Financial And Managerial Accounting,9780324188011

Financial And Managerial Accounting

by
ISBN13: 9780324188011
ISBN10: 0324188013
Format: Hardcover
Pub. Date: 2004-02-09
Publisher(s): South-Western College Pub
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Summary

Ideal for first-year accounting courses, this market dominating text presents balanced coverage of both financial and managerial topics. In this text, the authors refine their proven approach to accounting's expanding role in business. This text uses the preparation of financial statements as the framework for understanding what accounting is all about.

Table of Contents

Introduction to Accounting and Business
1(46)
Nature of a Business
2(6)
Types of Businesses
2(1)
Types of Business Organizations
3(1)
Business Strategies
4(2)
Value Chain of a Business
6(1)
Business Stakeholders
6(2)
The Role of Accounting in Business
8(1)
Business Ethics
8(2)
Profession of Accounting
10(2)
Private Accounting
11(1)
Public Accounting
11(1)
Specialized Accounting Fields
11(1)
Generally Accepted Accounting Principles
12(1)
Business Entity Concept
13(1)
The Cost Concept
13(1)
Assets, Liabilities, and Owner's Equity
13(1)
Business Transactions and the Accounting Equation
14(5)
Financial Statements
19(3)
Income Statement
19(1)
Retained Earnings Statement
19(2)
Balance Sheet
21(1)
Statement of Cash Flows
21(1)
Financial Analysis and Interpretation
22(25)
Analyzing Transactions
47(54)
Usefulness of an Account
48(1)
Characteristics of an Account
49(1)
Analyzing and Summarizing Transactions in Accounts
50(5)
Balance Sheet Accounts
50(2)
Income Statement Accounts
52(2)
Dividends Account
54(1)
Normal Balances of Accounts
55(1)
Illustration of Analyzing and Summarizing Transactions
55(13)
Trial Balance
68(1)
Discovery and Correction of Errors
69(2)
Discovery of Errors
69(1)
Correction of Errors
70(1)
Financial Analysis and Interpretation
71(30)
The Matching Concept and the Adjusting Process
101(38)
The Matching Concept
102(1)
Nature of the Adjusting Process
103(1)
Recording Adjusting Entries
104(9)
Deferred Expenses (Prepaid Expenses)
105(2)
Deferred Revenue (Unearned Revenue)
107(1)
Accrued Expenses (Accrued Liabilities)
108(3)
Accrued Revenues (Accrued Assets)
111(1)
Fixed Assets
112(1)
Summary of Adjustment Process
113(4)
Financial Analysis and Interpretation
117(22)
Completing the Accounting Cycle
139(49)
Accounting Cycle
140(1)
Work Sheet
140(6)
Unadjusted Trial Balance Columns
141(1)
Adjustments Columns
142(1)
Adjusted Trial Balance Columns
143(1)
Income Statement and Balance Sheet Columns
143(3)
Financial Statements
146(4)
Income Statement
147(1)
Retained Earnings Statement
148(1)
Balance Sheet
149(1)
Adjusting and Closing Entries
150(9)
Journalizing and Posting Closing Entries
151(7)
Post-Closing Trial Balance
158(1)
Fiscal Year
159(2)
Financial Analysis and Interpretation
161(1)
Appendix: Reversing Entries
161(22)
Comprehensive Problem 1
183(5)
Practice Set: Tom's Asphalt
This set is a service business operated as a proprietorship. It includes a narrative of transactions and instructions for an optional solution with no debits and credits. This set can be solved manually or with the P.A.S.S. software.
