There is a new edition of this book available Financial & Managerial Accounting for Undergraduates, 3e.

Financial & Managerial Accounting for Undergraduates, 2e

by Wallace, Nelson, Christensen, Hobson, Matthews

ISBN: 978-1-61853-310-4 | Copyright 2020


Welcome to Financial & Managerial Accounting for Undergraduates!

We wrote this book to satisfy the needs of students taking an introductory course in financial and managerial accounting by providing a high quality, contemporary, and engaging textbook at an affordable price. 

Financial & Managerial Accounting for Undergraduates 2e is written for students who want to understand how financial statements are prepared and how the information in published financial reports is used. It will also introduce students to management accounting concepts and decision making tools that will help them become effective managers in an increasingly competitive global market. The publication of this text has benefited from extensive feedback and suggestions from focus groups, market surveys, manuscript reviews, and interviews with faculty from across the country.

Target Audience

Financial & Managerial Accounting for Undergraduates is intended for use in introductory financial and managerial accounting courses at the undergraduate level; courses that balance the development of financial statements and management accounting tools, with their interpretation and use in decision making. This book teaches future business professionals how to read, analyze, and interpret accounting and other company, industry, and economic data to make informed business decisions.


Incredible Value: Offered at $130 net to the bookstore (which includes textbook and access to MBC), your students will benefit from high quality course materials and access to online learning tools at a price significantly lower than that of other textbooks.


Students frequently ask this or similar questions. The extent to which they feel accounting is relevant to their daily lives will often determine how much effort they put into the course. The following features are used throughout the book to convey the relevance of accounting to their lives and society.

Real Company Examples in Financial Chapters

Students better engage in the learning process and retain concepts through real and familiar examples. Throughout the text, authors incorporate real financial statements and examples from companies such as Microsoft, Amazon, and Google that prepare students to make real world business decisions. The Extending Your Knowledge section in the assignments throughout the financial accounting chapters, requires students to use the financial statements of Columbia Sportswear Company and Under Armour

Extensive Service Industry Coverage in Managerial Chapters

The service sector is the fastest growing segment of the U.S. economy. The managerial accounting chapters include Service Industry Margin Callouts identifying the sections that apply managerial accounting concepts to the service industry.  Further, each managerial accounting chapter concludes with a Service Industry in Focus case that provides students an opportunity to apply what they learned within a service industry situation.

Data Analytics

A discussion of data analytics is included in the new edition to expose students to its relevance in accounting.

Accounting in Practice

Accounting Information in Practice boxed inserts help students bridge the gap between the classroom and what students will encounter in the real world.  These inserts present real business scenarios and the choices companies face in making decisions.

Your Turn!

Your Turn! Boxed inserts are integrated throughout each chapter and reinforce the concepts and techniques just presented through immediate practice. Solutions are provided at the end of each chapter so students can check their work.


As professionals, students will eventually be confronted with day-to-day-decisions that have ethical implications. The authors discuss ethics where appropriate in the textbook, including assignments throughout the text that raise ethical issues.

Student Success

As accounting can be challenging, the authors include many features throughout the text that provide additional direction for students. Mapping Each Chapter – each chapter begins with an overview that visually depicts the layout of the chapter. A.K.A. Boxes – inform students of commonly used alternative terms that they may encounter in practice. Hints – additional suggestions inserted in the margin to help students understand difficult concepts.

Road Map

Each chapter opens with a grid that identifies each learning objective for the chapter, the related pages, guided example videos, and end of chapter assignments. This allows students and faculty to quickly grasp the chapter contents and to efficiently navigate to the desired topic.

Financial Chapters Reflect Current FASB Standards

The text and assignments were updated to reflect the new revenue recognition standard, Chapter 6 on Inventory was updated for new standard on lower of cost or net realizable value, the lease appendix in Chapter 10 was updated for the new lease standard, and Appendix D on Investments was updated to reflect the new standard.

New Coverage

A new section on Natural Resources and Depletion has been added to Chapter 9.

Managerial Chapters Integrated with Excel

In the managerial chapters, the authors demonstrate data analysis concepts in Excel such as cost –volume-profit relationships and overhead cost allocations. Excel templates are provided for select assignments and are identified by an EXCEL icon. 

Data Analysis

Cost-Volume-Profit Relationships (Chapter 19) includes an expanded discussion of regression analysis using Excel to develop cost formulas. 


Additional assignments and video examples have been added to MBC, so nearly all of the textbook assignments are available in the system.

Additional Assignments

Additional assignments were added to ensure adequate reinforcement of each learning objective.  

Additional Test Bank Questions

Additional test bank questions were added to ensure adequate assessment of each topic.

More Your Turn! Boxes

Now each learning objective ends with a comprehensive Your Turn! exercise that gives students even more opportunities to practice. Each Your Turn! is accompanied by a short video clip walking students through the solution.

Introducing myBusinessCourse

myBusinessCourse is a complete, secure, web-based training and e-Learning solution. There is nothing to download or install; it is accessible through any modern web browser and most mobile devices.

Request a One-on-One Demo

eLecture Videos

eLecture Videos

  • Created by the authors of the textbook
  • Consistent with the textbook's explanations and approach
  • Cover learning objectives and concepts from each chapter
  • Ideal for remediation
  • Ideal for online and hybrid classrooms

Narrated demonstration videos

Guided Example Videos

  • Created by the authors of the textbook
  • Provide problem solving strategies as well as solutions
  • Offer clear, step-by-step demonstrations of how to solve select problems from the textbook

Auto-graded assignments

Auto-graded Assignments

  • Provides immediate feedback
  • Create assignments using problems from the textbook
  • Additional randomized versions of assignments provide extra practice
  • Ideal for remediation
  • Include select questions from test banks

Respondus LockDown Browser

Respondus LockDown Browser®

  • Assessments are displayed full-screen and cannot be minimized
  • Browser menu and toolbar options are removed, except for Back, Forward, Refresh and Stop
  • Prevents access to other applications including messaging, screen-sharing, virtual machines, and remote desktops
  • Printing and screen capture functions are disabled
  • Copying and pasting anything to or from an assessment are prevented
  • Right-click menu options, function keys, keyboard shortcuts and task switching are disabled
  • An assessment cannot be exited until the student submits it for grading
  • Assessments set up with LockDown Browser cannot be accessed with other browsers
  • Students use their preferred device to take exams (iPad, Mac, Windows)
  • Students will be prompted to install LockDown Browser prior to accessing the exam

Detailed Reporting Tools

Detailed Reporting Tools

  • Quickly review the performance of individual students
  • Quickly review the performance of entire class
  • Use reports on student performance to customize your lectures to fit student needs

Enhanced eBook

  • Save money
  • Includes myBusinessCourse
  • Integrates eLecture and demonstration videos
  • Bookmarking
  • Note taking
  • Highlighting

Third Party Integrations

Third Party Integrations

  • Single sign-on
  • Link to assignments in myBusinessCourse from your third party course
  • Automatically sync gradebooks each night


  • Study, learn and master key terms.
  • With linear-mode, get full control over the deck. Go back and forth between cards, shuffle and auto-play the deck.
  • With certainty-mode, test how well you know each term. If you are not certain you have learned the term, it will display again later in the deck.

Support and Training

Support and Training

  • Technical support for students and faculty available daily
  • Faculty training conducted daily

Example of the Road Map & video features available for each chapter.

Click on a Chapter 3 eLecture or Guided Example to preview the related video.

Road Map
LO Learning Objective Page eLecture Guided Example Assignments

Explain the accrual basis of accounting and contrast it with the cash basis with reference to revenue and expense recognition.


SS4, SS7, SE2, E6A, E7A, E6B, E7B


Describe the adjusting process.


SS6, SE3


Illustrate deferral adjustments.


SS1, SE4, SE5, SE6, SE7, E2A, E3A, E9A, E10A, E2B, E3B, E9B, E10B, P1A, P2A, P3A, P4A, P5A, P6A, P7A, P12A, P13A, P1B, P2B, P3B, P4B, P5B, P6B, P7B, P12B, P13B


Illustrate accrual adjustments.


