Accounting

15th Edition
Financial &
Managerial
Accounting
THE BASIS FOR BUSINESS DECISIONS
Jan R. Williams
University of Tennessee
Susan F. Haka
Michigan State University
Mark S. Bettner
Bucknell University
Joseph V. Carcelio
University of Tennessee
McGraw-Hill
Irwin
Boston Burr Ridge, IL Dubuque, IA New York San Francisco St. Louis
Bangkok Bogota Caracas Kuala Lumpur Lisbon London Madrid Mexico City
Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto
Contents
Accounting: Information
for Decision Making
Accounting Information: A Means to an End
Owners' Equity
45
The Accounting Equation
45
The Effects of Business Transactions: An Illustration
46
Effects of These Business Transactions

on the Accounting Equation
50
Accounting from a User's Perspective
Types of Accounting Information
Income Statement
Statement of Cash Flows
Determining Information Needs
Relationships among Financial Statements
The Cost of Producing Accounting Information
Financial Analysis and Decision Making
Basic Functions of an Accounting System
Forms of Business Organization
Who Designs and Installs Accounting Systems?
Components of Internal Control
Financial Accounting Information
Accounting Systems
External Users of Accounting Information
Objectives of External Financial Reporting
10
Characteristics of Externally Reported Information
12
51
53
54
57
57
Sole Proprietorships
57
Partnerships
58
Corporations
58
Reporting Ownership Equity in the

Statement of Financial Position
58
Management Accounting Information
13
The Use of Financial Statements by

External Parties
59
Users of Internal Accounting Information
13
The Need for Adequate Disclosure
60
Objectives of Management Accounting Information
14
Management's Interest in Financial Statements
60
Characteristics of Management
Accounting Information
15
Integrity of Accounting Information

Institutional Features
16
17
Professional Organizations
19
Competence, Judgment, and Ethical Behavior
21
Careers in Accounting
23
Public Accounting
23
Management Accounting
24
Governmental Accounting
24
Accounting Education
24
What about Bookkeeping?
25
Accounting as a Stepping-Stone
25
But What about Me? I'm Not an Accounting Major
25
Ethics^ Fraud & Corporate Governance .
26
Concluding Remarks
26
End-of-Chapter Review
27
Assignment Material
Concluding Remarks
61
62
63
Assignment Material
66
Ethics, Fraud & Corporate Governance
30
The Accounting Cycle:

Capturing Economic
Events
The Accounting Cycle
The Role of Accounting Records
The Ledger
The Use of Accounts
Debit and Credit Entries
Double-Entry AccountingThe Equality of
Debits and Credits
The Journal
Posting Journal Entries to the Ledger Accounts
(and How to "Read" a Journal Entry)
Basic Financial
Statements
Recording Balance Sheet Transactions:

An Illustration
89
89
90
91
92
92
Introduction to Financial Statements
40
What Is Net Income?
96
98
A Starting Point: Statement of Financial Position
41
Retained Earnings
98
Assets
42
The Income Statement: A Preview
Liabilities
44
Revenue
Ledger Accounts after Posting
98
100
100
102
Relationships among the Financial Statements
The Accrual Basis of Accounting
Drafting the Notes That Accompany Financial Statements
198
Debit and Credit Rules for Revenue and Expenses
102
What Types of Information Must Be Disclosed?
199
Expenses
103
Dividends
Recording Income Statement Transactions:
An Illustration
The Trial Balance
201
103
Closing Entries for Expense Accounts
201
109
Closing the Income Summary Account
202
109
111
Closing the Dividends Account
203
Summary of the Closing Process
204
112
After-Closing Trial Balance
205
Uses and Limitations of the Trial Balance
112
Concluding Remarks
113
113
The Accounting Cycle in Perspective
114
Assignment Material
119

Accruals and Deferrals
Adjusting Entries
142
A Last Look at Overnight: Was 2009 a Good Year?
Financial Analysis and Decision Making "

Preparing Financial Statements Covering Different
Periods of Time
210
Isn't This Really a Spreadsheet?
210
How Is a Worksheet Used?
210
The Mechanics: How It's Done
210
What If: A Special Application of Worksheet Software
142
142
Assignment Material
Adjusting Entries and Timing Differences
143
Characteristics of Adjusting Entries
144
Year-End at Overnight Auto Service
145
Converting Assets to Expenses
146
The Concept of Depreciation
148
Converting Liabilities to Revenue
151
Accruing Unpaid Expenses
152
Accruing Uncollected Revenue
154
Accruing Income Taxes Expense:

