Financial Accounting, 6e - Texas A&M Univesity

ISBN: 978-1-61853- 311-1 | Copyright 2020

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Financial Accounting, 6e (pg. 1.2)
Chapter 1 Introducing Financial Accounting (pg. 1.2)
Demand for Accounting Information (pg. 1.4)
Who Uses Financial Accounting Information? (pg. 1.5)
Costs and Benefits of Disclosure (pg. 1.7)
Business Activities (pg. 1.7)
Planning Activities (pg. 1.8)
Investing Activities (pg. 1.8)
Financing Activities (pg. 1.9)
Operating Activities (pg. 1.10)
Financial Statements (pg. 1.11)
Balance Sheet (pg. 1.12)
Income Statement (pg. 1.12)
Statement of Cash Flows (pg. 1.14)
Financial Statement Linkages (pg. 1.15)
Information Beyond Financial Statements (pg. 1.16)
Mid-Chapter Review (pg. 1.16)
Financial Reporting Environment (pg. 1.17)
Generally Accepted Accounting Principles (pg. 1.17)
Regulation and Oversight (pg. 1.18)
Role of the Auditor (pg. 1.19)
A Global Perspective (pg. 1.20)
Analyzing Financial Statements (pg. 1.21)
Profitability Analysis (pg. 1.21)
Analysis Objective (pg. 1.21)
Credit Risk Analysis (pg. 1.23)
Analysis Objective (pg. 1.23)
Technology and Accounting (pg. 1.24)
Organization of the Book (pg. 1.25)
Chapter-End Review (pg. 1.25)
Appendix 1A: Conceptual Framework for Financial Reporting (pg. 1.26)
Objective of Financial Reporting (pg. 1.26)
Qualitative Characteristics of Useful Financial Information (pg. 1.26)
Enhancing Qualitative Characteristics (pg. 1.27)
The Cost Constraint (pg. 1.28)
Additional Underlying Basic Assumptions (pg. 1.28)
Summary (pg. 1.28)
Guidance Answers . . . You Make the Call (pg. 1.30)
Key Ratios (pg. 1.30)
Key Terms (pg. 1.30)
Multiple Choice (pg. 1.31)
Questions (pg. 1.31)
Mini Exercises (pg. 1.32)
Exercises (pg. 1.33)
Problems (pg. 1.35)
Solutions to Review Problems (pg. 1.39)
Chapter 2 Constructing Financial Statements (pg. 1.42)
Reporting Financial Condition (pg. 1.44)
Assets (pg. 1.44)
Liabilities and Equity (pg. 1.47)
Reporting Financial Performance (pg. 1.53)
Accrual Accounting for Revenues and Expenses (pg. 1.54)
Retained Earnings (pg. 1.56)
Analyzing and Recording Transactions for the Income Statement (pg. 1.56)
Reporting on Equity (pg. 1.60)
Analyzing and Recording Equity Transactions (pg. 1.60)
Statement of Stockholders’ Equity (pg. 1.61)
Mid-Chapter Review 3 (pg. 1.61)
Journalizing and Posting Transactions (pg. 1.62)
T-Account (pg. 1.62)
Debit and Credit System (pg. 1.62)
T-Account with Debits and Credits (pg. 1.63)
The Journal Entry (pg. 1.64)
Analyze, Journalize, and Post (pg. 1.64)
Analyzing Financial Statements (pg. 1.71)
Analysis Objective (pg. 1.71)
Chapter-End Review (pg. 1.73)
Summary (pg. 1.73)
Guidance Answers . . . You Make the Call (pg. 1.74)
Key Ratios (pg. 1.74)
Key Terms (pg. 1.75)
Multiple Choice (pg. 1.75)
Questions (pg. 1.76)
Mini Exercises (pg. 1.76)
Exercises (pg. 1.80)
Problems (pg. 1.86)
Cases and Projects (pg. 1.92)
Solutions to Review Problems (pg. 1.93)
Chapter 3 Adjusting Accounts for Financial Statements (pg. 1.100)
Accounting Cycle (pg. 1.102)
