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Table of Contents

    • About the Authors
    • Acknowledgments
    • Preface
    • 1What Is Financial Accounting, and Why Is It Important?
      • 1.1Making Good Financial Decisions about an Organization
      • 1.2Incorporation and the Trading of Capital Shares
      • 1.3Using Financial Accounting for Wise Decision Making
      • 1.4End-of-Chapter Exercises
    • 2What Should Decision Makers Know in Order to Make Good Decisions about an Organization?

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      • 2.1Creating a Portrait of an Organization That Can Be Used by Decision Makers

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      • 2.2Dealing with Uncertainty

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      • 2.3The Need for Accounting Standards

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      • 2.4Four Essential Terms Encountered in Financial Accounting

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      • 2.5End-of-Chapter Exercises

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    • 3How Is Financial Information Delivered to Decision Makers Such as Investors and Creditors?

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      • 3.1Construction of Financial Statements Beginning with the Income Statement

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      • 3.2Reported Profitability and the Impact of Conservatism

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      • 3.3Increasing the Net Assets of a Company

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      • 3.4Reporting a Balance Sheet and a Statement of Cash Flows

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      • 3.5End-of-Chapter Exercises

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    • 4How Does an Organization Accumulate and Organize the Information Necessary to Create Financial Statements?

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      • 4.1The Essential Role of Transaction Analysis

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      • 4.2Understanding the Effects Caused by Common Transactions

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      • 4.3Double-Entry Bookkeeping

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      • 4.4Recording Transactions Using Journal Entries

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      • 4.5Connecting the Journal to the Ledger

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      • 4.6End-of-Chapter Exercises

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    • 5Why Is Financial Information Adjusted Prior to the Production of Financial Statements?

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      • 5.1The Need for Adjusting Entries

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      • 5.2Preparing Various Adjusting Entries

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      • 5.3Preparation of Financial Statements

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      • 5.4End-of-Chapter Exercises

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    • 6Why Should Decision Makers Trust Financial Statements?

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      • 6.1The Need for the Securities and Exchange Commission

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      • 6.2The Role of the Independent Auditor in Financial Reporting

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      • 6.3Performing an Audit

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      • 6.4The Need for Internal Control

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      • 6.5The Purpose and Content of an Independent Auditor’s Report

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      • 6.6End-of-Chapter Exercises

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    • 7In Financial Reporting, What Information Is Conveyed about Receivables?

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      • 7.1Accounts Receivable and Net Realizable Value

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      • 7.2Accounting for Uncollectible Accounts

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      • 7.3The Problem with Estimations

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      • 7.4The Actual Estimation of Uncollectible Accounts

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      • 7.5Reporting Foreign Currency Balances

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      • 7.6A Company’s Vital Signs—Accounts Receivable

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      • 7.7End-of-Chapter Exercises

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    • 8How Does a Company Gather Information about Its Inventory?

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      • 8.1Determining and Reporting the Cost of Inventory

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      • 8.2Perpetual and Periodic Inventory Systems

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      • 8.3The Calculation of Cost of Goods Sold

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      • 8.4Reporting Inventory at Lower of Cost or Net Realizable Value

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      • 8.5Determining Inventory on Hand

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      • 8.6End-of-Chapter Exercises

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    • 9Why Does a Company Need a Cost Flow Assumption in Reporting Inventory?

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      • 9.1The Necessity of Adopting a Cost Flow Assumption

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      • 9.2The Selection of a Cost Flow Assumption for Reporting Purposes

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      • 9.3Problems with Applying LIFO

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      • 9.4Merging Periodic and Perpetual Inventory Systems with a Cost Flow Assumption

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      • 9.5Applying LIFO and Averaging to Determine Reported Inventory Balances

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      • 9.6Analyzing Reported Inventory Figures

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      • 9.7End-of-Chapter Exercises

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    • 10In a Set of Financial Statements, What Information Is Conveyed about Property and Equipment?