The Final Adjusting Entry
155
Susquehanna Equipmental Rentals
Merchandising Companies
248
248
249
Effects of the Adjusting Entries
158
Companies
161
161
162
167
Two Approaches Used in Accounting for Merchandise

Inventories
250
251
Perpetual Inventory Systems
251
Taking a Physical Inventory
253
Closing Entries in a Perpetual Inventory System
254
Periodic Inventory Systems

Reporting Financial
Results
244
Income Statement of a Merchandising Company

Accounting System Requirements for Merchandising
Assignment Material
218
The Operating Cycle of a Merchandising Company
157
213
214
Merchandising
Activities
The Concept of Materiality
Concluding Remarks
208
Supplemental Topic: The Worksheet
Types of Adjusting Entries
206
209
209
The Need for Adjusting Entries
156
205
Concluding Remarks
Adjusting Entries and Accounting Principles
254
Operation of a Periodic Inventory System
254
Closing Process in a Periodic Inventory System
255
Comparison of Perpetual and Periodic Inventory Systems 257

Selecting an Inventory System
258
194
Transactions Relating to Purchases
The Income Statement
194
Credit Terms and Cash Discounts
259
The Statement of Retained Earnings
197
Returns of Unsatisfactory Merchandise
261
The Balance Sheet
197
Transportation Costs on Purchases
261
Preparing Financial Statements
XXIV
200
Closing Entries for Revenue Accounts
The Journal
February's Ledger Balances
Closing the Temporary Accounts
198
259
314
Sales Returns and Allowances
262
316
Sales Discounts
263
Concluding Remarks
316
Delivery Expenses
263
Accounting for Sales Taxes
264
317
Assignment Material
321
Transactions Relating to Sales
262
Modifying an Accounting System

Special Journals Provide Speed and Efficiency
264
264

Net Sales
Gross Profit Margins
Concluding Remarks
265
265
265
267
267
Assignment Material
268
272
The Valuation of Financial Assets
Cash
346
346
Which Unit Did We Sell?
347
Data for an Illustration
347
Specific Identification
348
Cost Flow Assumptions
348
Average-Cost Method
348
First-ln, First-Out Method
349
Last-In, First-Out Method
350
292
Evaluation of the Methods
351
292
Do Inventory Methods Really Affect

Performance?
353
The Principle of Consistency
353
Just-in-Time (JIT) Inventory Systems
353
293
Reporting Cash in the Balance Sheet
Inventory Defined
The Flow of Inventory Costs
Financial Assets
How Much Cash Should a Business Have?
Inventories and the

Cost of Goods Sold
293
The Statement of Cash Flows ';
294
Cash Management
294
Taking a Physical Inventory
355
294
Recording Shrinkage Losses
355
295
LCM and Other Write-Downs of Inventory
355
Reconciling the Bank Statement
295
The Year-End Cutoff of Transactions
356
Petty Cash Funds
299
Periodic Inventory Systems
357
International Financial Reporting Standards
360
Importance of an Accurate Valuation

of Inventory
361
362
Internal Control over Cash

Bank Statements
Short-Term Investments
Accounting for Marketable Securities
299
300
Purchase of Marketable Securities
300
Recognition of Investment Revenue
301
Techniques for Estimating the Cost of

Goods Sold and the Ending Inventory
Sale of Investments
301
The Gross Profit Method
362
Adjusting Marketable Securities to Market Value
302
The Retail Method
363
363
364
Accounts Receivable
303
Uncollectible Accounts
303
"Textbook" Inventory Systems Can Be

Modified... and They Often Are
The Allowance for Doubtful Accounts
305
Writing Off an Uncollectible Account Receivable
305
Monthly Estimates of Credit Losses

Concentrations of Credit Risk
Inventory Turnover
364
306
Receivables Turnover
365
308
Accounting Methods Can Affect

Financial Ratios
365
Recovery of an Account Receivable Previously Written Off
308
Direct Write-Off Method
309
Internal Controls for Receivables
310
Management of Accounts Receivable
310
Factoring Accounts Receivable