Accounting for Merchandising Businesses
188(49)
Nature of Merchandising Businesses
189(1)
Financial Statements for a Merchandising Business
190(6)
Multiple-Step Income Statement
191(3)
Single-Step Income Statement
194(1)
Retained Earnings Statement
194(1)
Balance Sheet
194(2)
Sales Transactions
196(4)
Cash Sales
196(1)
Sales on Account
197(1)
Sales Discounts
197(2)
Sales Returns and Allowances
199(1)
Purchase Transactions
200(3)
Purchases Discounts
200(1)
Purchases Returns and Allowances
201(2)
Transportation Costs, Sales Taxes, and Trade Discounts
203(3)
Transportations Costs
203(1)
Sales Taxes
204(1)
Trade Discounts
205(1)
Illustration of Accounting for Merchandise Transactions
206(1)
Chart of Accounts for a Merchandising Business
207(1)
The Accounting Cycle for a Merchandising Business
208(1)
Merchandise Inventory Shrinkage
208(1)
Work Sheet
209(1)
Closing Entries
209(1)
Financial Analysis and Interpretation
209(1)
Appendix: Work Sheet and Adjusting and Closing Entries for a Merchandising Business
210(27)
Practice Set: Specialty Sports
This set is a merchandising business operated as a proprietorship. It includes business documents, and it can be solved manually or with the P.A.S.S. software.
Accounting Systems, Internal Controls, and Cash
237(42)
Basic Accounting Systems
238(1)
Internal Control
239(6)
Objectives of Internal Control
239(1)
Elements of Internal Control
240(5)
Nature of Cash and the Importance of Controls Over Cash
245(1)
Control of Cash Receipts
245(2)
Controlling Cash Received from Cash Sales
245(1)
Controlling Cash Received in the Mail
246(1)
Internal Control of Cash Payments
247(2)
Basic Features of the Voucher System
247(2)
Electronic Funds Transfer
249(1)
Bank Accounts: Their Nature and Use as a Control Over Cash
249(4)
Business Bank Accounts
249(2)
Bank Statement
251(1)
Bank Accounts as a Control Over Cash
251(2)
Bank Reconciliation
253(2)
Petty Cash
255(2)
Presentation of Cash on the Balance Sheet
257(1)
Financial Analysis and Interpretation
258(21)
Receivables
279(37)
Classification of Receivables
280(1)
Accounts Receivable
280(1)
Notes Receivable
280(1)
Other Receivables
280(1)
Internal Control of Receivables
281(1)
Uncollectible Receivables
282(1)
Allowance Method of Accounting for Uncollectibles
283(4)
Write-Offs to the Allowance Account
284(1)
Estimating Uncollectibles
285(2)
Direct Write-Off Method of Accounting for Uncollectibles
287(1)
Characteristics of Notes Receivable
288(2)
Due Date
289(1)
Interest
290(1)
Maturity Value
290(1)
Accounting for Notes Receivable
290(2)
Receivables on the Balance Sheet
292(1)
Financial Analysis and Interpretation
292(2)
Appendix: Discounting Notes Receivable
294(22)
Inventories
316(38)
Internal Control of Inventories
317(2)
Effect of Inventory Errors on Financial Statements
319(1)
Inventory Cost Flow Assumptions
320(2)
Inventory Costing Methods Under a Perpetual Inventory System
322(3)
First-In, First-Out Method
322(1)
Last-In, First-Out Method
323(1)
Average Cost Method
324(1)
Computerized Perpetual Inventory Systems
324(1)
Inventory Costing Methods Under a Periodic Inventory System
325(2)
First-In, First-Out Method
325(1)
Last-In, First-Out Method
326(1)
Average Cost Method
326(1)
Comparing Inventory Costing Methods
327(2)
Use of the First-In, First-Out Method
328(1)
Use of the Last-In, First-Out Method
328(1)
Use of the Average Cost Method
329(1)
Valuation of Inventory at Other than Cost
329(1)
Valuation at Lower of Cost or Market
329(1)
Valuation at Net Realizable Value
330(1)
Presenting Merchandise Inventory on the Balance Sheet
330(1)
Estimating Inventory Cost
331(2)
Retail Method of Inventory Costing
332(1)
Gross Profit Method of Estimating Inventories
333(1)
Financial Analysis and Interpretation
333(21)
Fixed Assets and Intangible Assets
354(42)
Nature of Fixed Assets
355(4)
Classifying Costs
356(1)
The Cost of Fixed Assets
356(1)
Donated Assets