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      • 10.1The Reporting of Property and Equipment

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      • 10.2Determining Historical Cost and Depreciation Expense

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      • 10.3Recording Depreciation Expense for a Partial Year

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      • 10.4Alternative Depreciation Patterns and the Recording of a Wasting Asset

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      • 10.5Recording Asset Exchanges and Expenditures That Affect Older Assets

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      • 10.6Reporting Land Improvements and Impairments in the Value of Property and Equipment

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      • 10.7End-of-Chapter Exercises

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    • 11In a Set of Financial Statements, What Information Is Conveyed about Intangible Assets?

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      • 11.1Identifying and Accounting for Intangible Assets

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      • 11.2Balance Sheet Reporting of Intangible Assets

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      • 11.3Recognizing Intangible Assets Owned by a Subsidiary

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      • 11.4Accounting for Research and Development

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      • 11.5Acquiring an Asset with Future Cash Payments

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      • 11.6End-of-Chapter Exercises

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    • 12In a Set of Financial Statements, What Information Is Conveyed about Investments?

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      • 12.1Accounting for Investments in Equity Securities

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      • 12.2Accounting for Investments in Debt Securities

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      • 12.3Accounting for Investments by Means of the Equity Method

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      • 12.4Reporting Consolidated Financial Statements

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      • 12.5End-of-Chapter Exercises

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    • 13In a Set of Financial Statements, What Information Is Conveyed about Current and Contingent Liabilities?

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      • 13.1The Basic Reporting of Liabilities

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      • 13.2Reporting Current Liabilities Such as Gift Cards

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      • 13.3Accounting for Contingencies

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      • 13.4Accounting for Product Warranties

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      • 13.5End-of-Chapter Exercises

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    • 14In a Set of Financial Statements, What Information Is Conveyed about Noncurrent Liabilities Such as Bonds?

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      • 14.1Debt Financing

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      • 14.2Issuance of Notes and Bonds

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      • 14.3Accounting for Zero-Coupon Bonds

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      • 14.4Pricing and Reporting Term Bonds

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      • 14.5Issuing and Accounting for Serial Bonds

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      • 14.6Bonds with Other Than Annual Interest Payments

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      • 14.7End-of-Chapter Exercises

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    • 15In a Set of Financial Statements, What Information Is Conveyed about Other Noncurrent Liabilities?

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      • 15.1Accounting for Leases

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      • 15.2Operating Leases versus Finance Leases

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      • 15.3Recognition of Deferred Income Taxes

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      • 15.4Reporting Postretirement Benefits

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      • 15.5End-of-Chapter Exercises

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    • 16In a Set of Financial Statements, What Information Is Conveyed about Shareholders’ Equity?

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      • 16.1Selecting a Legal Form for a Business

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      • 16.2The Issuance of Common Stock

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      • 16.3Issuing and Accounting for Preferred Stock and Treasury Stock

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      • 16.4The Issuance of Cash and Stock Dividends

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      • 16.5The Computation of Earnings per Share

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      • 16.6End-of-Chapter Exercises

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    • 17In a Set of Financial Statements, What Information Is Conveyed by the Statement of Cash Flows?

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      • 17.1The Structure of a Statement of Cash Flows

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      • 17.2Cash Flows from Operating Activities: The Direct Method

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      • 17.3Cash Flows from Operating Activities: The Indirect Method

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      • 17.4Cash Flows from Investing and Financing Activities

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      • 17.5Appendix: Comprehensive Illustration—Statement of Cash Flows

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      • 17.6End-of-Chapter Exercises

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    • APresent Value Tables

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    • BSummary of Ratios and Financial Indicators

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      • B.1Chapter 1

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      • B.2Chapter 3

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      • B.3Chapter 7

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      • B.4Chapter 9

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      • B.5Chapter 10

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      • B.6Chapter 12

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      • B.7Chapter 16

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      • B.8Chapter 13

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