Credit Card Sales
Notes Receivable and Interest Revenue

Concluding Remarks
366
310
366
367
310
Assignment Material
370
311
Nature of Interest
312
Accounting for Notes Receivable
312
Guitar Universe, Inc.
388
XXV
Plant and Intangible

Assets
Plant Assets as a "Stream of Future Services"
Major Categories of Plant Assets
Accountable Events in the Lives of Plant Assets
Acquisitions of Plant Assets

Some Special Considerations
393
416
Assignment Material
419
394
395
10 Liabilities
The Nature of Liabilities
Current Liabilities
436
437
Accounts Payable
437
Motes Payable
437
Allocating the Cost of Plant and

Equipment over the Years of Use
395
The Current Portion of Long-Term Debt
438
Causes of Depreciation
396
Accrued Liabilities
439
Methods of Computing Depreciation
396
Payroll Liabilities
439
The Straight-Line Method
397
Unearned Revenue
441
The Declining-Balance Method
399
Which Depreciation Methods Do Most

Businesses Use?
401
Financial Statement Disclosures
402
The Impairment of Plant Assets
403
Other Depreciation Methods
403
Long-Term Liabilities
441
Maturing Obligations Intended to Be Refinanced
441
Installment Notes Payable
442
Bonds Payable
444
What Are Bonds?
444
Tax Advantage of Bond Financing
446
The Units-of-Output Method
404
Accounting for Bonds Payable
446
MACRS
404
Bonds Issued at a Discount or a Premium
448
Sum-of-the-Years' Digits
404
Accounting for a Bond Discount: An Illustration
449
Decelerated Depreciation Methods
404
Accounting fora Bond Premium: An Illustration
451
Depreciation Methods in Use: A Survey
405
Bond Discount and Premium in Perspective
454
The Concept of Present Value
454
Bond Prices after Issuance
455
Early Retirement of Bonds Payable
456
Disposal of Plant and Equipment
405
Gains and Losses on the Disposal

of Plant and Equipment
405
Trading in Used Assets for New Ones
406
407
Estimated Liabilities, Loss Contingencies,

and Commitments
457
407
Estimated Liabilities
457
Characteristics
407
Loss Contingencies
457
Operating Expenses versus Intangible Assets
408
Amortization
408
Evaluating the Safety of Creditors' Claims
458
Goodwill
408
Methods of Determining Creditworthiness
459
Patents
410
Trademarks and Trade Names
411
Franchises
411
Copyrights
411
Other Intangibles and Deferred Charges
411
Research and Development (R&D) Costs
Intangible Assets

Natural Resources
Accounting for Natural Resources
Depreciation, Amortization, and Depletion
A Common Goal
Plant Transactions and the

XXVI
392
392
393
Depreciation
415
392
392
Determining Cost: An Example
Capital Expenditures and Revenue Expenditures
Concluding Remarks
Commitments
How Much Debt Should a Business Have?
458
459
Special Types of Liabilities
460
461
462
411
Lease Payment Obligations
462
412
413
Operating Leases
462
Capital Leases
462
413
413
414
414

Liabilities for Pensions and Other

Postretirement Benefits
463
Deferred Income Taxes
465
Concluding Remarks
465
466
470
Assignment Material
Stockholders' Equity:
Paid-in Capital
Corporations
490
Why Businesses Incorporate
490
Publicly Owned Corporations
491
Formation of a Corporation
Stockholder Records in a Corporation
Paid-in Capital of a Corporation
492
494
494
Authorization and Issuance of Capital Stock
494
Common Stock and Preferred Stock
496
Characteristics of Preferred Stock
497
Book Value per Share of Common Stock
499
Market Value
500
Statement of Retained Earnings
538
Prior Period Adjustments
539
Comprehensive Income
539
Statement of Stockholders' Equity
540
Stockholders' Equity Section of the Balance Sheet
540
542
Concluding Remarks
543
544
Assignment Material
548
13 Statement of Cash Flows

570
Market Price of Preferred Stock
501
Purposes of the Statement
570
Market Price of Common Stock
501
Example of a Statement of Cash Flows
570
Book Value and Market Price
502
Classification of Cash Flows
570
Stock Splits
502
Treasury Stock
Preparing a Statement of Cash Flows
573
502
Operating Activities
Recording Purchases of Treasury Stock
503
Investing Activities
574
Reissuance of Treasury Stock
503
Financing Activities
575
Stock Buyback Programs
504
Cash and Cash Equivalents
575
505
Cash Flows from Operating Activities
576
506
Cash Payments for Merchandise and for Expenses
577
Cash Flows from Investing Activities
579
Cash Flows from Financing Activities
581