357(1)
Nature of Depreciation
357(2)
Accounting for Depreciation
359(5)
Straight-Line Method
360(1)
Units-of-Production Method
361(1)
Declining-Balance Method
361(1)
Comparing Depreciation Methods
362(1)
Depreciation for Federal Income Tax
362(1)
Revising Depreciation Estimates
363(1)
Composite-Rate Method
364(1)
Capital and Revenue Expenditures
364(2)
Stages of Acquiring Fixed Assets
364(1)
Fixed Asset Components
365(1)
Disposal of Fixed Assets
366(4)
Discarding Fixed Assets
367(1)
Selling Fixed Assets
367(1)
Exchanging Similar Fixed Assets
368(2)
Leasing Fixed Assets
370(1)
Internal Control of Fixed Assets
371(1)
Natural Resources
372(1)
Intangible Assets
372(4)
Patents
373(1)
Copyrights and Trademarks
373(1)
Goodwill
374(2)
Financial Reporting for Fixed Assets and Intangible Assets
376(1)
Financial Analysis and Interpretation
376(2)
Appendix: Sum-of-the-Years-Digits Depreciation
378(18)
Current Liabilities
396(47)
The Nature of Current Liabilities
397(1)
Short-Term Notes Payable and Current Portion of Long-Term Debt
398(2)
Short-Term Notes Payable
398(1)
Current Portion of Long-Term Debt
399(1)
Contingent Liabilities
400(1)
Payroll and Payroll Taxes
401(7)
Liability for Employee Earnings
402(1)
Deductions from Employee Earnings
403(3)
Computing Employee Net Pay
406(1)
Liability for Employer's Payroll Taxes
406(2)
Accounting Systems for Payroll and Payroll Taxes
408(7)
Payroll Register
408(2)
Employee's Earnings Record
410(1)
Payroll Checks
410(1)
Payroll System Diagram
411(1)
Internal Controls for Payroll Systems
411(4)
Employees' Fringe Benefits
415(2)
Vacation Pay
415(1)
Pensions
416(1)
Postretirement Benefits Other Than Pensions
417(1)
Financial Analysis and Interpretation
417(19)
Comprehensive Problem 3
436(7)
Practice Set: Groom and Board
This set includes payroll transactions for a merchandising business operated as a proprietorship. It includes business documents, and it can be solved manually or with the P.A.S.S. software.
Practice Set: The Coddled Canine with Peachtree® Accounting Software
This set includes payroll transactions for a merchandising business operated as a proprietorship. It can be solved with the Peachtree software.
Corporations: Organization, Capital Stock Transactions, and Dividends
443(36)
Nature of a Corporation
444(2)
Characteristics of a Corporation
444(1)
Forming a Corporation
445(1)
Sources of Paid-In Capital
446(3)
Stock
446(3)
Issuing Stock
449(3)
Premium on Stock
450(1)
No-Par Stock
451(1)
Treasury Stock Transactions
452(1)
Stock Splits
453(1)
Accounting for Dividends
454(2)
Cash Dividends
454(1)
Stock Dividends
455(1)
Reporting Stockholders' Equity
456(3)
Stockholders' Equity in the Balance Sheet
457(1)
Reporting Retained Earnings
458(1)
Financial Analysis and Interpretation
459(20)
Income Taxes, Unusual Income Items, and Investments in Stocks
479(42)
Corporate Income Taxes
480(4)
Payment of Income Taxes
480(1)
Allocating Income Taxes
481(2)
Reporting and Analyzing Taxes
483(1)
Unusual Items Affecting the Income Statement
484(4)
Unusual Items Affecting Income from Continuing Operations
484(2)
Unusual Items Not Affecting Income from Continuing Operations
486(2)
Reporting Unusual Below-the-Line Items
488(1)
Earnings per Common Share
488(2)
Comprehensive Income
490(1)
Accounting for Investments in Stocks
491(4)
Short-Term Investments in Stocks
491(2)
Long-Term Investments in Stocks
493(2)
Sale of Investments in Stocks
495(1)
Business Combinations
495(3)
Mergers and Consolidations
495(1)
Parent and Subsidiary Corporations
496(1)
Consolidated Financial Statements
496(2)
Financial Analysis and Interpretation
498(23)
Practice Set: Nina's Decorating House
This set is a service and merchandising business operated as a corporation. It includes narrative for six months of transactions, which are to be recorded in a general journal. The set can be solved manually or with the P.A.S.S. software.