SS2, SE6, SE7, E1A, E2A, E3A, E9A, E10A, E1B, E2B, E3B, E9B, E10B, P1A, P2A, P3A, P4A, P5A, P6A, P7A, P12A, P13A, P1B, P2B, P3B, P4B, P5B, P6B, P7B, P12B, P13B


Explain the adjusted trial balance and use it to prepare financial statements.


SE8, SE10, E4A, E4B, P8A, P10A, P11A, P12A, P13A, P14A, P15A, P16A, P17A, P18A, P8B, P10B, P11B, P12B, P13B, P14B, P15B, P16B, P17B, P18B


Describe the closing process and summarize the accounting cycle.


SS3, SS1, SE9, E5A, E8A, E11A, E5B, E8B, E11B, P8A, P9A, P13A, P8B, P9B, P12A, P12B


Appendix 3A: Describe the process of closing to the Income Summary account and summarize the accounting cycle.


SE11, E12A, E13A, E15A, E12B, E13B, E15B, P18A, P19A, P18B, P19B


Appendix 3B: Explain how to use a worksheet in the adjusting and closing process.


SE12, E14A, E16A, E14B, E16B, P20A, P20B

Expand/Collapse All
About the Authors (pg. iii)
Preface (pg. v)
Brief Contents (pg. xiii)
Contents (pg. xiv)
Chapter 1 Financial Accounting and Business Decisions (pg. 2)
Business Organization (pg. 4)
Your Turn! 1.1 (pg. 5)
Activities of a Business (pg. 5)
Financing Activities (pg. 5)
Investing Activities (pg. 6)
Operating Activities (pg. 6)
Your Turn! 1.2 (pg. 6)
Accounting Information and Its Use (pg. 6)
External Users of Accounting (pg. 7)
Internal Users of Accounting (pg. 8)
Your Turn! 1.3 (pg. 8)
Ethics and Accounting (pg. 8)
Your Turn! 1.4 (pg. 9)
The Accounting Process (pg. 10)
Generally Accepted Accounting Principles (pg. 10)
International Financial Reporting Standards (pg. 11)
Your Turn! 1.5 (pg. 12)
Financial Statements (pg. 12)
Balance Sheet (pg. 12)
Income Statement (pg. 14)
Statement of Stockholders’ Equity (pg. 15)
Statement of Cash Flows (pg. 16)
Relations Among the Financial Statements (pg. 17)
Your Turn! 1.6 (pg. 18)
Other Annual Report Components (pg. 18)
Notes to Financial Statements (pg. 19)
Independent Auditor’s Report (pg. 19)
Management’s Discussion and Analysis (pg. 19)
Your Turn! 1.7 (pg. 20)
Careers in Accounting (pg. 20)
Data Analytics and Blockchain Technology (pg. 21)
Comprehensive Problem (pg. 22)
Appendix 1A: FASB’s Conceptual Framework (pg. 23)
Summary of Learning Objectives (pg. 26)
Key Terms (pg. 28)
Self-Study Questions (pg. 29)
Questions (pg. 31)
Short Exercises (pg. 32)
Exercises-Set A (pg. 35)
Exercises-Set B (pg. 38)
Problems-Set A (pg. 42)
Problems-Set B (pg. 46)
Serial Problem: Kate’s Cards (pg. 49)
Extending Your Knowledge (pg. 49)
Answers to Self-Study Questions: (pg. 53)
Your Turn! Solutions (pg. 53)
Chapter 2 Processing Accounting Information (pg. 56)
Accounting Cycle (pg. 58)
Your Turn! 2.1 (pg. 59)
Analyzing Transactions (pg. 59)
Accounting Equation Expanded (pg. 60)
Transactions and the Accounting Equation: An Illustration (pg. 60)
Transaction Summary (pg. 64)
Your Turn! 2.2 (pg. 65)
The “Account” System (pg. 66)
Chart of Accounts (pg. 66)
System of Debits and Credits (pg. 66)
Your Turn! 2.3 (pg. 68)
Your Turn! 2.4 (pg. 68)
Recording Transactions (pg. 69)
General Journal (pg. 69)
Posting Journal Entries to the General Ledger (pg. 70)
Illustration of the Recording Process (pg. 71)
Summary Illustration of Journalizing and Posting Transactions (pg. 74)
Your Turn! 2.5 (pg. 76)
Trial Balance (pg. 77)
Your Turn! 2.6 (pg. 78)
Comprehensive Problem (pg. 79)
Summary of Learning Objectives (pg. 80)
Key Terms (pg. 81)
Self-Study Questions (pg. 82)
Questions (pg. 83)
Short Exercises (pg. 84)
Exercises-Set A (pg. 86)
Exercises-Set B (pg. 90)
Problems-Set A (pg. 94)
Problems-Set B (pg. 102)
Serial Problem: Kate’s Cards (pg. 110)
Extending Your Knowledge (pg. 110)
Answers to Self-Study Questions: (pg. 115)
Your Turn! Solutions (pg. 116)
Chapter 3 Accrual Basis of Accounting (pg. 118)
Accrual Basis of Accounting (pg. 120)
Revenue Recognition Principle (pg. 120)
Expense Recognition (Matching) Principle (pg. 123)
Your Turn! 3.1 (pg. 124)
Adjusting Accounts (pg. 124)
Unadjusted Trial Balance (pg. 124)
Types of Adjustments (pg. 125)
Your Turn! 3.2 (pg. 125)
Deferral Adjusting Entries (pg. 125)
Allocating Previously Recorded Assets to Expenses (pg. 125)
Allocating Previously Recorded Unearned Revenue to Revenue (pg. 127)
Your Turn! 3.3 (pg. 128)
Accrual Adjusting Entries (pg. 128)
Recording Previously Unrecorded Expenses (pg. 128)
Recording Previously Unrecorded Revenues (pg. 130)
Summary of Accounting Adjustments (pg. 130)
Your Turn! 3.4 (pg. 132)
Adjusted Trial Balance and Financial Statements (pg. 132)
Preparing the Adjusted Trial Balance (pg. 132)
Preparing Financial Statements (pg. 133)
STEP 1: Income Statement (pg. 133)
STEP 2: Statement of Stockholders’ Equity (pg. 133)
STEP 3: Balance Sheet (pg. 134)
STEP 4: Statement of Cash Flows (pg. 134)
Your Turn! 3.5 (pg. 135)
Closing Process (pg. 136)
Your Turn! 3.6 (pg. 136)
Journalizing and Posting the Closing Entries (pg. 136)
Summary of the Accounting Cycle (pg. 138)
Quality of Accounting Numbers (pg. 139)
Comprehensive Problem (pg. 140)
Appendix 3A: Closing Process-Using Income Summary Account (pg. 143)
Your Turn! 3A.1 (pg. 144)
Your Turn! 3A.2 (pg. 147)
Appendix 3B: Using a Worksheet (pg. 147)
Summary of Learning Objectives (pg. 150)
Key Terms (pg. 151)
Self-Study Questions (pg. 151)
Questions (pg. 152)
Short Exercises (pg. 153)
Exercises-Set A (pg. 154)
Exercises-Set B (pg. 158)
Problems-Set A (pg. 161)
Problems-Set B (pg. 169)
Serial Problem: Kate’s Cards (pg. 178)
Extending Your Knowledge (pg. 179)
Answers to Self-Study Questions: (pg. 182)
Your Turn! Solutions (pg. 182)
Chapter 4 Understanding Financial Statements (pg. 186)
Balance Sheet Classification and Analysis (pg. 188)
Current Assets (pg. 188)
Long-Term Assets (pg. 189)
Current Liabilities (pg. 190)
LongTerm Liabilities (pg. 191)
Stockholders’ Equity (pg. 191)
Presentation Format (pg. 191)
Your Turn! 4.1 (pg. 193)
Income Statement Classification and Analysis (pg. 193)
Your Turn! 4.2 (pg. 196)
Working with Financial Statements (pg. 196)
Analysis Based on Ratios (pg. 196)
Working with the Balance Sheet (pg. 197)
Your Turn! 4.3 (pg. 199)
Working with the Income Statement (pg. 199)
Your Turn! 4.4 (pg. 201)
Working with the Statement of Stockholders’ Equity (pg. 201)
Your Turn! 4.5 (pg. 202)
Working with the Statement of Cash Flows (pg. 202)
Your Turn! 4.6 (pg. 204)
Comprehensive Problem (pg. 205)
Summary of Learning Objectives (pg. 207)
Key Terms (pg. 208)
Self-Study Questions (pg. 209)