Concluding Remarks
506
574
507
Relationship between the Statement of
Assignment Material
510
Cash Flows and the Balance Sheet
582 ,
Reporting Operating Cash Flows by the Indirect Method
583
McMinn Retail, Inc.
525
12 Income and Changes

in Retained Earnings
Reporting the Results of Operations
528
Developing Predictive Information
528
Reporting Irregular Items: An Illustration
Reconciling Net Income with Net Cash Flows
584
The Indirect Method: A Summary
585
Indirect Method May Be Required in

a Supplementary Schedule
585
The Statement of Cash Flows: A Second Look
585
587
Managing Cash Flows
589
Budgeting: The Primary Cash Management Tool
589
528
What Priority Should Managers Give to

Increasing Net Cash Flows?
589
Continuing Operations
528
Some Strategies for Permanent Improvements
Discontinued Operations
529
in Cash Flow
590
Extraordinary Items
529
591
Earnings per Share (EPS)
531
A Worksheet for Preparing a Statement

of Cash Flows
592

Basic and Diluted Earnings per Share
Other Transactions Affecting Retained Earnings

Cash Dividends
Dividend Dates
Liquidating Dividends
Stock Dividends
533
534
534
534
535
_ 536
536
Data for an Illustration
592
The Worksheet
593
Entry
595
Concluding Remarks
Assignment Material
596
.'
598
603
XXVII
15 Global Business
and Accounting
14 Financial Statement
Analysis
Globalization
Financial Statements Are Designed

for Analysis
630
Tools of Analysis
631
Dollar and Percentage Changes
631
694
Economic Systems
694
695
632
Culture
Component Percentages
633
Technology and Infrastructure
Ratios
633
Standards of Comparison
633
Quality of Earnings
634
Quality of Assets and the Relative

Amount of Debt
635
A Classified Balance Sheet

Working Capital
International Financial Reporting

Standards: Adoption or Convergence
699
700
635
Currency FluctuationsWho Wins and Who Loses?
704
637
Consolidated Financial Statements That Include

Foreign Subsidiaries
706
637
Debt Ratio
638
Evaluating Financial Ratios
638
Liquidity, Credit Risk, and the Law
640
640
Classifications in the Income Statement
641
Multiple-Step Income Statements
642
706
Global Sourcing
Foreign Corrupt Practices Act
708
709
709
710
Assignment Material
713

Concluding Remarks
644
Price-Earnings Ratio
644
Single-Step Income Statements
645
Evaluating the Adequacy of Net Income
645
Return on Investment (ROI)
645
Return on Assets (ROA)
646
Management Accounting: Basic Framework
Return on Equity (ROE)
646
Management Accounting's Role in Assigning
Comprehensive Illustration: Seacliff Company
699
Accounting for Transactions with Foreign Companies
638
697
635
Quick Ratio
Measures of Profitability
696
697
Exchange Rates
Current Ratio
Earnings per Share
Harmonization of Financial Reporting Standards
Foreign Currencies and Exchange Rates
692
693
Political and Legal Systems
Trend Percentages
Measures of Liquidity and Credit Risk
647
Management
Accounting: A Business
Partner
730
Decision-Making Authority
730
Analysis by Common Stockholders
650
Management Accounting's Role in Decision Making
730
Return on Investment (ROI)
652
Leverage
653
Management Accounting's Role in Performance

Evaluation and Rewards
731
Analysis by Long-Term Creditors
654
Accounting Systems: A Business Partner
731
Accounting for Manufacturing Operations
733
Analysis by Short-Term Creditors
654
Cash Flow Analysis
658
Classifications of Manufacturing Costs
Statements
659
735
Product Costs and the Matching Principle
736
Product Costs versus Period Costs
Usefulness of Notes to Financial
734
734
659
Summary of Analytical Measurements
660
Inventories of a Manufacturing Business
736
662
The Flow of Costs Parallels the Flow of Physical Goods
736
Concluding Remarks
663
Accounting for Manufacturing Costs: An Illustration
737
Assignment Material
Home Depot, Inc.