Practice Set: First Designs, Inc.
This set is a departmentalized merchandising business operated as a corporation. It includes a narrative of transactions, which are to be recorded in special journals. The set can be solved manually or with the P.A.S.S. software.
Bonds Payable and Investments in Bonds
521(39)
Financing Corporations
522(1)
Characteristics of Bonds Payable
523(1)
The Present-Value Concept and Bonds Payable
524(4)
Present Value of the Face Amount of Bonds
525(1)
Present Value of the Periodic Bond Interest Payments
526(2)
Accounting for Bonds Payable
528(4)
Bonds Issued at Face Amount
528(2)
Bonds Issued at a Discount
530(1)
Amortizing a Bond Discount
530(1)
Bonds Issued at a Premium
531(1)
Amortizing a Bond Premium
531(1)
Zero-Coupon Bonds
531(1)
Bond Sinking Funds
532(1)
Bond Redemption
533(1)
Investments in Bonds
534(2)
Accounting for Bond Investments---Purchase, Interest, and Amortization
534(1)
Accounting for Bond Investments---Sale
535(1)
Corporation Balance Sheet
536(2)
Balance Sheet Presentation of Bonds Payable
536(2)
Balance Sheet Presentation of Bond Investments
538(1)
Financial Analysis and Interpretation
538(1)
Appendix: Effective Interest Rate Method of Amortization
539(21)
Amortization of Discount by the Interest Method
539(1)
Amortization of Premium by the Interest Method
540(15)
Comprehensive Problem 4
555(5)
Statement of Cash Flows
560(51)
Reporting Cash Flows
561(4)
Cash Flows from Operating Activities
562(1)
Cash Flows from Investing Activities
563(1)
Cash Flows from Financing Activities
563(1)
Noncash Investing and Financing Activities
564(1)
No Cash Flow per Share
564(1)
Statement of Cash Flows---The Indirect Method
565(9)
Retained Earnings
565(6)
Common Stock
571(1)
Bonds Payable
571(1)
Building
572(1)
Land
572(1)
Preparing the Statement of Cash Flows
573(1)
Statement of Cash Flows---The Direct Method
574(4)
Cash Received from Customers
574(1)
Cash Payments for Merchandise
575(1)
Cash Payments for Operating Expenses
576(1)
Gain on Sale of Land
577(1)
Interest Expense
577(1)
Cash Payments for Income Taxes
577(1)
Reporting Cash Flows from Operating Activities---Direct Method
577(1)
Financial Analysis and Interpretation
578(2)
Appendix: Work Sheet for Statement of Cash Flows
580(31)
Work Sheet---Indirect Method
580(3)
Work Sheet---Direct Method
583(28)
Financial Statement Analysis
611(46)
Basic Analytical Procedures
612(5)
Horizontal Analysis
612(2)
Vertical Analysis
614(2)
Common-Size Statements
616(1)
Other Analytical Measures
617(1)
Solvency Analysis
617(7)
Current Position Analysis
618(1)
Accounts Receivable Analysis
619(1)
Inventory Analysis
620(1)
Ratio of Fixed Assets to Long-Term Liabilities
621(1)
Ratio of Liabilities to Stockholders' Equity
622(1)
Number of Times Interest Charges Earned
622(2)
Profitability Analysis
624(4)
Ratio of Net Sales to Assets
624(1)
Rate Earned on Total Assets
624(1)
Rate Earned on Stockholders' Equity
625(1)
Rate Earned on Common Stockholders' Equity
626(1)
Earnings per Share on Common Stock
626(1)
Price-Earnings Ratio
627(1)
Dividends per Share and Dividend Yield
627(1)
Summary of Analytical Measures
628(1)
Corporate Annual Reports
628(29)
Management Discussion and Analysis
630(1)
Independent Auditors' Report
630(27)
Introduction to Managerial Accounting and Job Order Cost Systems
657(46)
The Differences Between Managerial and Financial Accounting
658(1)
The Management Accountant in the Organization
659(1)
Manufacturing Cost Terms
660(2)
Materials
660(1)
Factory Labor
661(1)
Factory Overhead Cost
662(1)
Cost Accounting System Overview
662(1)
Job Order Cost Systems for Manufacturing Businesses
663(11)
Materials
663(2)
Factory Labor
665(2)
Factory Overhead Cost
667(3)
Work in Process
670(1)
Finished Goods and Cost of Goods Sold
671(1)
Sales
671(1)
Period Costs
672(1)
Summary of Cost Flows for Goodwell Printers
672(2)
Job Order Costing for Decision Making
674(2)
Job Order Cost Systems for Professional Service Businesses
676(27)
Practice Set: Dynamic Designs, Inc.