Questions (pg. 210)
Short Exercises (pg. 211)
Exercises-Set A (pg. 213)
Exercises-Set B (pg. 214)
Problems-Set A (pg. 216)
Problems-Set B (pg. 220)
Serial Problem: Kate’s Cards (pg. 223)
Extending Your Knowledge (pg. 223)
Answers to Self-Study Questions: (pg. 226)
Your Turn! Solutions (pg. 227)
Chapter 5 Accounting for Merchandising Operations (pg. 230)
The Nature of Merchandising (pg. 232)
Operating Cycle of a Merchandising Firm (pg. 233)
Cost Flows (pg. 234)
Inventory Systems (pg. 234)
Your Turn! 5.1 (pg. 235)
Accounting for Purchases of Merchandise (pg. 235)
Transportation Costs (pg. 235)
Purchase Returns and Allowances (pg. 236)
Purchase Discounts (pg. 237)
Your Turn! 5.2 (pg. 239)
Accounting for Sales of Merchandise (pg. 239)
Revenue Side (pg. 240)
Cost Side (pg. 240)
Sales Returns and Allowances (pg. 240)
Sales Discounts (pg. 241)
Net Sales (pg. 242)
Your Turn! 5.3 (pg. 242)
Profitability Analysis (pg. 242)
Gross Profit Percentage (pg. 242)
Return on Sales Ratio (Profit Margin) (pg. 243)
Your Turn! 5.4 (pg. 244)
Comprehensive Problem (pg. 245)
Appendix 5A: Periodic Inventory System (pg. 246)
Your Turn! 5A.1 (pg. 247)
Your Turn! 5A.2 (pg. 248)
Your Turn! 5A.3 (pg. 249)
Appendix 5B: The Revenue Recognition Standard (pg. 249)
Your Turn! 5B.1 (pg. 251)
Summary of Learning Objectives (pg. 251)
Key Terms (pg. 252)
Self-Study Questions (pg. 253)
Questions (pg. 254)
Short Exercises (pg. 254)
Exercises-Set A (pg. 256)
Exercises-Set B (pg. 258)
Problems-Set A (pg. 259)
Problems-Set B (pg. 262)
Serial Problem: Kate’s Cards (pg. 264)
Extending Your Knowledge (pg. 265)
Answers to Self-Study Questions: (pg. 267)
Your Turn! Solutions (pg. 267)
Chapter 6 Accounting for Inventory (pg. 270)
Inventory Categories and Concepts (pg. 272)
Categories of Inventory (pg. 272)
Concepts of Inventory Management (pg. 273)
Inventory Ownership and Physical Count (pg. 274)
Ownership of Inventory (pg. 274)
Physical Count of Inventory (pg. 275)
Your Turn! 6.1 (pg. 276)
Inventory Costing Methods (pg. 276)
Goods Flow vs. Cost Flow (pg. 277)
Data for Illustration of Cost Flow Assumptions (pg. 277)
Specific Identification Method (pg. 278)
FirstIn, FirstOut (FIFO) Method (pg. 278)
LastIn, FirstOut (LIFO) Method (pg. 279)
Weighted-Average Cost Method (pg. 280)
Your Turn! 6.2 (pg. 281)
Comparative Analysis of Inventory Costing Methods and Gross Profit (pg. 281)
Selecting Inventory Methods (pg. 282)
Your Turn! 6.3 (pg. 286)
Lower-of-Cost-or-Net Realizable Value Method (pg. 286)
Net Realizable Value (pg. 287)
Lower-of-Cost-or-Net Realizable Value (pg. 287)
Your Turn! 6.4 (pg. 288)
Inventory Analysis (pg. 288)
Inventory Turnover and Days’ Sales in Inventory (pg. 288)
Your Turn! 6.5 (pg. 289)
Comprehensive Problem (pg. 290)
Appendix 6A: Inventory Costing Methods and the Perpetual Inventory System (pg. 291)
Your Turn! 6A.1 (pg. 296)
Appendix 6B: LIFO Reserve (pg. 296)
Your Turn! 6B.1 (pg. 297)
Summary of Learning Objectives (pg. 297)
Key Terms (pg. 299)
Self-Study Questions (pg. 299)
Questions (pg. 300)
Short Exercises (pg. 301)
Exercises-Set A (pg. 303)
Exercises-Set B (pg. 306)
Problems-Set A (pg. 309)
Problems-Set B (pg. 313)
Serial Problem: Kate’s Cards (pg. 317)
Extending Your Knowledge (pg. 317)
Answers to Self-Study Questions: (pg. 320)
Your Turn! Solutions (pg. 320)
Chapter 7 Internal Control and Cash (pg. 324)
Fraud (pg. 326)
Fraud Triangle (pg. 326)
Your Turn! 7.1 (pg. 327)
Internal Control (pg. 327)
COSO Framework (pg. 327)
Control Failures (pg. 332)
The Sarbanes-Oxley Act (pg. 333)
Your Turn! 7.2 (pg. 333)
Accounting for Cash (pg. 333)
Reporting Cash (pg. 334)
Cash and Cash Equivalents (pg. 334)
Your Turn! 7.3 (pg. 335)
Internal Control of Cash Receipts Transactions (pg. 335)
Cash Received on Account (pg. 335)
Cash Received from Retail Cash Sales (pg. 337)
Checks (pg. 339)
Using Electronic Funds Transfer (pg. 340)
The Petty Cash Fund (pg. 340)
Your Turn! 7.4 (pg. 341)
The Bank Statement (pg. 341)
The Bank Reconciliation (pg. 341)
Your Turn! 7.5 (pg. 346)
Effective Cash Management (pg. 346)
Monitoring Cash (pg. 346)
Primary Activities of Effective Cash Management (pg. 347)
Your Turn! 7.6 (pg. 347)
Comprehensive Problem (pg. 348)
Appendix 7A: Auditing and Internal Control (pg. 349)
Your Turn! 7A.1 (pg. 351)
Summary of Learning Objectives (pg. 351)
Key Terms (pg. 353)
Self-Study Questions (pg. 353)
Questions (pg. 354)
Short Exercises (pg. 355)
Exercises-Set A (pg. 356)
Exercises-Set B (pg. 357)
Problems-Set A (pg. 359)
Problems-Set B (pg. 363)
Serial Problem: Kate’s Cards (pg. 366)
Extending Your Knowledge (pg. 367)
Answers to Self-Study Questions: (pg. 370)
Your Turn! Solutions (pg. 371)
Chapter 8 Accounting for Receivables (pg. 372)
Receivables (pg. 374)
Accounts Receivable (pg. 374)
Accounting for Bad Debts (pg. 375)
Allowance Method (pg. 376)
Your Turn! 8.1 (pg. 379)
Estimating Credit Losses (pg. 379)
Percentage of Net Sales Method (pg. 380)
Your Turn! 8.2 (pg. 380)
Accounts Receivable Aging Method (pg. 380)
Your Turn! 8.3 (pg. 383)
Credit Card Sales (pg. 384)
Your Turn! 8.4 (pg. 384)
Notes Receivable (pg. 384)
Interest on Notes Receivable (pg. 385)
Adjusting Entry for Interest (pg. 386)
Reporting Notes Receivable on the Balance Sheet (pg. 387)
Your Turn! 8.5 (pg. 388)
Analyzing and Managing Receivables (pg. 388)
Your Turn! 8.6 (pg. 389)
Factoring and Discounting (pg. 389)
Comprehensive Problem (pg. 390)
Appendix 8A: Direct Write-Off Method (pg. 391)
Your Turn! 8A.1 (pg. 392)
Key Terms (pg. 394)
Questions (pg. 395)
Short Exercises (pg. 396)
Exercises-Set A (pg. 397)
Exercises-Set B (pg. 401)
Problems-Set A (pg. 404)
Problems-Set B (pg. 407)
Serial Problem: Kate’s Cards (pg. 411)
Extending Your Knowledge (pg. 411)
Answers to Self-Study Questions: (pg. 414)
Your Turn! Solutions (pg. 414)
Chapter 9 Accounting for Long-Lived and Intangible Assets (pg. 416)
Overview of Long-Lived Assets (pg. 418)
Measuring Acquisition Cost of Plant Assets (pg. 419)
Acquisition Cost (pg. 419)
Acquisition Costs Related to Land (pg. 421)
Your Turn! 9.1 (pg. 422)
Nature of Depreciation (pg. 422)
Allocation versus Valuation: Depreciation Accounting (pg. 423)
Calculating Depreciation Expense (pg. 423)
A Comparison of Alternative Depreciation Methods (pg. 427)
Your Turn! 9.2 (pg. 428)
Depreciation Method Estimate Changes (pg. 428)
Revenue versus Capital Expenditures (pg. 431)
