1 Accounting in Action 1-1 Knowing the Numbers: Columbia Sportswear 1-1 1.1 Accounting Activities and Users 1-3 Three Activities 1-3 Data Analytics 1-4 Who Uses Accounting Data 1-5 1.2 The Building Blocks of Accounting 1-7 Ethics in Financial Reporting 1-8 Generally Accepted Accounting Principles 1-9 Measurement Principles 1-10 Assumptions 1-10 1.3 The Accounting Equation 1-13 Assets 1-13 Liabilities 1-13 Stockholders'' Equity 1-14 1.4 Analyzing Business Transactions 1-15 Accounting Transactions 1-16 Transaction Analysis 1-17 Summary of Transactions 1-21 1.5 The Four Financial Statements 1-22 Income Statement 1-23 Retained Earnings Statement 1-25 Balance Sheet 1-25 Statement of Cash Flows 1-25 Financial Statements: Order of Preparation 1-26 ESG Reporting: Beyond the Four Financial Statements 1-27 Appendix 1A: Career Opportunities in Accounting 1-28 Public Accounting 1-29 Private Accounting 1-29 Governmental Accounting 1-29 Forensic Accounting 1-30 "Show Me the Money" 1-30 2 The Recording Process 2-1 Accidents Happen: MF Global Holdings 2-1 2.1 Accounts, Debits, and Credits 2-3 Debits and Credits 2-3 Debit and Credit Procedures 2-4 Stockholders'' Equity Relationships 2-7 Summary of Debit/Credit Rules 2-8 2.2 The Journal 2-9 The Recording Process 2-9 The Journal 2-10 2.

3 The Ledger and Posting 2-12 The Ledger 2-12 Posting 2-14 Chart of Accounts 2-15 The Recording Process Illustrated 2-16 Summary Illustration of Journalizing and Posting 2-22 2.4 The Trial Balance 2-24 Limitations of a Trial Balance 2-25 Locating Errors 2-25 Dollar Signs and Underlining 2-25 3 Adjusting the Accounts 3-1 Keeping Track of Groupons: Groupon 3-1 3.1 Accrual-Basis Accounting and Adjusting Entries 3-2 Fiscal and Calendar Years 3-3 Accrual- versus Cash-Basis Accounting 3-4 Recognizing Revenues and Expenses 3-4 The Need for Adjusting Entries 3-6 Types of Adjusting Entries 3-7 3.2 Adjusting Entries for Deferrals 3-8 Prepaid Expenses 3-8 Unearned Revenues 3-13 3.3 Adjusting Entries for Accruals 3-16 Accrued Revenues 3-17 Accrued Expenses 3-18 Summary of Basic Relationships 3-22 3.4 Adjusted Trial Balance and Financial Statements 3-24 Preparing the Adjusted Trial Balance 3-25 Preparing Financial Statements 3-25 Appendix 3A: Adjusting Entries for the Alternative Treatment of Deferrals 3-28 Prepaid Expenses 3-29 Unearned Revenues 3-30 Summary of Additional Adjustment Relationships 3-31 Appendix 3B: Financial Reporting Concepts 3-31 Qualities of Useful Information 3-32 Assumptions in Financial Reporting 3-33 Principles in Financial Reporting 3-33 Cost Constraint 3-34 4 Completing the Accounting Cycle 4-1 Everyone Likes to Win: Rhino Foods 4-1 4.1 The Worksheet 4-3 Steps in Preparing a Worksheet 4-4 Preparing Financial Statements from a Worksheet 4-6 Preparing Adjusting Entries from a Worksheet 4-8 4.2 Closing the Books 4-8 Preparing Closing Entries 4-9 Posting Closing Entries 4-11 Preparing a Post-Closing Trial Balance 4-12 4.