This set is a manufacturing business operated as a corporation that uses a job order cost system. The set can be solved manually or with the P.A.S.S. software.
Process Cost Systems
703(42)
Comparing Job Order Costing and Process Costing
704(2)
Physical Flows and Cost Flows for a Process Manufacturer
706(2)
The First-In, First-Out (Fifo) Method
708(6)
Step 1: Determine the Units to Be Assigned Costs
708(2)
Step 2: Calculate Equivalent Units of Production
710(1)
Step 3: Determine the Cost per Equivalent Unit
711(2)
Step 4: Allocate Costs to Transferred and Partially Completed Units
713(1)
Bringing It All Together: The Cost of Production Report
714(1)
Journal Entries for a Process Cost System
715(1)
Using the Cost of Production Report for Decision Making
716(2)
Just-in-Time Processing
718(1)
Appendix: Average Cost Method
719(26)
Determining Cost Under the Average Cost Method
720(2)
The Cost of Production Report
722(23)
Cost Behavior and Cost-Volume-Profit Analysis
745(42)
Cost Behavior
746(5)
Variable Costs
746(2)
Fixed Costs
748(1)
Mixed Costs
748(2)
Summary of Cost Behavior Concepts
750(1)
Cost-Volume-Profit Relationships
751(2)
Contribution Margin Concept
751(2)
Mathematical Approach to Cost-Volume-Profit Analysis
753(5)
Break-Even Point
754(3)
Target Profit
757(1)
Graphic Approach to Cost-Volume-Profit Analysis
758(4)
Cost-Volume-Profit (Break-Even) Chart
758(2)
Profit-Volume Chart
760(1)
Use of Computers in Cost-Volume-Profit Analysis
761(1)
Sales Mix Considerations
762(2)
Special Cost-Volume-Profit Relationships
764(3)
Operating Leverage
764(2)
Margin of Safety
766(1)
Assumptions of Cost-Volume-Profit Analysis
767(20)
Profit Reporting for Management Analysis
787(46)
The Income Statement Under Variable Costing and Absorption Costing
788(5)
Income from Operations When Units Manufactured Equal Units Sold
790(1)
Income from Operations When Units Manufactured Exceed Units Sold
790(1)
Income from Operations When Units Manufactured Are Less than Units Sold
791(1)
Comparing Income from Operations Under the Two Concepts
792(1)
Income Analysis Under Variable Costing and Absorption Costing
793(2)
Management's Use of Variable Costing and Absorption Costing
795(3)
Controlling Costs
795(2)
Pricing Products
797(1)
Planning Production
797(1)
Analyzing Market Segments
797(1)
Contribution Margin Reporting for Market Segments
798(3)
Sales Territory Profitability Analysis
798(1)
Product Profitability Analysis
799(1)
Salesperson Profitability Analysis
800(1)
Contribution Margin Analysis
801(2)
Contribution Margin Reporting and Analysis for Service Firms
803(30)
Contribution Margin Report
803(2)
Market Segment Analysis
805(1)
Contribution Margin Analysis
805(28)
Budgeting
833(46)
Nature and Objectives of Budgeting
834(3)
Objectives of Budgeting
834(2)
Human Behavior and Budgeting
836(1)
Budgeting Systems
837(4)
Static Budget
838(1)
Flexible Budget
839(1)
Computerized Budgeting Systems
840(1)
Master Budget
841(1)
Income Statement Budgets
842(7)
Sales Budget
842(1)
Production Budget
843(1)
Direct Materials Purchases Budget
843(2)
Direct Labor Cost Budget
845(1)
Factory Overhead Cost Budget
