1 Accounting in Action 1-1 Knowing the Numbers 1-1 1.1 Accounting Activities and Users 1-3 Who Uses Accounting Data 1-4 Data Analytics 1-5 1.2 The Building Blocks of Accounting 1-7 Ethics in Financial Reporting 1-7 Accounting Standards 1-8 Measurement Principles 1-9 Assumptions 1-9 1.3 The Accounting Equation 1-12 Assets 1-12 Liabilities 1-13 Equity 1-13 1.4 Analyzing Business Transactions 1-14 Accounting Transactions 1-15 Transaction Analysis 1-16 Summary of Transactions 1-21 1.5 Financial Statements 1-22 Income Statement 1-24 Retained Earnings Statement 1-24 Statement of Financial Position 1-24 Statement of Cash Flows 1-25 Comprehensive Income Statement 1-25 Appendix 1A: Career Opportunities in Accounting 1-27 Public Accounting 1-27 Private Accounting 1-28 Governmental Accounting 1-28 Forensic Accounting 1-28 A Look at U.S. GAAP 1-48 2 The Recording Process 2-1 Accidents Happen: Bank of Taiwan 2-1 2.

1 Accounts, Debits, and Credits 2-2 The Account 2-2 Debits and Credits 2-3 Equity Relationships 2-7 Summary of Debit/Credit Rules 2-7 2.2 The Journal 2-8 The Recording Process 2-8 The Journal 2-9 2.3 The Ledger and Posting 2-11 The Ledger 2-11 Posting 2-13 Chart of Accounts 2-14 The Recording Process Illustrated 2-14 Summary Illustration of Journalizing and Posting 2-20 2.4 The Trial Balance 2-22 Limitations of a Trial Balance 2-23 Locating Errors 2-23 Currency Signs and Underlining 2-23 A Look at U.S. GAAP 2-47 3 Adjusting the Accounts 3-1 What Was Your Profit? 3-1 3.1 Accrual-Basis Accounting and Adjusting Entries 3-2 Fiscal and Calendar Years 3-3 Accrual- versus Cash-Basis Accounting 3-3 Recognizing Revenues and Expenses 3-3 The Need for Adjusting Entries 3-6 Types of Adjusting Entries 3-6 3.2 Adjusting Entries for Deferrals 3-7 Prepaid Expenses 3-7 Unearned Revenues 3-11 3.

3 Adjusting Entries for Accruals 3-14 Accrued Revenues 3-14 Accrued Expenses 3-16 Summary of Basic Relationships 3-19 3.4 Adjusted Trial Balance and Financial Statements 3-22 Preparing the Adjusted Trial Balance 3-23 Preparing Financial Statements 3-23 Appendix 3A: Alternative Treatment of Deferrals 3-26 Prepaid Expenses 3-27 Unearned Revenues 3-28 Summary of Additional Adjustment Relationships 3-29 Appendix 3B: Financial Reporting Concepts 3-30 Qualities of Useful Information 3-30 Assumptions in Financial Reporting 3-31 Principles in Financial Reporting 3-31 Cost Constraint 3-32 A Look at U.S. GAAP 3-58 4 Completing the Accounting Cycle 4-1 Speaking the Same Language: IASB 4-1 4.1 The Worksheet 4-3 Steps in Preparing a Worksheet 4-3 Preparing Financial Statements from a Worksheet 4-11 Preparing Adjusting Entries from a Worksheet 4-12 4.2 Closing the Books 4-13 Preparing Closing Entries 4-13 Posting Closing Entries 4-15 Preparing a Post-Closing Trial Balance 4-17 4.3 The Accounting Cycle and Correcting Entries 4-20 Summary of the Accounting Cycle 4-20 Reversing Entries--An Optional Step 4-20 Correcting Entries--An Avoidable Step 4-20 4.4 Classified Statement of Financial Position 4-24 Intangible Assets 4-25 Property, Plant, and Equipment 4-26 Long-Term Investments 4-26 Current Assets 4-26 Equity 4-27 Non-Current Liabilities 4-27 Current Liabilities 4-28 Appendix 4A: Reversing Entries 4-30 Reversing Entries Example 4-30 A Look at U.

S. GAAP 4-59 5 Accounting for Merchandise Operations 5-1 Who Doesn''t Shop?: Carrefour 5-1 5.1 Merchandising Operations and Inventory Systems 5-3 Operating Cycles 5-3 Flow of Costs 5-4 5.2 Recording Purchases Under a Perpetual System 5-7 Freight Costs 5-8 Purchase Returns and Allowances 5-9 Purchase Discounts 5-10 Summary of Purchasing Transactions 5-11 5.3 Recording Sales Under a Perpetual System 5-11 Sales Returns and Allowances 5-13 Sales Discounts 5-14 Data Analytics and Credit Sales 5-15 5.4 The Accounting Cycle for a Merchandising Company 5-16 Adjusting Entries 5-16 Closing Entries 5-17 Summary of Merchandising Entries 5-17 5.5 Financial Statements for a Merchandiser 5-19 Income Statement 5-19 Classified Statement of Financial Position 5-23 Appendix 5A: Worksheet for a Merchandising Company 5-25 Using a Worksheet 5-25 Appendix 5B: Periodic Inventory System 5-26 Determining Cost of Goods Sold Under a Periodic System 5-27 Recording Merchandise Transactions 5-28 Recording Purchases of Merchandise 5-28 Recording Sales of Merchandise 5-29 Journalizing and Posting Closing Entries 5-29 Using a Worksheet 5-31 Appendix 5C: Adjusting Entries for Credit Sales with Returns and Allowances 5-33 Data Analytics in Action 5-54 A Look at U.S.