Revenue Expenditures (pg. 431)
Capital Expenditures (pg. 431)
Your Turn! 9.3 (pg. 432)
Disposals of Plant Assets (pg. 433)
Sale of Plant Assets (pg. 433)
Your Turn! 9.4 (pg. 434)
Intangible Assets and Natural Resources (pg. 434)
Measurement of Intangible Assets (Cost Determination) (pg. 435)
Amortization of Intangibles (pg. 435)
Examples of Intangible Assets (pg. 435)
Patents (pg. 435)
Copyright (pg. 436)
Franchises (pg. 436)
Trademarks (pg. 436)
Goodwill (pg. 437)
Your Turn! 9.5 (pg. 437)
Natural Resources (pg. 437)
Your Turn! 9.6 (pg. 438)
Balance Sheet Presentation (pg. 438)
Return on Assets and Asset Turnover (pg. 439)
Your Turn! 9.7 (pg. 440)
Comprehensive Problem (pg. 440)
Summary Of Learning Objectives (pg. 441)
Key Terms (pg. 442)
SelfStudy Questions (pg. 443)
Questions (pg. 444)
Exercises-Set A (pg. 446)
Exercises-Set B (pg. 448)
Problems-Set A (pg. 450)
Problems-Set B (pg. 453)
Serial Problem: Kate’s Cards (pg. 456)
Extending Your Knowledge (pg. 457)
Answers to Self-Study Questions: (pg. 460)
Your Turn! Solutions (pg. 460)
Chapter 10 Accounting for Liabilities (pg. 462)
Current Liabilities (pg. 464)
Accounts Payable (pg. 464)
Notes Payable and Interest (pg. 464)
Interest Payable (pg. 466)
Current Portion of LongTerm Debt (pg. 466)
Advance Payments-Unearned Revenue (pg. 466)
Sales and Excise Taxes Payable (pg. 467)
PayrollRelated Liabilities (pg. 467)
Your Turn! 10.1 (pg. 469)
Income Taxes Payable (pg. 469)
Long-Term Liabilities (pg. 470)
Long-Term Notes (Term Loans) (pg. 470)
Types of Bonds (pg. 471)
Bond Prices (pg. 472)
Recording Bonds (pg. 475)
Your Turn! 10.2 (pg. 479)
Advantages and Disadvantages of Long-Term Bonds and Notes (pg. 479)
Contingent Liabilities (pg. 480)
Examples of Contingent Liabilities (pg. 481)
Summary of Accounting Treatment for Liabilities (pg. 483)
Your Turn! 10.3 (pg. 484)
Analyzing Liabilities (pg. 484)
Current Ratio and Quick Ratio (pg. 484)
Times-Interest-Earned Ratio (pg. 485)
Your Turn! 10.4 (pg. 486)
Comprehensive Problem (pg. 487)
Appendix 10A: Bond Pricing (pg. 487)
Your Turn! 10A.1 (pg. 496)
Appendix 10B: Leases (pg. 496)
Your Turn! 10B.1 (pg. 496)
Summary of Learning Objectives (pg. 497)
Key Terms (pg. 499)
Self-Study Questions (pg. 499)
Questions (pg. 500)
Short Exercises (pg. 501)
Exercises-Set A (pg. 503)
Exercises-Set B (pg. 506)
Problems-Set A (pg. 509)
Problems-Set B (pg. 513)
Serial Problem: Kate’s Cards (pg. 516)
Extending Your Knowledge (pg. 517)
Answers to Self-Study Questions: (pg. 519)
Your Turn! Solutions (pg. 520)
Chapter 11 Stockholders’ Equity (pg. 522)
Nature and Formation of a Corporation (pg. 524)
Advantages of the Corporate Form of Organization (pg. 524)
Disadvantages of the Corporate Form of Organization (pg. 526)
Accounting for Stockholders’ Equity in Alternative Organizational Forms (pg. 527)
Your Turn! 11.1 (pg. 527)
Par Value Stock and NoPar Value Stock (pg. 527)
Your Turn! 11.2 (pg. 528)
Types of Capital Stock (pg. 528)
Common Stock (pg. 529)
Preferred Stock (pg. 529)
Your Turn! 11.3 (pg. 531)
Stock Issuances for Cash (pg. 532)
Issuing Stock at a Premium (pg. 532)
Issuing No-Par Stock (pg. 532)
Noncash Stock Issuances (pg. 533)
Your Turn! 11.4 (pg. 533)
Stock Splits (pg. 534)
Your Turn! 11.5 (pg. 534)
Treasury Stock (pg. 534)
Accounting for Treasury Stock (pg. 535)
Your Turn! 11.6 (pg. 536)
Cash Dividends and Stock Dividends (pg. 536)
Cash Dividends (pg. 537)
Stock Dividends (pg. 538)
Your Turn! 11.7 (pg. 540)
Retained Earnings and the Statement of Stockholder’s Equity (pg. 540)
Statement of Stockholders’ Equity (pg. 541)
Your Turn! 11.8 (pg. 541)
Analyzing Stockholders’ Equity (pg. 542)
Return on Common Stockholders’ Equity (pg. 542)
Dividend Yield and Dividend Payout Ratio (pg. 542)
Your Turn! 11.9 (pg. 544)
Comprehensive Problem (pg. 544)
Summary of Learning Objectives (pg. 545)
Key Terms (pg. 546)
Self-Study Questions (pg. 547)
Questions (pg. 548)
Short Exercises (pg. 548)
Exercises-Set A (pg. 549)
Exercises-Set B (pg. 552)
Problems-Set A (pg. 555)
Problems-Set B (pg. 559)
Serial Problem: Kate’s Cards (pg. 563)
Extending Your Knowledge (pg. 564)
Answers to Self-Study Questions: (pg. 567)
Your Turn! Solutions (pg. 567)
Chapter 12 Statement of Cash Flows (pg. 570)
Cash and Cash Equivalents (pg. 572)
Activity Classifications in the Statement of Cash Flows (pg. 573)
Operating Activities (pg. 574)
Investing Activities (pg. 574)
Financing Activities (pg. 574)
Usefulness of Activity Classification (pg. 575)
Noncash Investing and Financing Activities (pg. 576)
Using the Statement of Cash Flows (pg. 576)
Cash Flow from Operating Activities (pg. 577)
Your Turn! 12.1 (pg. 578)
Preparing the Statement of Cash Flows Using the Indirect Method (pg. 578)
Five Steps to Preparing a Statement of Cash Flows (pg. 579)
Your Turn! 12.2 (pg. 585)
Analyzing Cash Flows (pg. 586)
Free Cash Flow (pg. 586)
Operating-Cash-Flow-to-Current-Liabilities Ratio (pg. 586)
Operating-Cash-Flow-to-Capital-Expenditures Ratio (pg. 587)
Your Turn! 12.3 (pg. 588)
Comprehensive Problem (pg. 588)
Appendix 12A: Preparing the Statement of Cash Flows Under the Direct Method (pg. 590)
Your Turn! 12A.1 (pg. 592)
Summary of Learning Objectives (pg. 593)
Key Terms (pg. 594)
Self-Study Questions (pg. 594)
Questions (pg. 596)
Short Exercises (pg. 597)
Exercises-Set A (pg. 598)
Exercises-Set B (pg. 601)
Problems-Set A (pg. 604)
Problems-Set B (pg. 609)
Serial Problem: Kate’s Cards (pg. 614)
Extending Your Knowledge (pg. 616)
Answers to Self-Study Questions: (pg. 618)
Your Turn! Solutions (pg. 618)
Chapter 13 Analysis and Interpretation of Financial Statements (pg. 622)
Persistent Earnings and the Income Statement (pg. 624)
Discontinued Operations (pg. 626)
Changes in Accounting Principles (pg. 626)
Comprehensive Income (pg. 627)
Your Turn! 13.1 (pg. 627)
Sources of Information (pg. 628)
Analytical Techniques (pg. 628)
Horizontal Analysis (pg. 629)
Trend Analysis (pg. 632)
Your Turn! 13.2 (pg. 633)
Vertical Analysis (pg. 633)
Your Turn! 13.3 (pg. 634)
Ratio Analysis (pg. 634)
Analyzing Firm Profitability (pg. 636)
Your Turn! 13.4 (pg. 639)
Analyzing ShortTerm Firm Liquidity (pg. 639)
Your Turn! 13.5 (pg. 644)
Analyzing LongTerm Firm Solvency (pg. 644)
Your Turn! 13.6 (pg. 646)
Financial Ratios for Common Stockholders (pg. 646)
Your Turn! 13.7 (pg. 649)
Limitations of Financial Statement Analysis (pg. 649)