Analyzing and Recording Transactions (pg. 1.103)
Review of Accounting Procedures (pg. 1.103)
Review of Recording Transactions (pg. 1.103)
Adjusting the Accounts (pg. 1.109)
Preparing an Unadjusted Trial Balance (pg. 1.110)
Types of Adjustments (pg. 1.110)
Ethics and Adjusting Entries (pg. 1.117)
Mid-Chapter Review (pg. 1.117)
Constructing Financial Statements from Adjusted Accounts (pg. 1.118)
Preparing an Adjusted Trial Balance (pg. 1.118)
Preparing Financial Statements (pg. 1.118)
Closing Temporary Accounts (pg. 1.122)
Closing Process (pg. 1.123)
Closing Steps Illustrated (pg. 1.123)
Preparing a Post-Closing Trial Balance (pg. 1.124)
Subsequent Events (pg. 1.125)
Summarizing the Accounting Cycle (pg. 1.125)
Financial Statement Analysis (pg. 1.125)
Using Information on Levels and Flows (pg. 1.125)
Chapter-End Review (pg. 1.127)
Summary (pg. 1.128)
Guidance Answers . . . You Make the Call (pg. 1.128)
Key Terms (pg. 1.129)
Multiple Choice (pg. 1.129)
Questions (pg. 1.130)
Mini Exercises (pg. 1.130)
Exercises (pg. 1.133)
Problems (pg. 1.136)
Cases and Projects (pg. 1.145)
Solutions to Review Problems (pg. 1.147)
Chapter 4 Reporting and Analyzing Cash Flows (pg. 1.156)
Purpose of the Statement of Cash Flows (pg. 1.158)
What Do We Mean by “CASH”? (pg. 1.158)
What Does a Statement of Cash Flows Look Like? (pg. 1.159)
Framework for the Statement of Cash Flows (pg. 1.159)
Operating Activities (pg. 1.160)
Investing Activities (pg. 1.160)
Financing Activities (pg. 1.160)
Usefulness of Classifications (pg. 1.161)
Mid-Chapter Review 1 (pg. 1.162)
Preparing the Statement of Cash Flows-Operating Activities (pg. 1.162)
Converting Revenues and Expenses to Cash Flows from Operating Activities (pg. 1.164)
Mid-Chapter Review 2 (pg. 1.171)
Reconciling Net Income and Cash Flow from Operating Activities (pg. 1.171)
Cash Flow from Operating Activities Using the Indirect Method (pg. 1.173)
Mid-Chapter Review 3 (pg. 1.174)
Preparing the Statement of Cash Flows-Investing and Financing Activities (pg. 1.174)
Cash Flows from Investing Activities (pg. 1.174)
Cash Flows from Financing Activities (pg. 1.175)
Mid-Chapter Review 4 (pg. 1.177)
Additional Detail in the Statement of Cash Flows (pg. 1.177)
Case Illustration (pg. 1.177)
Gains and Losses on Investing and Financing Activities (pg. 1.179)
Noncash Investing and Financing Activities (pg. 1.180)
Mid-Chapter Review 5 (pg. 1.181)
The Effects of Foreign Currencies on the Cash Flow Statement (pg. 1.181)
Supplemental Disclosures (pg. 1.182)
Analysis Objective (pg. 1.183)
Chapter-End Review (pg. 1.186)
Appendix 4A: A Spreadsheet Approach to Preparing the Statement of Cash Flows (pg. 1.186)
Step 1: Classify the balance sheet accounts. (pg. 1.186)
Step 2: Compute the changes in the balance sheet accounts. (pg. 1.187)
Step 3: Handle the accounts that have single classifications. (pg. 1.187)
Step 4: Enter the effect of investing/financing transactions that do not involve cash. (pg. 1.188)
Step 5: Analyze the change in retained earnings. (pg. 1.188)
Step 6: Analyze the change in plant assets. (pg. 1.188)