GAAP 5-58 6 Inventories 6-1 "Where Is That Spare Bulldozer Blade?": Komatsu 6-1 6.1 Classifying and Determining Inventory 6-2 Classifying Inventory 6-2 Determining Inventory Quantities 6-4 6.2 Inventory Methods and Financial Effects 6-7 Specific Identification 6-7 Cost Flow Assumptions 6-8 Financial Statement and Tax Effects of Cost Flow Methods 6-11 Using Inventory Cost Flow Methods Consistently 6-13 6.3 Effects of Inventory Errors 6-14 Income Statement Effects 6-14 Statement of Financial Position Effects 6-15 6.4 Inventory Statement Presentation and Analysis 6-16 Presentation 6-16 Lower of Cost or Net Realizable Value 6-16 Financial Analysis and Data Analytics 6-17 Appendix 6A: Inventory Cost Flow Methods in Perpetual Inventory Systems 6-21 First-In, First-Out (FIFO) 6-21 Average-Cost 6-22 Appendix 6B: Estimating Inventories 6-23 Gross Profit Method 6-23 Retail Inventory Method 6-24 Appendix 6C: LIFO Inventory Method 6-25 Data Analytics in Action 6-47 A Look at U.S. GAAP 6-50 7 Fraud, Internal Control, and Cash 7-1 Minding the Money at Nick''s: Nick''s Steakhouse and Pizza 7-1 7.1 Fraud and Internal Control 7-2 Fraud 7-3 Internal Control 7-3 Principles of Internal Control Activities 7-4 Data Analytics and Internal Controls 7-10 Limitations of Internal Control 7-10 7.

2 Cash Controls 7-11 Cash Receipts Controls 7-11 Cash Disbursements Controls 7-14 Petty Cash Fund 7-16 7.3 Control Features of a Bank Account 7-19 Making Bank Deposits 7-19 Writing Checks 7-20 Electronic Banking 7-21 Bank Statements 7-21 Reconciling the Bank Account 7-22 7.4 Reporting Cash 7-27 Cash Equivalents 7-27 Restricted Cash 7-28 Data Analytics in Action 7-46 A Look at U.S. GAAP 7-49 Appendix 9A: Exchange of Plant Assets 9-26 Loss Treatment 9-27 Gain Treatment 9-27 Data Analytics in Action 9-47 A Look at U.S. GAAP 9-50 8 Accounting for Receivables 8-1 Are You Going to Pay Me--or Not?: BNP Paribas 8-1 8.1 Recognition of Accounts Receivable 8-2 Types of Receivables 8-3 Recognizing Accounts Receivable 8-3 8.

2 Valuation and Disposition of Accounts Receivable 8-5 Valuing Accounts Receivable 8-5 Disposing of Accounts Receivable 8-12 8.3 Notes Receivable 8-15 Determining the Maturity Date 8-16 Computing Interest 8-16 Recognizing Notes Receivable 8-17 Valuing Notes Receivable 8-17 Disposing of Notes Receivable 8-17 8.4 Presentation and Analysis 8-20 Presentation 8-20 Analysis 8-20 Data Analytics and Receivables Management 8-21 Data Analytics in Action 8-38 A Look at U.S. GAAP 8-41 9 Plant Assets, Natural Resources, and Intangible Assets 9-1 How Much for a Ride to the Beach?: Rent-A-Wreck 9-1 9.1 Plant Asset Expenditures 9-2 Determining the Cost of Plant Assets 9-3 Expenditures During Useful Life 9-6 9.2 Depreciation Methods 9-7 Factors in Computing Depreciation 9-8 Depreciation Methods 9-9 Component Depreciation 9-13 Depreciation and Income Taxes 9-14 Revaluation of Plant Assets 9-14 Revising Periodic Depreciation 9-15 9.3 Plant Asset Disposals 9-16 Retirement of Plant Assets 9-17 Sale of Plant Assets 9-18 9.

4 Natural Resources and Intangible Assets 9-19 Natural Resources and Depletion 9-20 Intangible Assets 9-21 9.5 Statement Presentation and Analysis 9-25 Presentation 9-25 Analysis 9-26 10 Current Liabilities 10-1 Financing His Dreams: Wilbert Murdock 10-1 10.1 Accounting for Current Liabilities 10-2 What Is a Current Liability? 10-2 Notes Payable 10-3 Value-Added and Sales Taxes Payable 10-4 Unearned Revenues 10-5 Salaries and Wages 10-6 Current Maturities of Long-Term Debt 10-8 10.2 Reporting and Analyzing Current Liabilities 10-8 Reporting Uncertainty 10-8 Reporting of Current Liabilities 10-10 Analysis of Current Liabilities 10-11 A Look at U.S.