Comprehensive Problem (pg. 650)
Appendix 13A: Financial Statement Disclosures (pg. 651)
Summary of Learning Objectives (pg. 654)
Summary of Financial Statement Ratios (pg. 655)
Key Terms (pg. 657)
Self-Study Questions (pg. 658)
Questions (pg. 659)
Short Exercises (pg. 660)
Exercises-Set A (pg. 661)
Exercises-Set B (pg. 664)
Problems-Set A (pg. 666)
Problems-Set B (pg. 672)
Serial Problem: Kate’s Cards (pg. 678)
Extending Your Knowledge (pg. 680)
Answers to Self-Study Questions: (pg. 685)
Your Turn! Solutions (pg. 685)
Chapter 14 Overview of Managerial Accounting (pg. 688)
Introduction To Managerial Accounting (pg. 690)
Managerial Accounting versus Financial Accounting (pg. 690)
Objectives of Managerial Accounting (pg. 691)
Your Turn! 14.1 (pg. 691)
Types Of Business Entities (pg. 692)
Your Turn! 14.2 (pg. 692)
Major Trends In Business And Managerial Accounting (pg. 693)
Outsourcing (pg. 693)
Factory Automation (pg. 694)
Just-in-Time Inventory Systems (pg. 694)
Lean Manufacturing (pg. 695)
Customer Profitability (pg. 695)
Big Data and Predictive Analytics (pg. 696)
Your Turn! 14.3 (pg. 696)
Introducing Two New Companies (pg. 697)
Fezzari-A U.S. Bicycle Manufacturer and Distributor (pg. 697)
Environmental Business Consultants, LLC-A U.S. Service Firm (pg. 698)
Careers In Managerial Accounting (pg. 699)
Alternative Career Paths (pg. 699)
Work/Life Balance (pg. 700)
Your Turn! 14.4 (pg. 700)
Professional Certifications (pg. 700)
Certified Public Accountant (CPA) (pg. 700)
Certified Management Accountant (CMA) (pg. 701)
Other Professional Certifications (pg. 701)
Your Turn! 14.5 (pg. 701)
Summary of Learning Objectives (pg. 702)
Key Terms (pg. 703)
Self-Study Questions (pg. 703)
Questions (pg. 704)
Extending Your Knowledge (pg. 704)
Answers to Self-Study Questions: (pg. 706)
Your Turn! Solutions (pg. 706)
Chapter 15 Managerial Accounting Concepts and Cost Flows (pg. 708)
Key Objectives of a Managerial Accounting System (pg. 710)
Product Costing in a Manufacturing Environment (pg. 710)
Product Costing in a Service and Merchandising Environment (pg. 714)
Cost Control (pg. 714)
Your Turn! 15.1 (pg. 715)
Inventories and Cost Categories (pg. 715)
Inventories (pg. 715)
Manufacturing Product Cost Categories (pg. 716)
Product Cost Flows (pg. 718)
Raw Materials (pg. 718)
Labor (pg. 718)
Manufacturing Overhead (pg. 719)
Cost of Goods Manufactured (pg. 720)
Cost of Goods Sold (pg. 721)
Your Turn! 15.2 (pg. 721)
Illustration of Product Cost Accumulation (pg. 721)
Introduction of T-Accounts (pg. 721)
Real-World Manufacturing Example (pg. 722)
Schedule of Cost of Goods Manufactured (pg. 722)
Calculating Cost of Goods Sold (pg. 724)
Income Statement for a Manufacturing Firm (pg. 725)
Your Turn! 15.3 (pg. 725)
Illustration of Product Cost Journal Entries (pg. 725)
Cost Flows (pg. 727)
Financial Statements (pg. 729)
Your Turn! 15.4 (pg. 730)
Service Industry in Focus (pg. 731)
Comprehensive Problem (pg. 734)
Summary of Learning Objectives (pg. 735)
Key Terms (pg. 736)
Self-Study Questions (pg. 737)
Questions (pg. 737)
Short Exercises (pg. 738)
Exercises-Set A (pg. 740)
Exercises-Set B (pg. 743)
Problems-Set A (pg. 745)
Problems-Set B (pg. 748)
Extending Your Knowledge (pg. 750)
Answers to Self-Study Questions: (pg. 751)
Your Turn! Solutions (pg. 751)
Chapter 16 Cost Accounting Systems: Job Order Costing (pg. 754)
Cost Accounting Systems (pg. 756)
Two Basic Types of Cost Accounting Systems (pg. 756)
Timely Product Costing (pg. 757)
Your Turn! 16.1 (pg. 758)
Predetermined Overhead Rates (pg. 759)
Calculation of Predetermined Overhead Rate (pg. 759)
Your Turn! 16.2 (pg. 760)
Job Order Costing Systems (pg. 760)
Illustration of Job Order Costing for a Manufacturer (pg. 761)
Your Turn! 16.3 (pg. 766)
Illustration of Job Order Costing for a Service Firm (pg. 770)
Your Turn! 16.4 (pg. 771)
Accounting for Service Departments (pg. 771)
Service Departments as Cost Centers (pg. 772)
Service Department Costs as Product Costs (pg. 772)
Method of Cost Allocation (pg. 773)
Choosing an Allocation Basis (pg. 773)
Your Turn! 16.5 (pg. 775)
Departmental Overhead Rates (pg. 775)
Departmental Overhead Rates (pg. 775)
Your Turn! 16.6 (pg. 776)
Service Industry in Focus (pg. 776)
Comprehensive Problem (pg. 777)
Summary of Learning Objectives (pg. 778)
Self-Study Questions (pg. 780)
Questions (pg. 781)
Short Exercises (pg. 782)
Exercises-Set A (pg. 784)
Exercises-Set B (pg. 786)
Problems-Set A (pg. 789)
Problems-Set B (pg. 794)
Extending Your Knowledge (pg. 798)
Answers to Self-Study Questions: (pg. 800)
Your Turn! Solutions (pg. 800)
Chapter 17 Cost Accounting Systems: Process Costing (pg. 802)
Introduction to Process Costing (pg. 804)
Job Order Costing Review (pg. 804)
Process Costing (pg. 805)
Characteristics of Process Costing (pg. 806)
Manufacturing Departments (pg. 807)
Basic Processing Patterns (pg. 807)
Process Costing Steps (pg. 808)
Step 1: Visualize the Physical Flow of the Units (pg. 810)
Your Turn! 17.1 (pg. 811)
Step 2: Calculate the Equivalent Units (pg. 811)
Your Turn! 17.2 (pg. 813)
Step 3: Determine the Per-Unit Costs (pg. 813)
Your Turn! 17.3 (pg. 814)
Step 4: Calculate the Cost of Goods Manufactured (pg. 814)
Your Turn! 17.4 (pg. 815)
Step 5: Calculate the Cost of Ending Work-in-Process Inventory (pg. 815)
Your Turn! 17.5 (pg. 815)
The Product Cost Report (pg. 816)
Companies with Multiple Production Processes (pg. 817)
Journal Entries Illustrated (pg. 817)
Materials (pg. 817)
Labor (pg. 818)
Manufacturing Overhead (pg. 818)
Your Turn! 17.6 (pg. 818)
Service Industry in Focus (pg. 819)
Comprehensive Problem (Including Transferred-in Costs) (pg. 820)
Appendix 17A: Process Costing Using FIFO Method (pg. 822)
Process Costing Steps (pg. 822)
Your Turn! 17.7 (pg. 824)
Your Turn! 17.8 (pg. 827)
Your Turn! 17.9 (pg. 828)
Your Turn! 17.10 (pg. 829)
Your Turn! 17.11 (pg. 829)
The Product Cost Report (pg. 829)
Journal Entries Illustrated (pg. 831)
Your Turn! 17.12 (pg. 832)
Summary of Learning Objectives (pg. 832)
Key Terms (pg. 834)
Self-Study Questions (pg. 834)
Questions (pg. 835)
Short Exercises (pg. 835)
Exercises-Set A (pg. 837)
Exercises-Set B (pg. 840)
Problems-Set A (pg. 842)
Problems-Set B (pg. 846)
Extending Your Knowledge (pg. 849)
ANSWERS TO Self-Study Questions: (pg. 850)
Your Turn! Solutions (pg. 850)
Chapter 18 Activity-Based Costing (pg. 856)
