book

Financial Accounting: Tools for Business Decision Making, 7th Edition

Name: Financial Accounting: Tools for Business Decision Making, 7th Edition
ISBN: 9781118162286

by Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

October 2012

Beginner

880 pages

34h 3m

English

Wiley

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Cover Page
Title Page
Copyright
Brief Contents
From the Authors
Your Team for Success in Accounting
Author Commitment
The Wiley Faculty Network
WileyPLUS
What's New?

Content Changes by Chapter
Active Teaching and Learning Supplementary Material
Acknowledgments
Contents
Student success is a team effort.
Chapter 1: Introduction to Financial Statements
Knowing the NumbersForms of Business OrganizationUsers and Uses of Financial InformationInternal UsersExternal UsersEthics in Financial ReportingBusiness ActivitiesFinancing ActivitiesInvesting ActivitiesOperating ActivitiesCommunicating with UsersIncome StatementRetained Earnings StatementBalance SheetStatement of Cash FlowsInterrelationships of StatementsOther Elements of an Annual ReportA Look at IFRS
Chapter 2: A Further Look at Financial Statements
Just Fooling Around?The Classified Balance SheetCurrent AssetsLong-Term InvestmentsProperty, Plant, and EquipmentIntangible AssetsCurrent LiabilitiesLong-Term LiabilitiesStockholders’ EquityUsing the Financial StatementsRatio AnalysisUsing the Income StatementUsing the Statement of Stockholders’ EquityUsing a Classified Balance SheetKeeping an Eye on CashFinancial Reporting ConceptsThe Standard-Setting EnvironmentQualities of Useful InformationAssumptions in Financial ReportingPrinciples in Financial ReportingCost ConstraintA Look at IFRS
Chapter 3: The Accounting Information System
Accidents HappenThe Accounting Information SystemAccounting TransactionsAnalyzing TransactionsSummary of TransactionsThe AccountDebits and CreditsDebit and Credit ProceduresStockholders’ Equity RelationshipsSummary of Debit/Credit RulesSteps in the Recording ProcessThe JournalThe LedgerChart of AccountsPostingThe Recording Process IllustratedSummary Illustration of Journalizing and PostingThe Trial BalanceLimitations of a Trial BalanceKeeping an Eye on CashA Look at IFRS
Chapter 4: Accrual Accounting Concepts
Keeping Track of GrouponsTiming IssuesThe Revenue Recognition PrincipleThe Expense Recognition PrincipleAccrual versus Cash Basis of AccountingThe Basics of Adjusting EntriesTypes of Adjusting EntriesAdjusting Entries for DeferralsAdjusting Entries for AccrualsSummary of Basic RelationshipsThe Adjusted Trial Balance and Financial StatementsPreparing the Adjusted Trial BalancePreparing Financial StatementsQuality of EarningsClosing the BooksPreparing Closing EntriesPreparing a Post-Closing Trial BalanceSummary of the Accounting CycleKeeping an Eye on CashAPPENDIX 4A: Adjusting Entries in an Automated World—Using a WorksheetA Look at IFRS
Chapter 5: Merchandising Operations and the Multiple-Step Income Statement
Buy Now, Vote LaterMerchandising OperationsOperating CyclesFlow of CostsRecording Purchases of MerchandiseFreight CostsPurchase Returns and AllowancesPurchase DiscountsSummary of Purchasing TransactionsRecording Sales of MerchandiseSales Returns and AllowancesSales DiscountsIncome Statement PresentationSales RevenuesGross ProfitOperating ExpensesNonoperating ActivitiesDetermining Cost of Goods Sold Under a Periodic SystemEvaluating ProfitabilityGross Profit RateProfit MarginKeeping an Eye on CashAPPENDIX 5A: Periodic Inventory SystemRecording Merchandise TransactionsRecording Purchases of MerchandiseFreight CostsRecording Sales of MerchandiseComparison of Entries—Perpetual vs. PeriodicA Look at IFRS
Chapter 6: Reporting and Analyzing Inventory
