivable and Net Realizable Value
Accounting for Uncollectible Accounts
The Problem with Estimations
Estimating the Amount of Uncollectible Accounts
Remeasuring Foreign Currency Balances
A Company’s Vital Signs—Accounts Receivable
End-of-Chapter Exercises
Chapter 8: How Does a Company Gather Information about Its Inventory?
Chapter Introduction
Determining and Reporting the Cost of Inventory
Perpetual and Periodic Inventory Systems
The Calculation of Cost of Goods Sold
Reporting Inventory at the Lower-of-Cost-or-Market
Determining Inventory on Hand
End-of-Chapter Exercises
Chapter 9: Why Does a Company Need a Cost Flow Assumption in Reporting Inventory?
Chapter Introduction
The Necessity of Adopting a Cost Flow Assumption
The Selection of a Cost Flow Assumption for Reporting Purposes
Problems with Applying LIFO
Merging Periodic and Perpetual Inventory Systems with a Cost Flow Assumption
Applying LIFO and Averaging to Determine Reported Inventory Balances
Analyzing Reported Inventory Figures
End-of-Chapter Exercises
Chapter 10: In a Set of Financial Statements, What Information Is Conveyed about Property and Equipment?
Chapter Introduction
The Reporting of Property and Equipment
Determining Historical Cost and Depreciation Expense
Recording Depreciation Expense for a Partial Year
Alternative Depreciation Patterns and the Recording of a Wasting Asset
Recording Asset Exchanges and Expenditures That Affect Older Assets
Reporting Land Improvements and Impairments in the Value of Property and Equipment
End-of-Chapter Exercises
Chapter 11: In a Set of Financial Statements, What Information Is Conveyed about Intangible Assets?
Chapter Introduction
Identifying and Accounting for Intangible Assets
The Balance Sheet Reporting of Intangible Assets
Recognizing Intangible Assets Owned by a Subsidiary
Accounting for Research and Development
Acquiring an Asset with Future Cash Payments
End-of-Chapter Exercises
Chapter 12: In a Set of Financial Statements, What Information Is Conveyed about Equity Investments?
Chapter Introduction
Accounting for Investments in Trading Securities
Accounting for Investments in Securities That Are Available for Sale
Accounting for Investments by Means of the Equity Method
The Reporting of Consolidated Financial Statements
End-of-Chapter Exercises
Chapter 13: In a Set of Financial Statements, What Information Is Conveyed about Current and Contingent Liabilities?
Chapter Introduction
Basic Reporting of Liabilities
Reporting Current Liabilities Such as Gift Cards
Accounting for Contingencies
Accounting for Product Warranties
End-of-Chapter Exercises
Chapter 14: In a Set of Financial Statements, What Information Is Conveyed about Noncurrent Liabilities Such as Bonds?
Chapter Introduction
Debt Financing
The Issuance of Notes and Bonds
Accounting for Zero-Coupon Bonds
Pricing and Reporting Term Bonds
Issuing and Accounting for Serial Bonds
Bonds with Other Than Annual Interest Payments
End-of-Chapter Exercises
Chapter 15: In Financial Statements, What Information Is Conveyed about Other Noncurrent Liabilities?
Chapter Introduction
Accounting for Leases
Operating Leases versus Capital Leases
Recognition of Deferred Income Taxes
Reporting Postretirement Benefits
End-of-Chapter Exercises
Chapter 16: In a Set of Financial Statements, What Information Is Conveyed about Shareholders’ Equity?
Chapter Introduction
Selecting a Legal Form for a Business
The Issuance of Common Stock
Issuing and Accounting for Preferred Stock and Treasury Stock
The Issuance of Cash and Stock Dividends
The Computation of Earnings per Share
End-of-Chapter Exercises
Chapter 17: In a Set of Financial Statements, What Information Is Conveyed by the Statement of Cash Flows?
Chapter Introduction
The Structure of a Statement of Cash Flows
Cash Flows from Operating Activities: The Direct Method
Cash Flows from Operating Activities: The Indirect Method
Cash Flows from Investing and Financing Activities
Appendix
End-of-Chapter Exercises
Appendix: Present Value Tables