Understanding Indirect Costs Using Activity-Based Costing (pg. 858)
Changing Cost Environment (pg. 859)
Activity-Based Costing (pg. 860)
ABC Product Costing Model (pg. 861)
Your Turn! 18.1 (pg. 863)
Traditional Product Costing and ABC Compared (pg. 863)
Applying Overhead with Activity-Based Costing (pg. 864)
Limitations of ABC Illustration (pg. 867)
Comparing Traditional and Activity-Based Costing (pg. 867)
Your Turn! 18.2 (pg. 867)
ABC Implementation Issues (pg. 868)
Your Turn! 18.3 (pg. 869)
ABC and Customer Profitability Analysis (pg. 869)
Customer Profitability Profile (pg. 869)
Your Turn! 18.4 (pg. 872)
Activity-Based Management (pg. 872)
Your Turn! 18.5 (pg. 873)
Services Industry in Focus (pg. 873)
Customer Profitability Analysis (pg. 873)
Summary of Learning Objectives (pg. 874)
Key Terms (pg. 876)
Self-Study Questions (pg. 876)
Questions (pg. 877)
Short Exercises (pg. 877)
Exercises-Set A (pg. 881)
ExerciseS-Set B (pg. 884)
Problems-Set A (pg. 887)
Problems-Set B (pg. 892)
Extending Your Knowledge (pg. 898)
Answers to Self-Study Questions: (pg. 899)
Your Turn! Solutions (pg. 899)
Chapter 19 Cost-Volume-Profit Relationships (pg. 900)
Cost Behavior Analysis (pg. 902)
Selecting the Activity Basis (pg. 902)
Cost-Volume Graphs (pg. 903)
Classifications of Cost Behavior Patterns (pg. 904)
Your Turn! 19.1 (pg. 905)
Relevant Range (pg. 905)
Your Turn! 19.2 (pg. 906)
Analyzing Cost Behavior (pg. 906)
Scattergraph Method (pg. 907)
High-Low Method (pg. 907)
Least Squares Regression Method (pg. 909)
Analyzing Costs in Practice (pg. 910)
Your Turn! 19.3 (pg. 911)
Cost-Volume-Profit (CVP) Analysis (pg. 912)
Break-Even Analysis (pg. 912)
Your Turn! 19.4 (pg. 914)
Contribution Margin Analysis (pg. 914)
Your Turn! 19.5 (pg. 917)
Planning For Profit (pg. 917)
Desired Profit (pg. 917)
Margin of Safety (pg. 919)
Operating Leverage (pg. 919)
Using Cost-Volume-Profit Relationships (pg. 923)
Break-Even Analysis and Multiple Products (pg. 925)
Cost-Volume-Profit Analysis for Retail Businesses (pg. 925)
Your Turn! 19.6 (pg. 927)
Service Industry in Focus (pg. 927)
Comprehensive Problem (pg. 929)
Summary of Learning Objectives (pg. 930)
Key Terms (pg. 932)
Self-Study Questions (pg. 933)
Questions (pg. 933)
Short Exercises (pg. 934)
Exercises-Set A (pg. 935)
Exercises-Set B (pg. 938)
Problems-Set A (pg. 942)
Problems-Set B (pg. 946)
Extending Your Knowledge (pg. 951)
Answers to Self-Study Questions: (pg. 951)
Your Turn! Solutions (pg. 951)
Chapter 20 Variable Costing: A Tool for Decision Making (pg. 954)
Treatment of Product Costs (pg. 956)
Absorption Costing (pg. 956)
Variable Costing (pg. 956)
Appropriate Use of Absorption Costing and Variable Costing (pg. 958)
Your Turn! 20.1 (pg. 958)
Variable Costing Income Statement (pg. 958)
Income Statement Preparation (pg. 958)
Your Turn! 20.2 (pg. 961)
Income Reconciliation (pg. 961)
Your Turn! 20.3 (pg. 962)
Advantages and Disadvantages of Variable Costing (pg. 963)
Advantages (pg. 964)
Disadvantages (pg. 964)
Your Turn! 20.4 (pg. 964)
Services Industry in Focus (pg. 964)
Comprehensive Problem (pg. 966)
Summary of Learning Objectives (pg. 967)
Key Terms (pg. 968)
Self-Study Questions (pg. 969)
Questions (pg. 969)
Short Exercises (pg. 969)
Exercises-Set A (pg. 971)
Exercises-Set B (pg. 972)
Problems-Set A (pg. 973)
Problems-Set B (pg. 975)
Extending Your Knowledge (pg. 977)
Answers to Self-Study Questions: (pg. 977)
Your Turn! Solutions (pg. 977)
Chapter 21 Relevant Costs and Short-Term Decision Making (pg. 978)
Management and the Decision-Making Process (pg. 980)
Who Makes Decisions? (pg. 980)
Phases of Decision Making (pg. 982)
Relevant Costs and Differential Analysis (pg. 983)
Your Turn! 21.1 (pg. 985)
Illustrations of Differential Analysis (pg. 985)
The Special Order (pg. 985)
Your Turn! 21.2 (pg. 987)
Make or Buy? (pg. 987)
Your Turn! 21.3 (pg. 988)
Dropping Unprofitable Segments (pg. 989)
Your Turn! 21.4 (pg. 990)
Sell or Process Further? (pg. 990)
Your Turn! 21.5 (pg. 994)
Constrained Resources (pg. 994)
Your Turn! 21.6 (pg. 997)
Service Industry in Focus (pg. 997)
Summary of Learning Objectives (pg. 998)
Key Terms (pg. 999)
Self-Study Questions (pg. 1000)
Questions (pg. 1000)
Short Exercises (pg. 1001)
Exercises-Set A (pg. 1004)
Exercises-Set B (pg. 1007)
Problems-Set A (pg. 1009)
Problems-Set B (pg. 1012)
Extending Your Knowledge (pg. 1015)
Answers to Self-Study Questions: (pg. 1017)
Your Turn! Solutions (pg. 1017)
Chapter 22 Planning and Budgeting (pg. 1020)
The Planning Process (pg. 1022)
Strategic Planning (pg. 1023)
Operational Planning (pg. 1024)
Progress Measurement and Reporting (pg. 1025)
Your Turn! 22.1 (pg. 1025)
The Budgeting Process (pg. 1025)
Advantages of Budgeting (pg. 1026)
Elements of Effective Budgeting (pg. 1026)
Zero-Based Budgeting (pg. 1027)
Your Turn! 22.2 (pg. 1029)
The Framework of the Master Budget (pg. 1029)
Your Turn! 22.3 (pg. 1030)
Illustration of a Master Budget and its Components (pg. 1030)
Sales Budget (pg. 1030)
Production Budget (pg. 1031)
Direct Materials Budget (pg. 1032)
Direct Labor Budget (pg. 1033)
Manufacturing Overhead Budget (pg. 1034)
Selling and Administrative Expense Budget (pg. 1035)
Capital Expenditures Budget (pg. 1036)
Cash Budget (pg. 1037)
Illustration of a Service Firm’s Budgets (pg. 1037)
Your Turn! 22.4 (pg. 1040)
Budgeted Financial Statements (pg. 1040)
Your Turn! 22.5 (pg. 1043)
Services Industry in Focus (pg. 1043)
Comprehensive Problem (pg. 1045)
Summary of Learning Objectives (pg. 1047)
Key Terms (pg. 1049)
Self-Study Questions (pg. 1050)
Questions (pg. 1050)
Short Exercises (pg. 1051)
Exercises-Set A (pg. 1053)
Exercises-Set B (pg. 1055)
Problems-Set A (pg. 1058)
Problems-Set B (pg. 1060)
Answers to Self-Study Questions: (pg. 1064)
Your Turn! Solutions (pg. 1065)
Chapter 23 Standard Costing and Variance Analysis (pg. 1066)
Standard Costs (pg. 1068)
Uses of Standard Cost Accounting (pg. 1069)
Your Turn! 23.1 (pg. 1070)
Determining Standard Costs (pg. 1070)
Direct Materials Standards (pg. 1070)
Direct Labor Standards (pg. 1071)
Variable Overhead Standards (pg. 1071)
Total Standard Costs (pg. 1072)
Cost Variances (pg. 1073)
Your Turn! 23.2 (pg. 1074)
Direct Materials Variances (pg. 1074)
Fezzari’s Direct Materials Variances (pg. 1076)
Your Turn! 23.3 (pg. 1078)
Direct Labor Variances (pg. 1078)
Fezzari’s Direct Labor Variances (pg. 1080)
Your Turn! 23.4 (pg. 1081)