“Where Is That Spare Bulldozer Blade?”Classifying and Determining InventoryClassifying InventoryDetermining Inventory QuantitiesInventory CostingSpecific IdentificationCost Flow AssumptionsFinancial Statement and Tax Effects of Cost Flow MethodsKeeping an Eye on CashUsing Inventory Cost Flow Methods ConsistentlyLower-of-Cost-or-MarketAnalysis of InventoryInventory TurnoverAnalysts' Adjustments for LIFO ReserveAPPENDIX 6A: Inventory Cost Flow Methods in Perpetual Inventory SystemsFirst-In, First-Out (FIFO)Last-In, First-Out (LIFO)Average-CostAPPENDIX 6B: Inventory ErrorsIncome Statement EffectsBalance Sheet EffectsA Look at IFRS
Chapter 7: Fraud, Internal Control, and Cash
Minding the Money in Moose JawFraud and Internal ControlFraudThe Sarbanes-Oxley ActInternal ControlPrinciples of Internal Control ActivitiesLimitations of Internal ControlCash ControlsCash Receipts ControlsCash Disbursements ControlsControl Features: Use of a BankBank StatementsReconciling the Bank AccountReporting CashCash EquivalentsRestricted CashManaging and Monitoring CashBasic Principles of Cash ManagementKeeping an Eye on CashAPPENDIX 7A: Operation of the Petty Cash FundEstablishing the Petty Cash FundMaking Payments from Petty CashReplenishing the Petty Cash FundA Look at IFRS
Chapter 8: Reporting and Analyzing Receivables
What's Cooking?Types of ReceivablesAccounts ReceivableRecognizing Accounts ReceivableValuing Accounts ReceivableNotes ReceivableDetermining the Maturity DateComputing InterestRecognizing Notes ReceivableValuing Notes ReceivableDisposing of Notes ReceivableFinancial Statement Presentation of ReceivablesManaging ReceivablesExtending CreditEstablishing a Payment PeriodMonitoring CollectionsEvaluating Liquidity of ReceivablesAccelerating Cash ReceiptsKeeping an Eye on CashA Look at IFRS
Chapter 9: Reporting and Analyzing Long-Lived Assets
A Tale of Two AirlinesPlant AssetsDetermining the Cost of Plant AssetsTo Buy or Lease?Accounting for Plant AssetsDepreciationFactors in Computing DepreciationDepreciation MethodsRevising Periodic DepreciationExpenditures During Useful LifeImpairmentsPlant Asset DisposalsAnalyzing Plant AssetsReturn on AssetsAsset TurnoverProfit Margin RevisitedIntangible AssetsAccounting for Intangible AssetsTypes of Intangible AssetsFinancial Statement Presentation of Long-Lived AssetsKeeping an Eye on CashAPPENDIX 9A: Calculation of Depreciation Using Other MethodsDeclining-BalanceUnits-of-ActivityA Look at IFRS
Chapter 10: Reporting and Analyzing Liabilities
And Then There Were TwoCurrent LiabilitiesWhat Is a Current Liability?Notes PayableSales Taxes PayableUnearned RevenuesCurrent Maturities of Long-Term DebtPayroll and Payroll Taxes PayableBonds: Long-Term LiabilitiesTypes of BondsIssuing ProceduresDetermining the Market Price of BondsAccounting for Bond IssuesIssuing Bonds at Face ValueDiscount or Premium on BondsIssuing Bonds at a DiscountIssuing Bonds at a PremiumAccounting for Bond RedemptionsRedeeming Bonds at MaturityRedeeming Bonds before MaturityFinancial Statement Presentation and AnalysisBalance Sheet PresentationKeeping an Eye on CashAnalysisOff-Balance-Sheet FinancingAPPENDIX 10A: Straight-Line AmortizationAmortizing Bond DiscountAmortizing Bond PremiumAPPENDIX 10B: Effective-Interest AmortizationAmortizing Bond DiscountAmortizing Bond PremiumAPPENDIX 10C: Accounting for Long-Term Notes PayableA Look at IFRS
Chapter 11: Reporting and Analyzing Stockholders' Equity
Oh Well, I Guess I'll Get RichThe Corporate Form of OrganizationCharacteristics of a CorporationForming a CorporationStockholder RightsStock Issue ConsiderationsAuthorized StockIssuance of StockPar and No-Par Value StocksAccounting for Issues of Common StockAccounting for Treasury StockPurchase of Treasury StockPreferred StockDividend PreferencesLiquidation PreferenceDividendsCash DividendsStock DividendsStock SplitsRetained EarningsRetained Earnings RestrictionsFinancial Statement Presentation of Stockholders' EquityBalance Sheet PresentationKeeping an Eye on CashMeasuring Corporate PerformanceDividend RecordEarnings PerformanceDebt versus Equity DecisionAPPENDIX 11A: Entries for Stock DividendsA Look at IFRS