Step 7: Total the columns. (pg. 1.188)
Step 8: Prepare the cash flow statement. (pg. 1.188)
Appendix 4A Review (pg. 1.189)
Summary (pg. 1.189)
Guidance Answers . . . You Make the Call (pg. 1.190)
Key Ratios (pg. 1.191)
Key Terms (pg. 1.191)
Multiple Choice (pg. 1.191)
Questions (pg. 1.192)
Mini Exercises (pg. 1.193)
Exercises (pg. 1.197)
Problems (pg. 1.201)
Cases and Projects (pg. 1.209)
Solutions to Review Problems (pg. 1.214)
Chapter 5 Analyzing and Interpreting Financial Statements (pg. 1.218)
Introduction (pg. 1.220)
Assessing the Business Environment (pg. 1.220)
Vertical and Horizontal Analysis (pg. 1.221)
Mid-Chapter Review 1 (pg. 1.223)
Return on Investment (pg. 1.225)
Return on Equity (ROE) (pg. 1.225)
Return on Assets (ROA) (pg. 1.225)
Return on Financial Leverage (ROFL) (pg. 1.226)
Mid-Chapter Review 2 (pg. 1.227)
Disaggregating ROA (pg. 1.228)
Liquidity and Solvency (pg. 1.233)
Liquidity Analysis (pg. 1.235)
Solvency Analysis (pg. 1.237)
Limitations of Ratio Analysis (pg. 1.239)
Chapter-End Review (pg. 1.240)
Appendix 5A: Analyzing and Interpreting Core Operating Activities (pg. 1.241)
Reporting Operating Activities in the Income Statement (pg. 1.241)
Reporting Operating Activities in the Balance Sheet (pg. 1.242)
Disaggregating RNOA (pg. 1.242)
Appendix 5A Review (pg. 1.243)
Appendix 5B: Financial Statement Forecasts (pg. 1.243)
Step 1. Forecast Sales Revenue (pg. 1.243)
Step 2. Forecast Operating Expenses (pg. 1.244)
Step 3. Forecast Operating Assets and Liabilities (pg. 1.244)
Step 4. Forecast Nonoperating Assets, Liabilities, Revenues and Expenses (pg. 1.244)
Step 5. Forecast Net Income, Dividends, and Retained Earnings (pg. 1.245)
Step 6. Forecast Cash (pg. 1.246)
Step 7. Prepare the Cash Flow Statement Forecast (pg. 1.247)
Additional Considerations (pg. 1.247)
Appendix 5B Review (pg. 1.248)
Summary (pg. 1.248)
Key Ratios (pg. 1.249)
Key Terms (pg. 1.250)
Multiple Choice (pg. 1.250)
Guidance Answers . . . You Make the Call (pg. 1.251)
Questions (pg. 1.251)
Mini Exercises (pg. 1.251)
Exercises (pg. 1.255)
Problems (pg. 1.259)
Cases and Projects (pg. 1.265)
Solutions to Review Problems (pg. 1.266)
Chapter 6 Reporting and Analyzing Revenues, Receivables, and Operating Income (pg. 1.270)
Reporting Operating Income (pg. 1.272)
Revenue Recognition (pg. 1.274)
Revenue Recognition Subsequent to Customer Purchase (pg. 1.276)
Mid-Chapter Review 1 (pg. 1.279)
Mid-Chapter Review 2 (pg. 1.283)
Reporting Accounts Receivable (pg. 1.283)
Determining the Allowance for Uncollectible Accounts (pg. 1.284)
Reporting the Allowance for Uncollectible Accounts (pg. 1.285)
Recording Write-offs of Uncollectible Accounts (pg. 1.286)
Footnote Disclosures and Interpretations (pg. 1.288)
Mid-Chapter Review 3 (pg. 1.291)
Analyzing Financial Statements (pg. 1.291)
Net Operating Profit After Taxes (NOPAT) (pg. 1.292)
Analysis Objective (pg. 1.292)
Analysis Objective (pg. 1.294)
Earnings Management (pg. 1.296)
Chapter-End Review (pg. 1.298)
Appendix 6A: Reporting Nonrecurring Items (pg. 1.298)