Variable Overhead Variances (pg. 1081)
Fezzari’s Variable Overhead Variances (pg. 1082)
Your Turn! 23.5 (pg. 1083)
Standard Costs In Financial Statements (pg. 1083)
Your Turn! 23.6 (pg. 1084)
Services Industry in Focus (pg. 1084)
Appendix 23A: Cost Variance Journal Entries Illustrated (pg. 1085)
Journal Entries Illustrated (pg. 1085)
Your Turn! 23.7 (pg. 1087)
Comprehensive Problem (pg. 1089)
Summary of Learning Objectives (pg. 1089)
Key Terms (pg. 1091)
Self-Study Questions (pg. 1091)
Questions (pg. 1091)
Short Exercises (pg. 1092)
Exercises-Set A (pg. 1093)
Exercises-Set B (pg. 1094)
Problems-Set A (pg. 1096)
Problems-Set B (pg. 1097)
Answers to Self-Study Questions: (pg. 1101)
Your Turn! Solutions (pg. 1101)
Chapter 24 Flexible Budgets, Segment Reporting, and Performance Analysis (pg. 1104)
Static Budgets (pg. 1106)
Your Turn! 24.1 (pg. 1107)
Flexible Budgets (pg. 1107)
Flexible Budgets in a Manufacturing Environment (pg. 1108)
Flexible Budgets in a Service Environment (pg. 1110)
Your Turn! 24.2 (pg. 1113)
Internal Reporting of Segment Operations (pg. 1114)
Decentralized Organizations (pg. 1114)
Segment Reporting (pg. 1114)
Types of Business Segments (pg. 1115)
Your Turn! 24.3 (pg. 1116)
Performance Reporting (pg. 1117)
Departmental Operations (pg. 1117)
Contribution Margin Income Statement (pg. 1117)
Segment Performance Evaluation (pg. 1119)
Service Company Segment Reporting Illustration (pg. 1119)
Office Margin (pg. 1120)
Your Turn! 24.4 (pg. 1123)
Performance Analysis (pg. 1123)
Return on Investment (pg. 1124)
Profit Margin (pg. 1125)
Asset Turnover (pg. 1125)
Residual Income (pg. 1126)
Balanced Scorecard (pg. 1127)
Your Turn! 24.5 (pg. 1127)
Your Turn! 24.6 (pg. 1127)
Service Industry in Focus (pg. 1128)
APPENDIX 11A: Transfer Pricing (pg. 1130)
Domestic Transfer Pricing (pg. 1130)
International Transfer Pricing (pg. 1137)
Comprehensive Problem (pg. 1137)
Summary of Learning Objectives (pg. 1138)
Key Terms (pg. 1141)
Self-Study Questions (pg. 1141)
Questions (pg. 1142)
Short Exercises (pg. 1143)
Exercises-Set A (pg. 1145)
Exercises-Set B (pg. 1146)
Problems-Set A (pg. 1148)
Problems-Set B (pg. 1152)
Extending Your Knowledge (pg. 1155)
Chapter 25 Capital Budgeting (pg. 1158)
Elements of Capital Budgeting (pg. 1160)
Capital Budgeting Phases (pg. 1160)
Capital Expenditure Analysis (pg. 1161)
Your Turn! 25.1 (pg. 1162)
Required Rates of Return and the Time Value of Money (pg. 1162)
Cost of Capital (pg. 1162)
Time Value of Money (pg. 1163)
Your Turn! 25.2 (pg. 1165)
Performing Net Present Value Calculations (pg. 1165)
Single-Sum Cash Flows (pg. 1165)
Annuity Cash Flows (pg. 1166)
Your Turn! 25.3 (pg. 1167)
Measurement of Investments and Returns (pg. 1167)
Cash Flows (pg. 1167)
After-Tax Cash Flows (pg. 1168)
Depreciation Tax Shield (pg. 1168)
Illustration of After-Tax Cash Flows (pg. 1169)
Summary of Concerns Underlying Capital Budgeting (pg. 1171)
Your Turn! 25.4 (pg. 1171)
Net Present Value Analysis (pg. 1171)
Basic Steps (pg. 1171)
Illustration of Net Present Value (NPV) Analysis (pg. 1172)
Liquidation Proceeds (pg. 1176)
Excess Present Value Index (pg. 1177)
Your Turn! 25.5 (pg. 1177)
Other Capital Budgeting Analyses (pg. 1177)
Internal Rate of Return Analysis (pg. 1177)
Basic Steps (pg. 1178)
Your Turn! 25.6 (pg. 1179)
Cash Payback Analysis (pg. 1179)
Average Rate of Return Analysis (pg. 1181)
Capital Budgeting: A Complex Subject (pg. 1183)
Your Turn! 25.7 (pg. 1183)
Service Industry in Focus (pg. 1183)
Comprehensive Problem (pg. 1185)
Summary of Learning Objectives (pg. 1186)
Key Terms (pg. 1188)
Self-Study Questions (pg. 1188)
Questions (pg. 1189)
Short Exercises (pg. 1189)
Exercises-Set A (pg. 1191)
Exercises-Set B (pg. 1193)
Problems-Set A (pg. 1194)
Problems-Set B (pg. 1197)
Extending Your Knowledge (pg. 1199)
Appendix A Columbia Sportswear Company (pg. A-1)
Report of Independent Auditors (pg. A-2)
Financial Statements (pg. A-3)
Notes To Financial Statements (pg. A-7)
Earnings Per Share Data (pg. A-23)
Supplemental Information (pg. A-24)
Report on Internal Control (pg. A-26)
Appendix B Financial Statements for Under Armour (pg. B-1)
Appendix C Financial Statements for LVMH Moet Hennessy - Louis Vuitton (pg. C-1)
Appendix D Accounting for Investments and Consolidated Financial Statements (pg. D-1)
Investments (pg. D-2)
Investment Categories (pg. D-2)
Your Turn! D-1 (pg. D-3)
Investments in Debt Securities (pg. D-3)
Purchase (pg. D-4)
Recognition of Interest Income (pg. D-5)
Balance Sheet Valuation (pg. D-5)
Sale or Redemption at Maturity (pg. D-7)
Your Turn! D-2 (pg. D-8)
Investments in Equity Securities (pg. D-8)
Purchase (pg. D-8)
Recognition of Investment Income (pg. D-9)
Balance Sheet Valuation (pg. D-10)
Sale (pg. D-11)
Current and Noncurrent Classifications (pg. D-11)
Your Turn! D-3 (pg. D-12)
ParentSubsidiary Relationship (pg. D-12)
Consolidated Financial Statements (pg. D-12)
Limitations of Consolidated Statements (pg. D-13)
Summary of Learning Objectives (pg. D-13)
Key Terms (pg. D-14)
Self-Study Questions (pg. D-15)
Questions (pg. D-16)
Exercises-Set A (pg. D-17)
Exercises-Set B (pg. D-19)
Problems-Set A (pg. D-21)
Problems-Set B (pg. D-23)
Answers to Self-Study Questions: (pg. D-25)
Your Turn! Solutions (pg. D-25)
Appendix E Accounting and the Time Value of Money (pg. E-1)
Time Value of Money Concept (pg. E-2)
Time Value of Money: Simple Interest Model (pg. E-2)
Time Value of Money: Compound Interest Model (pg. E-2)
Your Turn! E-1 (pg. E-3)
Future Value of an Amount (pg. E-3)
Your Turn! E-2 (pg. E-5)
Future Value of an Annuity (pg. E-5)
Your Turn! E-3 (pg. E-6)
Present Value of an Amount (pg. E-7)
Your Turn! E-4 (pg. E-9)
Present Value of an Annuity (pg. E-9)
Your Turn! E-5 (pg. E-10)
Calculations Using a Calculator and a Spreadsheet (pg. E-10)
Summary of Learning Objectives (pg. E-11)
Key Terms (pg. E-11)
Self-Study Questions (pg. E-11)
Exercises-Set A (pg. E-12)
Exercises-Set B (pg. E-13)
Answers to Self-Study Questions: (pg. E-14)
Your Turn! Solutions (pg. E-15)
Appendix F Data Analytics and Blockchain Technology (pg. F-1)
Data Analytics (pg. F-2)
Data Analytics in the Accounting Profession (pg. F-3)
Blockchain Technology (pg. F-4)
Summary of Learning Objectives (pg. F-5)
Key Terms (pg. F-6)
Self-Study Questions (pg. F-6)
Exercises (pg. F-6)
Answers to Self-Study Questions: (pg. F-8)
Index (pg. I-1)
James S. Wallace