XXVIII
Environmental Forces Shaping Globalization
664
668
688
Direct Materials
737
Direct Labor
738
Manufacturing Overhead
739
Direct and Indirect Manufacturing Costs
740
Work in Process Inventory, Finished Goods

Inventory, and the Cost of Goods Sold
740
The Need for Per-Unit Cost Data
741
826
Determining the Cost of Finished Goods Manufactured
741
Concluding Remarks
826
Financial Statements of a Manufacturing Company
742
827
Assignment Material
830

and Inventories
Concluding Remarks
743
744
745
Assignment Material
748
Costing and the

Value Chain
17 Job Order Cost

Systems and Overhead
Allocations
Cost Accounting Systems
Job Order Cost Systems and the Creation
of Goods and Services
Overhead Application Rates
What "Drives" Overhead Costs?
770
The Value Chain
771
779
852
Value- and Non-Value-Added Activities
852
Activity-Based Management
Activity-Based Management across the Value Chain
770
ABC: A Subset of Activity-Based Management
The Target Costing Process
tic.
852
International Financial Reporting

Standards and the Value Chain
854
854
857
857
Components of the Target Costing Process
858
ltd
Target Costing: An Illustration
859
The Job Cost Sheet
773
Characteristics of the Target Costing Process
861
Flow of Costs in Job Costing: An Illustration
774
Accounting for Direct Materials
71A
1 14
Accounting for Direct Labor Costs
775
Accounting for Overhead Costs
776
Accounting for Completed Jobs'
779
Job Order Costing
Job Order Costing in Service Industries
Activity-Based Costing (ABC)
-7-70
Just-in-Time Inventory Procedures
862
Measures of Efficiency in a JIT System
863
Total Quality Management and the Value Chain
779
779
864
Measuring the Cost of Quality
865
Productivity and Quality
866
782
Stage 2: Allocate Activity Cost Pools to the Products
783
Determining Unit Costs Using ABC
786
Concluding Remarks
788
788
Concluding Remarks
789
790
Assignment Material
792
Assignment Material
Production of Goods and Services and Costing

Systems
814
Process Costing
815
Tracking the Physical Flow and Related Production Costs

Process Costing and Equivalent Units
Cost per Equivalent Unit
866
867
868
871
i E r < V 20 Cost-Volume-Profit
Wmff
Analysis
Cost-Volume Relationships
18 Process Costing
863
Components of the Cost of Quality
Stage 1: Separate Activity Cost Pools
The Trend toward More Informative

Cost Accounting Systems
862
JIT, Supplier Relationships, and Product Quality
890
Fixed Costs (and Fixed Expenses)
890
Cost-Volume Relationships: A Graphic Analysis
891
The Behavior of Per-Unit Costs 895
893
Economies of Scale
894
Additional Cost Behavior Patterns
895
Cost Behavior and Operating Income
896
815
Cost-Volume-Profit Analysis: An Illustration
896
817
Preparing and Using a Cost-Volume-Profit Graph
897
819
Contribution Margin: A Key Relationship
898
How Many Units Must We Sell?
899
Tracking Costs Using a Process Costing

Production Report
821
How Many Dollars in Sales Must We Generate?
900
Evaluating Departmental Efficiency
825
What Is Our Margin of Safety?
900
XXIX
968
900
Business Applications of CVP
900
Responsibility Accounting: An Illustration
968
Additional Considerations in CVP
903
CVP Analysis When a Company Sells Many Products
903
Assigning Revenue and Costs

to Responsibility Centers
969
Variable Costs
970
Determining Semivariable Cost Elements:

The High-Low Method
904
Contribution Margin
970
Assumptions Underlying Cost-Volume-Profit Analysis
905
Fixed Costs
971
Summary of Basic Cost-Volume-Profit Relationships
905
Traceable Fixed Costs
971
906
Common Fixed Costs
971
Responsibility Margin
972
When Is a Responsibility Center "Unprofitable"?
974
Evaluating Responsibility Center Managers
974

Concluding Remarks
906
907
Assignment Material
910
21 Incremental Analysis
The Challenge of Changing Markets
The Concept of Relevant Cost Information
928
928
Arguments against Allocating Common Fixed

Costs to Business Centers
975
Transfer Prices
975
Nonfinancial Objectives and Information
978
979
Responsibility Center Reporting in