Discontinued Operations (pg. 1.299)
Exit or Disposal Costs (pg. 1.299)
Appendix 6A Review (pg. 1.301)
Summary (pg. 1.301)
Guidance Answers . . . You Make the Call (pg. 1.302)
Key Ratios (pg. 1.302)
Key Terms (pg. 1.303)
Multiple Choice (pg. 1.303)
Questions (pg. 1.304)
Mini Exercises (pg. 1.304)
Exercises (pg. 1.308)
Problems (pg. 1.314)
Cases and Projects (pg. 1.317)
Solutions to Review Problems (pg. 1.321)
Chapter 7 Reporting and Analyzing Inventory (pg. 1.326)
Reporting Operating Expenses (pg. 1.328)
Expense Recognition Principles (pg. 1.328)
Reporting Inventory Costs in the Financial Statements (pg. 1.329)
Recording Inventory Costs in the Financial Statements (pg. 1.330)
Inventory and the Cost of Acquisition (pg. 1.331)
Inventory Reporting by Manufacturing Firms (pg. 1.331)
Inventory Costing Methods (pg. 1.332)
Illustration (pg. 1.333)
First-In, First-Out (FIFO) (pg. 1.333)
Last-In, First-Out (LIFO) (pg. 1.334)
Inventory Costing and Price Changes (pg. 1.336)
Average Cost (AC) (pg. 1.336)
Lower of Cost or Net Realizable Value (pg. 1.337)
Mid-Chapter Review (pg. 1.339)
Financial Statement Effects and Disclosure (pg. 1.340)
Financial Statement Effects of Inventory Costing (pg. 1.341)
Analyzing Financial Statements (pg. 1.345)
Analysis Objective (pg. 1.345)
Analysis Objective (pg. 1.347)
Chapter-End Review (pg. 1.350)
Appendix 7A: LIFO Liquidation (pg. 1.351)
Analysis Implications (pg. 1.352)
Appendix 7A Review (pg. 1.352)
Summary (pg. 1.353)
Guidance Answers . . . You Make the Call (pg. 1.354)
Key Ratios (pg. 1.354)
Key Terms (pg. 1.354)
Multiple Choice (pg. 1.355)
Questions (pg. 1.356)
Mini Exercises (pg. 1.356)
Exercises (pg. 1.359)
Problems (pg. 1.362)
Cases and Projects (pg. 1.365)
Solutions to Review Problems (pg. 1.366)
Chapter 8 Reporting and Analyzing Long-Term Operating Assets (pg. 1.372)
Introduction (pg. 1.374)
Property, Plant, and Equipment (PPE) (pg. 1.374)
Determining Costs to Capitalize (pg. 1.375)
Depreciation (pg. 1.376)
Depreciation Methods (pg. 1.377)
Changes in Accounting Estimates (pg. 1.380)
Asset Sales and Impairments (pg. 1.381)
Footnote Disclosure (pg. 1.383)
Analyzing Financial Statements (pg. 1.384)
Analysis Objective (pg. 1.384)
Analysis Objective (pg. 1.385)
Cash Flow Effects (pg. 1.387)
Mid-Chapter Review (pg. 1.387)
Intangible Assets (pg. 1.388)
Research and Development Costs (pg. 1.388)
Patents (pg. 1.389)
Trademarks (pg. 1.389)
Franchise Rights (pg. 1.390)
Amortization and Impairment of Identifiable Intangible Assets (pg. 1.390)
Goodwill (pg. 1.392)
Footnote Disclosures (pg. 1.392)
Analysis Implications (pg. 1.393)
Chapter-End Review (pg. 1.394)
Summary (pg. 1.394)
Guidance Answers . . . You Make the Call (pg. 1.395)
Key Ratios (pg. 1.395)
Key Terms (pg. 1.395)
Multiple Choice (pg. 1.396)
Questions (pg. 1.396)
Mini Exercises (pg. 1.397)
Exercises (pg. 1.399)
Problems (pg. 1.402)
Cases and Projects (pg. 1.405)
Solutions to Review Problems (pg. 1.407)
Chapter 9 Reporting and Analyzing Liabilities (pg. 1.412)
Introduction (pg. 1.414)
Current Liabilities (pg. 1.415)