Chapter 12: Statement of Cash Flows
Got Cash?The Statement of Cash Flows: Usefulness and FormatUsefulness of the Statement of Cash FlowsClassification of Cash FlowsSignificant Noncash ActivitiesFormat of the Statement of Cash FlowsThe Corporate Life CyclePreparing the Statement of Cash FlowsIndirect and Direct MethodsPreparation of the Statement of Cash Flows—Indirect MethodStep 1: Operating ActivitiesSummary of Conversion to Net Cash Provided by Operating Activities—Indirect MethodsStep 2: Investing and Financing ActivitiesStep 3: Net Change in CashUsing Cash Flows to Evaluate a CompanyFree Cash FlowKeeping an Eye on CashAssessing Liquidity and Solvency Using Cash FlowsAPPENDIX 12A: Statement of Cash Flows—Direct MethodStep 1: Operating ActivitiesStep 2: Investing and Financing ActivitiesStep 3: Net Change in CashAPPENDIX 12B: Statement of Cash Flows—T-Account ApproachA Look at IFRS
Chapter 13: Financial Analysis: The Big Picture
It Pays to Be PatientSustainable IncomeIrregular ItemsChanges in Accounting PrincipleComprehensive IncomeConcluding RemarksComparative AnalysisHorizontal AnalysisVertical AnalysisRatio AnalysisLiquidity RatiosSolvency RatiosProfitability RatiosQuality of EarningsAlternative Accounting MethodsPro Forma IncomeImproper RecognitionPrice-Earnings RatioAPPENDIX 13A: Comprehensive Illustration of Ratio AnalysisLiquidity RatiosSolvency RatiosProfitability RatiosA Look at IFRS
Appendix A: Specimen Financial Statements: Tootsie Roll Industries, Inc.
The Annual ReportLetter to the StockholdersFinancial HighlightsManagement Discussion and AnalysisFinancial Statements and Accompanying NotesAuditor's Report
Appendix B: Specimen Financial Statements: The Hershey Company
Appendix C: Specimen Financial Statements: Zetar plc
Appendix D: Time Value of Money
Nature of InterestSimple InterestCompound InterestFuture Value ConceptsFuture Value of a Single AmountFuture Value of an AnnuityPresent Value ConceptsPresent Value VariablesPresent Value of a Single AmountPresent Value of an AnnuityTime Periods and DiscountingComputing the Present Value of a Long-Term Note or BondUsing Financial CalculatorsPresent Value of a Single SumPresent Value of an AnnuityUseful Applications of the Financial Calculator
Appendix E: Reporting and Analyzing Investments
Why Corporations InvestAccounting for Debt InvestmentsRecording Acquisition of BondsRecording Bond InterestRecording Sale of BondsAccounting for Stock InvestmentsHoldings of Less Than 20%Holdings Between 20% and 50%Holdings of More Than 50%Valuing and Reporting InvestmentsCategories of SecuritiesBalance Sheet PresentationPresentation of Realized and Unrealized Gain or LossStatement of Cash Flows Presentation
Company Index
Subject Index

Content preview from Financial Accounting: Tools for Business Decision Making, 7th Edition

CHAPTER 5 MERCHANDISING OPERATIONS AND THE MULTIPLE-STEP INCOME STATEMENT

LEARNING OBJECTIVES

After studying this chapter, you should be able to:

Identify the differences between a service company and a merchandising company.
Explain the recording of purchases under a perpetual inventory system.
Explain the recording of sales revenues under a perpetual inventory system.
Distinguish between a single-step and a multiple-step income statement.
Determine cost of goods sold under a periodic system.
Explain the factors affecting profitability.
Identify a quality of earnings indicator.

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Financial Accounting: Tools for Business Decision Making, 7th Edition

by Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

CHAPTER 5

MERCHANDISING OPERATIONS AND THE MULTIPLE-STEP INCOME STATEMENT

BUY NOW, VOTE LATER

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.