Financial Statements
979

and Responsibility Center Reporting
Relevant Information in Business Decisions
930

and Relevant Costs
930
A Simple Illustration Of Relevant Costs
930
Assignment Material
Opportunity Costs
931
Concluding Remarks
979
980
981
983
931
Sunk Costs versus Out-of-Pocket Costs
'
Incremental Analysis in Common

Business Decisions
Special Order Decisions
931
I; 23 Operational Budgeting
932
932
Profit Rich, Yet Cash Poor
1002
1002
1003
Production Constraint Decisions
933
Operating Cash Flows: The Lifeblood of Survival
Make or Buy Decisions
935
Budgeting: The Basis for Planning and Control
Sell, Scrap, or Rebuild Decisions
936
Benefits Derived from Budgeting
1004
938
Establishing Budgeted Amounts
1004
Joint Product Decisions
Concluding Remarks
Assignment Material
The Gilster Company
939
940
943
960
22 Responsibility
Accounting and
Transfer Pricing
Responsibility Centers
XXX
Responsibility Accounting Systems
What Change in Operating Income Do We Anticipate?
964
The Need for Information about Responsibility

Center Performance
964
Cost Centers, Profit Centers,

and Investment Centers
965
1006
The Budget Period
1006
The Master Budget: A Package of Related Budgets
1007
Steps in Preparing a Master Budget
1007
Preparing the Master Budget: An Illustration
1009
Operating Budget Estimates
1009
Budgeted Income Statement
1013
Cash Budget Estimates
1014
The Cash Budget
1017
Budgeted Balance Sheets
1020
International Financial Reporting:

Standards and Budgeting
1020
Using Budgets Effectively
1021
Flexible Budgeting
1022
Concluding Remarks
1024
1025
Assignment Material
1028
Management Compensation
24 Standard Cost Systems
Components of Management Compensation

Standard Cost Systems
1048
1102
Direct Labor Standards
1050
Design Choices for Management

Compensation
Manufacturing Overhead Standards
1050
Goals and Rewards in Life
Standard Costs and Variance Analysis:

An Illustration
1050
Materials Price and Quantity Variances
1052
Labor Rate and Efficiency Variances
1054
1058
Evaluating Cost Variances from Different

Perspectives
1058
A Final Note: JIT Systems and Variance

Analysis
1102
1103
Assignment Material
1106
1062
1063
26 Capital Budgeting
Capital Investment Decisions
1066
25 Rewarding Business
Performance
Motivation and Aligning Goals and Objectives
1088
Communicating Goals and Objectives
1088
Accounting Information and Feedback about

Goal Achievement
Rewarding Goal Achievement
The DuPont System
1126
Evaluating Capital Investment Proposals:

An Illustration
1126
Payback Period
1127
Return on Average Investment
1128
Discounting Future Cash Flows
1129
Replacing Assets
1132
Behavioral Considerations in Capital Budgeting
1134
1135
1088
1135
1088
A Concluding Comment from the Authors
1136
1137
Assignment Material
1140
1089
1089
The Components of Return on Investment
1091
Return on Sales
1091
Capital Turnover
1092
Criticisms of ROI
1093
The Short Horizon Problem
1093
Failing to Undertake Profitable Investments
1093
Measurement Problems
1094
1094
Residual Income
1094
Economic Value Added
1095
The Balanced Scorecard
1126
Financial and Nonfinancial Considerations
Concluding Remarks
Return on Investment
Residual Income and Economic

Value Added
1122
1061
1061
Assignment Material
Concluding Remarks
Utease Corporation
Concluding Remarks
'
1101
1050
1055
1100
1101
1048
Direct Materials Standards
Manufacturing Overhead Variances
1099

and Management Compensation
Establishing and Revising Standard Costs
Valuation of Finished Goods
1099
1095
ra
m
mM
B
Home Depot 2007 Financial

Statements
The Time Value of Money: Future

Amounts and Present Values
The Concept
B-1
Relationships between Present Values

and Future Amounts
B-1
Compound Interest
B-2
Applications of the Time Value of Money Concept
B-2
B-2
The Financial Perspective
1097
The Customer Perspective
1098
The Business Process Perspective
1098
The Tables Approach
B-3
The Learning and Growth Perspective
1098
The Future Amount of an Annuity
B-4
Difficulties with the Balanced Scorecard
1098
Interest Periods of Less than One Year
B-5
Future Amounts
XXXI
Present Values
B-6
Using Present Value Tables
B-7
What Is the Appropriate Discount Rate?
B-7
The Present Value of an Annuity
B-8
B-10
Discount Periods of Less than One Year
B-10
Valuation of Financial Instruments