Accounts Payable (pg. 1.415)
Mid-Chapter Review 1 (pg. 1.417)
Accrued Liabilities (pg. 1.417)
Other Current Liabilities (pg. 1.421)
Mid-Chapter Review 2 (pg. 1.422)
Current Nonoperating (Financial) Liabilities (pg. 1.422)
Mid-Chapter Review 3 (pg. 1.424)
Long-Term Liabilities (pg. 1.424)
Installment Loans (pg. 1.425)
Bonds (pg. 1.427)
Pricing of Bonds (pg. 1.427)
Effective Cost of Debt (pg. 1.429)
Reporting of Bond Financing (pg. 1.430)
Effects of Discount and Premium Amortization (pg. 1.432)
The Fair Value Option (pg. 1.434)
Effects of Bond Repurchase (pg. 1.435)
Financial Statement Footnotes (pg. 1.436)
Interest and the Statement of Cash Flows (pg. 1.437)
Disclosure of Commitments and Contingencies (pg. 1.438)
Analyzing Financial Statements (pg. 1.438)
Analysis Objective (pg. 1.439)
Debt Ratings and the Cost of Debt (pg. 1.441)
Chapter-End Review (pg. 1.443)
Summary (pg. 1.443)
Guidance Answers . . . You Make the Call (pg. 1.444)
Key Ratios (pg. 1.444)
Key Terms (pg. 1.444)
Multiple Choice (pg. 1.445)
Questions (pg. 1.445)
Mini Exercises (pg. 1.446)
Exercises (pg. 1.449)
Problems (pg. 1.452)
Cases and Projects (pg. 1.456)
Solutions to Review Problems (pg. 1.458)
Chapter 11 Reporting and Analyzing Stockholders’ Equity (pg. 1.528)
Introduction (pg. 1.530)
Contributed Capital (pg. 1.531)
Classes of Stock (pg. 1.531)
Accounting for Stock Transactions (pg. 1.533)
Mid-Chapter Review 1 (pg. 1.538)
Earned Capital (pg. 1.538)
Cash Dividends (pg. 1.538)
Mid-Chapter Review 2 (pg. 1.540)
Stock Dividends and Splits (pg. 1.540)
Stock Transactions and the Cash Flows Statement (pg. 1.542)
Mid-Chapter Review 3 (pg. 1.543)
Comprehensive Income (pg. 1.543)
Summary of Stockholders’ Equity (pg. 1.544)
Analyzing Financial Statements (pg. 1.544)
Analysis Objective (pg. 1.544)
Mid-Chapter Review 4 (pg. 1.546)
Earnings Per Share (pg. 1.546)
Computation and Analysis of EPS (pg. 1.547)
Chapter-End Review (pg. 1.549)
Appendix 11A: Dilutive Securities: Accounting for convertible securities, stock options, and restr (pg. 1.549)
Convertible Securities (pg. 1.549)
Stock Rights (pg. 1.550)
Employee Stock Options (pg. 1.551)
Restricted Stock (pg. 1.552)
Appendix 11A Review (pg. 1.555)
Summary (pg. 1.555)
Guidance Answers . . . You Make the Call (pg. 1.556)
Key Ratios (pg. 1.556)
Key Terms (pg. 1.557)
Multiple Choice (pg. 1.557)
Questions (pg. 1.558)
Exercises (pg. 1.563)
Problems (pg. 1.568)
Cases and Projects (pg. 1.572)
Solutions to Review Problems (pg. 1.576)
Appendix A Compound Interest and the TimeValue of Money (pg. 1.638)
Future Value Concepts (pg. 1.639)
Present Value Concepts (pg. 1.640)
Present Value of a Single Amount (pg. 1.640)
Present Value of an Annuity (pg. 1.641)
Installment Loans (pg. 1.642)
Bond Valuation (pg. 1.642)
Calculating Bond Yields (pg. 1.643)
Future Value of Annuities (pg. 1.643)
Using Excel to Compute Time Value (pg. 1.644)
Future Value Calculations (pg. 1.644)
Present Value Calculations (pg. 1.647)
Key Terms (pg. 1.654)
Exercises (pg. 1.654)
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