American Institute of Certified Public Accountants (AICPA)·Financial Accounting
Standards Board (FASB)·Operating Procedure for Statements of Financial Accounting
Standards (SFASs)·FASB Conceptual Framework
Additional Input-American Institute of Certified Public Accountants (AICPA)
Emerging Issues Task Force (EITF)
A New Reality
Traditional Assumptions of the Accounting Model
Business Entity·Going Concern or Continuity·Time Period·Monetary Unit·Historical Cost·Conservatism·Realization·Matching·Consistency·Full Disclosure·Materiality·Industry Practices·Transaction Approach·Cash Basis·Accrual Basis
Using the Internet
Companies' Internet Web Sites·Helpful Web Sites
Summary
Questions
Problems
Case 1-1 Standards Overload?
Case 1-2 Recognizing Revenue and Related Costs-Part I
Case 1-3 Recognizing Revenue and Related Costs-Part II
Case 1-4 Cash Basis-Accrual Basis?
Case 1-5 Going Concern?
Case 1-6 Economics and Accounting: The Uncongenial Twins
Case 1-7 I Often Paint Fakes
CHAPTER 2 INTRODUCTION TO FINANCIAL STATEMENTS and Other Financial Reporting Topics
Forms of Business Entities
The Financial Statements
Auditor's Report
Management's Responsibility for Financial Statements·The SEC's Integrated Disclosure System·Proxy
Summary Annual Report
The Efficient Market Hypothesis
Ethics
SEC Requirements-Code of Ethics
Harmonization of International Accounting Standards
Consolidated Statements
Accounting for Business Combinations
Summary
Questions
Problems
Case 2-1 The CEO Retires
Case 2-2 The Dangerous Morality of Managing Earnings
Case 2-3 Frequent-Flier Awards-Tick-Tick, Tick-Tick, Tick-Tick
Case 2-4 International Accounting-Harmonization in Practice
Case 2-5 Materiality: In Practice
Case 2-6 Who is Responsible?
CHAPTER 3 BALANCE SHEET
Basic Elements of the Balance Sheet
Assets·Liabilities·Stockholders' Equity·Quasi-Reorganization·Accumulated Other Comprehensive Income·Equity-Oriented Deferred Compensation·Employee Stock Ownership Plans (ESOPs)·Treasury Stock·Stockholders' Equity in Unincorporated Firms
Statement of Stockholders' Equity
Problems in Balance Sheet Presentation
Summary
Questions
Problems
Case 3-1 Balance Sheet Review
Case 3-2 Insight on Liabilities
Case 3-3 Insight on Shareholders' Equity
Case 3-4 Insight on Assets
Case 3-5 Our Principal Asset Is Our People
Case 3-6 Brands Are Dead?
Case 3-7 Advertising-Asset?
CHAPTER 4 INCOME STATEMENT
Basic Elements of the Income Statement
Net Sales (Revenues)·Cost of Goods Sold (Cost of Sales)·Other Operating Revenue·Operating Expenses·Other Income or Expense
Special Income Statement Items
Earnings per Share
Retained Earnings
Dividends and Stock Splits
Legality of Distributions to Stockholders
Comprehensive Income
Summary
Questions
Problems
Case 4-1 Under the Arch
Case 4-2 Hidden Treasure
Case 4-3 Take My Picture
Case 4-4 The Big Order
Case 4-5 Celtics
Case 4-6 Always Low Prices
CHAPTER 5 BASICS OF ANALYSIS
Ratio Analysis
Common-Size Analysis (Vertical and Horizontal)
Year-to-Year Change Analysis
Financial Statement Variation by Type of Industry
Review of Descriptive Information
Comparisons
Trend Analysis·Standard Industrial Classification (SIC) Manual·North American Industry Classification System (NAICS)·Industry Averages and Comparison with Competitors·Caution in Using Industry Averages
Relative Size of Firm
Other Library Sources
The Users of Financial Statements
Summary
Questions
Problems
Chapter 6 Liquidity of Short-Term Assets;Related Debt-Paying Ability
Current Assets, Current Liabilities, and the Operating Cycle
Cash·Marketable Securities·Receivables·Inventories·Prepayments·Other Current Assets·Current Liabilities
Current Assets Compared with Current liabilities
Working Capital·Current Ratio·Arid-Test Ratio (Quick Ratio)·Cash Ratio
Other Liquidity Considerations
Sales to Working Capital (Working Capital Turnover)·Liquidity Considerations Not on the Face of the Statements
Summary
Questions
Problems
Case 6-1 LIFO-FIFO
Case 6-2 Rising Prices, a Time to Switch Off LIFO?
Case 6-3 Moments to Remember
Case 6-4 The Other Side of LIFO
Cast 6-5 Network Supreme
Case 6-6 Booming Retail
CHAPTER 7 LONG-TERM DEBT-PAYING ABILITY
Income Statement Consideration when Determining Long-Term Debt-Paying Ability
Times Interest Earned·Fixed Charge Coverage
Balance Sheet Consideration when Determining Long-Term Debt-Paying Ability
Debt Ratio·Debt/Equity Ratio·Debt to Tangible Net Worth Ratio·Other Long-Term Debt-Paying Ability Ratios
Special Items that Influence a Firm's Long-Term Debt-Paying Ability
Summary
Questions
Problems
Case 7-1 Expensing Interest Now and Later
Case 7-2 Consideration of Leases
Case 7-3 Lockout
Case 7-4 Many Employers
Case 7-S Play It Safe
CHAPTER 8 PROFITABILITY
Profitability Measures
Trends in Profitability
Segment Reporting
Sales and Marketing
Gains and Losses from Prior Period Adjustments
Comprehensive Income
Pro Forma Financial Information
Interim Reports
Summary
Questions
Problems
Case 8-1 Jeff's Self-Service Station
Case 8-2 The Tale of the Segments
Case 8-3 The Story of Starbucks-In Segments
Case 8-4 Tide, Pampers, and Etc.
Case 8-5 Cars, Trucks, Etc.
CHAPTER 9 FOR THE INVESTOR
Leverage and Its Effects on Earnings
Definition of Financial Leverage and Magnification Effects·Computation of the Degree of Financial Leverage·Summary of Financial Leverage