3 The Accounting Cycle and Correcting Entries 4-15 Summary of the Accounting Cycle 4-15 Reversing Entries--An Optional Step 4-15 Correcting Entries--An Avoidable Step 4-15 4.4 The Classified Balance Sheet 4-19 Current Assets 4-19 Long-Term Investments 4-21 Property, Plant, and Equipment 4-21 Intangible Assets 4-22 Current Liabilities 4-23 Long-Term Liabilities 4-24 Stockholders'' (Owners'') Equity 4-24 Appendix 4A: Reversing Entries 4-25 Reversing Entries Example 4-26 5 Accounting for Merchandising Operations 5-1 Buy Now, Vote Later: REI 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 Preparing the Multiple-Step Income Statement 5-19 Multiple-Step Income Statement 5-19 Single-Step Income Statement 5-22 Classified Balance Sheet 5-22 Appendix 5A: Merchandising Company Worksheet 5-24 Using a Worksheet 5-24 Appendix 5B: Periodic Inventory System 5-25 Determining Cost of Goods Sold Under a Periodic System 5-26 Recording Merchandise Transactions 5-27 Recording Purchases of Merchandise 5-27 Recording Sales of Merchandise 5-28 Journalizing and Posting Closing Entries 5-29 Using a Worksheet 5-30 Data Analytics in Action 5-54 6 Inventories 6-1 "Where Is That Spare Bulldozer Blade?": Caterpillar 6-1 6.1 Classifying and Determining Inventory 6-2 Classifying Inventory 6-3 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 6-13 Using Inventory Cost Flow Methods Consistently 6-15 6.3 Effects of Inventory Errors 6-17 Income Statement Effects 6-17 Balance Sheet Effects 6-18 6.4 Inventory Presentation and Analysis 6-19 Presentation 6-19 Lower-of-Cost-or-Net Realizable Value 6-19 Financial Analysis and Data Analytics 6-20 Appendix 6A: Inventory Cost Flow Methods in Perpetual Inventory Systems 6-24 First-In, First-Out (FIFO) 6-24 Last-In, First-Out (LIFO) 6-25 Average-Cost 6-25 Appendix 6B: Estimating Inventories 6-26 Gross Profit Method 6-27 Retail Inventory Method 6-27 Data Analytics in Action 6-50 7 Fraud, Internal Control, and Cash 7-1 Minding the Money in Madison: Barriques 7-2 7.1 Fraud and Internal Control 7-3 Fraud 7-3 The Sarbanes-Oxley Act 7-3 Internal Control 7-4 Principles of Internal Control Activities 7-5 Data Analytics and Internal Controls 7-10 Limitations of Internal Control 7-11 7.2 Cash Controls 7-12 Cash Receipts Controls 7-12 Cash Disbursements Controls 7-15 Petty Cash Fund 7-16 7.3 Control Features of a Bank Account 7-19 Making Bank Deposits 7-20 Writing Checks 7-20 Electronic Banking 7-21 Bank Statements 7-22 Reconciling the Bank Account 7-23 7.4 Reporting Cash 7-28 Cash Equivalents 7-29 Restricted Cash 7-29 Data Analytics in Action 7-49 8 Accounting for Receivables 8-1 What''s Cooking?: Nike 8-1 8.1 Recognition of Accounts Receivable 8-3 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 8-13 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 of Receivables 8-20 Presentation 8-20 Analysis 8-21 Data Analytics and Receivables Management 8-22 Data Analytics in Action 8-42 9 Plant Assets, Natural Resources, and Intangible Assets 9-1 A Tale of Two Airlines: American Airlines 9-1 9.1 Plant Asset Expenditures 9-3 Determining the Cost of Plant Assets 9-3 Expenditures During Useful Life 9-6 9.2 Depreciation Methods 9-8 Factors in Computing Depreciation 9-9 Depreciation Methods 9-9 Depreciation and Income Taxes 9-16 Revising Periodic Depreciation 9-16 Impairments 9-17 9.3 Plant Asset Disposals 9-18 Sale of Plant Assets 9-18 Retirement of Plant Assets 9-20 9.4 Natural Resources and Intangible Assets 9-21 Natural Resources 9-21 Depletion 9-21 Intangible Assets 9-22 Accounting for Intangible Assets 9-23 Types of Intangible Assets 9-23 Research and Development Costs 9-26 9.5 Statement Presentation and Analysis 9-27 Presentation 9-27 Analysis 9-28 Appendix 9A: Exchange of Plant Assets 9-29 Loss Treatment 9-29 Gain Treatment 9-30 Data Analytics in Action 9-51 10 Liabilities 10-1 And Then There Were Two: Maxwell Car Company 10-1 10.

1 Accounting for Current Liabilities 10-3 What Is a Current Liability? 10-3 Notes Payable 10-3 Sales Taxes Payable 10-4 Unearned Revenues 10-5 Current Maturities of Long-Term Debt 10-6 Payroll and Payroll Taxes Payable 10-6 10.2 Characteristics of Bonds 10-9 Types of Bonds 10-9 Issuing Procedures 10-10 Bond Trading 10-10 Determining the Market Price of a Bond 10-11 10.3 Accounting for Bond Transactions 10-14 Issuing Bonds at.