Interest-Bearing Receivables and Payables
B-10
"Non-Interest-Bearing" Notes
B-10
Market Prices of Bonds
B-12
Capital Leases
B-13
B-14
Obligations for Postretirement Benefits
B-14
Assignment Material
Evaluating the Financial Statements

of a Partnership
Corporations
C-6
C-6
What Is a Corporation?
C-7
Stockholders' Liability for Debts of a Corporation
C-8
What Types of Businesses Choose the

Corporate Form of Organization?
C-8
Accounting for Corporate Income Taxes
C-8
Salaries Paid to Owners
C-10
Owners' Equity in a Corporate Balance Sheet
C-10
The Issuance of Capital Stock
C-10
Retained Earnings
C-10
Accounting for Dividends
C-11
Closing Entries and the Statement
Forms of Business Organization

Importance of Business Form
C-1
Sole Proprietorships
C-1
The Concept of the Separate Business Entity
C-1
Characteristics of a Sole Proprietorship
C-1
Unlimited Personal Liability
C-2
Accounting Practices of Sole Proprietorships
C-2
Evaluating the Financial Statements

of a Proprietorship
C-2
Partnerships
General Partnerships
XXXII
C-3
C-4
Partnerships That Limit Personal Liability
C-4
Accounting Practices of Partnerships
C-5
of Retained Earnings
C-11
Evaluating the Financial Statements of a Corporation
C-12
The Conceptand the Problemof "Double Taxation"
C-13
S Corporations
C-13
Selecting an Appropriate Form of Business

Organization
Incorporating an Established Business
Supplemental Topic: Partnership Accounting

A Closer Look
C-14
C-14
C-16
Opening the Accounts of a New Partnership
C-16
Allocating Partnership Net Income among

the Partners
C-18
Assignment Material
Index
C-22

Accounting

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15th Edition

The Accounting Equation

The Effects of Business Transactions: An Illustration

Effects of These Business Transactions

Accounting from a User's Perspective

Types of Accounting Information

Statement of Cash Flows

Determining Information Needs

Relationships among Financial Statements

The Cost of Producing Accounting Information

Financial Analysis and Decision Making

Basic Functions of an Accounting System

Forms of Business Organization

Who Designs and Installs Accounting Systems?

Components of Internal Control

Financial Accounting Information

External Users of Accounting Information

Objectives of External Financial Reporting

Characteristics of Externally Reported Information

Reporting Ownership Equity in the

Management Accounting Information

The Use of Financial Statements by

Users of Internal Accounting Information

The Need for Adequate Disclosure

Objectives of Management Accounting Information

Management's Interest in Financial Statements

Integrity of Accounting Information

Competence, Judgment, and Ethical Behavior

What about Bookkeeping?

But What about Me? I'm Not an Accounting Major

Ethics^ Fraud & Corporate Governance .

Ethics, Fraud & Corporate Governance

The Accounting Cycle:

Recording Balance Sheet Transactions:

Introduction to Financial Statements

What Is Net Income?

A Starting Point: Statement of Financial Position

The Income Statement: A Preview

Ledger Accounts after Posting

Relationships among the Financial Statements

The Accrual Basis of Accounting

Drafting the Notes That Accompany Financial Statements

Debit and Credit Rules for Revenue and Expenses

What Types of Information Must Be Disclosed?

The Trial Balance

Closing Entries for Expense Accounts

Closing the Income Summary Account

Closing the Dividends Account

Summary of the Closing Process

After-Closing Trial Balance

Uses and Limitations of the Trial Balance

Ethics, Fraud & Corporate Governance

The Accounting Cycle in Perspective

The Accounting Cycle:

A Last Look at Overnight: Was 2009 a Good Year?

Financial Analysis and Decision Making "

Isn't This Really a Spreadsheet?

How Is a Worksheet Used?

The Mechanics: How It's Done

What If: A Special Application of Worksheet Software

Adjusting Entries and Timing Differences

Characteristics of Adjusting Entries

Year-End at Overnight Auto Service