James S. Wallace

Associate Professor at The Peter F. Drucker and Masatoshi Ito Graduate School of Management at The Claremont Graduate University.

He received his Bachelors of Arts from the University of California, Santa Barbara, his MBA from the University of California, Davis, and his PhD from the University of Washington. Professor Wallace also holds a CPA certification from the state of California. He previously served on the faculty of the University of California, Irvine and has served as a visiting professor at the University of California, San Diego. Professor Wallace's work has appeared in leading academic journals including the Journal of Accounting and Economics, the Journal of Corporate Finance, and Information Systems Research, along with leading applied journals such as the Journal of Applied Corporate Finance, the Journal of Accountancy, Issues in Accounting Education and Accounting Horizons. Prior to his career in academics, Professor Wallace worked in public accounting and in industry with a Fortune 500 company. He has done consulting work with numerous companies in multiple industries.

Karen K. Nelson

Karen K. Nelson

M.J. Neeley Professor of Accounting at TCU. Former Harmon Whittington Professor of Accounting and past Accounting Area Coordinator at the Jones Graduate School of Business at Rice University.

Karen previously served on the faculty at Rice University, the Stanford University Graduate School of Business, and as a visiting professor at the University of Michigan. She earned her Ph.D. at the University of Michigan and a bachelor’s degree (summa cum laude) from the University of Colorado. She also holds a CPA license from the state of Colorado. Professor Nelson’s research focuses on financial reporting and disclosure issues, including the role of regulators, auditors, and private securities litigation in monitoring financial reporting quality. She has held research seminars at over 50 leading business schools in the U.S. and abroad, and published in a variety of leading academic journals including The Accounting Review, Journal of Accounting and Economics, Journal of Accounting, and Review of Accounting Studies. Her research has been featured in the financial press in publications such as The Wall Street Journal, Business Week, and Forbes. She is an active member of the American Accounting Association and serves on the Editorial Board of The Accounting Review. She has taught financial accounting at all levels, and her students have honored her with numerous awards for teaching excellence. She currently teaches intermediate accounting to undergraduates and financial accounting to MBAs. She is a member of the Standing Advisory Group of the Public Company Accounting Oversight Board.

Theodore E. Christensen

Theodore E. Christensen

Director and Terry Distinguished Chair of Business in the J.M. Tull School of Accounting at the University of Georgia (UGA).

Prior to coming to UGA, he was on the faculty at Brigham Young University from 2000-2015 and at Case Western Reserve University from 1995-2000. He was a visiting professor at the University of Michigan (2013-2014) and the University of Utah (2012) and has taught at Santa Clara University in a summer program since 2005. He received a B.S. degree in accounting from San Jose State University, an M.Acc. degree in tax from Brigham Young University, and a Ph.D. in accounting from the University of Georgia. Professor Christensen has authored and coauthored articles published in many journals, including The Accounting Review; the Journal of Accounting and Economics; the Journal of Accounting Research; Review of Accounting Studies; Contemporary Accounting Research; Accounting Organizations and Society; the Journal of Business Finance & Accounting; the Journal of Accounting, Auditing, and Finance; Accounting Horizons; and Issues in Accounting Education.

L. Scott Hobson

L. Scott Hobson

L. Scott Hobson is a teaching Professor of Accounting at Brigham Young University (BYU) since 2003.

He received his B.S. in Accounting and Master of Accountancy Degrees from BYU in 1983. Prior to his career in academics, Professor Hobson was the founder and the owner of Hilton Farnkopf & Hobson (now HFG Consultants), a management consulting firm headquartered in Walnut Creek, California, for 14 years. He also worked in public accounting at Price Waterhouse for 5.5 years in both audit and consulting. While at Price Waterhouse, he taught for 2 years as an adjunct faculty at San Jose University. He has taught accounting at all levels, from principles to M.B.A. courses, including managerial accounting, financial accounting, governmental and not-for-profit accounting, and management consulting. Professor Hobson is licensed as a CPA (inactive) in California. Professor Hobson has published a case titled "Managing the CPA Firm at Dodge Company" in Issues in Accounting Education.

Jason W. Matthews

Jason W. Matthews

Senior Lecturer of Accounting and Director of Undergraduate Programs in the J.M. Tull School of Accounting at the University of Georgia (UGA)

He received his B.S. from Missouri State University; his Master of Accountancy degree from North Carolina State University; and his Ph.D. from the University of Georgia. Prior to his career in academics, Dr. Matthews was the interim Chief Financial Officer at Roark Capital Group, a private equity firm with approximately $12 billion in equity capital based in Atlanta, Georgia. He was also the Director and Chief Financial Officer at United Coal Company, a producer of metallurgical and steam coal and the Director and Chief Financial Officer of Oculan Corporation, which developed hardware and software related to IT security management.  Dr. Matthews has taught across all levels at UGA, including financial accounting to full-time and Executive M.B.A. students, accounting information systems to MAcc students, cost accounting and audit to accounting majors, and introductory financial and managerial accounting to non-accounting majors. He is the recipient of numerous teaching awards, including most recently the 2018 Terry College of Business Instructional Excellence Award and the 2018 Pearcy B. Yeargin Outstanding Undergraduate Teacher of the Year award. He has been active in serving on committees in the Teaching Learning and Curriculum section of the American Accounting Association and is a CMA. 

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