846(1)
Cost of Goods Sold Budget
846(1)
Selling and Administrative Expenses Budget
846(1)
Budgeted Income Statement
847(2)
Balance Sheet Budgets
849(30)
Cash Budget
849(3)
Capital Expenditures Budget
852(1)
Budgeted Balance Sheet
852(27)
Performance Evaluation Using Variances from Standard Costs
879(36)
Standards
880(2)
Setting Standards
880(1)
Types of Standards
880(1)
Reviewing and Revising Standards
881(1)
Support and Criticism of Standards
882(1)
Budgetary Performance Evaluation
882(2)
Direct Materials Variances
884(2)
Direct Materials Price Variance
885(1)
Direct Materials Quantity Variance
885(1)
Direct Materials Variance Relationships
885(1)
Reporting Direct Materials Variances
886(1)
Direct Labor Variances
886(2)
Direct Labor Rate Variance
886(1)
Direct Labor Time Variance
887(1)
Direct Labor Variance Relationships
887(1)
Reporting Direct Labor Variances
887(1)
Factory Overhead Variances
888(5)
The Factory Overhead Flexible Budget
888(1)
Variable Factory Overhead Controllable Variance
889(1)
Fixed Factory Overhead Volume Variance
889(2)
Reporting Factory Overhead Variances
891(1)
Factory Overhead Variances and the Factory Overhead Account
892(1)
Recording and Reporting Variances from Standards
893(2)
Standards for Nonmanufacturing Expenses
895(1)
Nonfinancial Performance Measures
895(20)
Performance Evaluation for Decentralized Operations
915(40)
Centralized and Decentralized Operations
916(1)
Advantages of Decentralization
916(1)
Disadvantages of Decentralization
917(1)
Responsibility Accounting
917(1)
Responsibility Accounting for Cost Centers
917(2)
Responsibility Accounting for Profit Centers
919(4)
Service Department Charges
920(2)
Profit Center Reporting
922(1)
Responsibility Accounting for Investment Centers
923(6)
Rate of Return on Investment
923(4)
Residual Income
927(1)
The Balanced Scorecard
928(1)
Transfer Pricing
929(26)
Market Price Approach
930(1)
Negotiated Price Approach
931(1)
Cost Price Approach
931(24)
Differential Analysis and Product Pricing
955(38)
Differential Analysis
956(8)
Lease or Sell
957(1)
Discontinue a Segment or Product
958(2)
Make or Buy
960(2)
Replace Equipment
962(1)
Process or Sell
963(1)
Accept Business at a Special Price
963(1)
Setting Normal Product Selling Prices
964(7)
Total Cost Concept
965(2)
Product Cost Concept
967(1)
Variable Cost Concept
968(1)
Choosing a Cost-Plus Approach Cost Concept
969(1)
Activity-Based Costing
969(1)
Target Costing
969(2)
Product Profitability and Pricing Under Production Bottlenecks
971(22)
Product Profitability Under Production Bottlenecks
971(1)
Product Pricing Under Production Bottlenecks
972(21)
Capital Investment Analysis
993(13)
Nature of Capital Investment Analysis
994(1)
Methods of Evaluating Capital Investment Proposals
995(9)
Methods that Ignore Present Value
995(2)
Present Value Methods
997(7)
Factors that Complicate Capital Investment Analysis
1004(2)
Income Tax
1004(1)
Unequal Proposal Lives
1004(1)
Lease versus Capital Investment
1005(1)
Uncertainty
1006(1)
Changes in Price Levels
1006(1)
Qualitative Considerations
1006

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