Contents Chapter 1 Uses of Accounting Information and the Financial Statements 1 1.1 Accounting as an Information System 2 1.2 Accounting Measurements 7 1.3 The Corporate Forms of Business 9 1.4 Financial Statements 10 1.5 Generally Accepted Accounting Principles 12 Chapter 2 Analyzing Business Transactions 19 2.1 Measurement Issues 20 2.2 Double-entry System 22 2.3 Business Transaction Analysis 25 2.4 The Trial Balance 29 2.5 Recording and Posting Transactions 31 Chapter 3 Measuring Business Income 45 3.1 Profitability Measurement Issues and Ethics 46 3.2 Accrual Accounting 49 3.3 The Adjustment Process 50 3.4 Closing Entries 57 3.5 Preparing Closing Entries 58 3.6 The Work Sheet:An Accountant’s Tool 59 Chapter 4 Financial Reporting and Analysis 68 4.1 Foundations of Financial Reporting 69 4.2 Accounting Conventions for Preparing Financial Statements 72 4.3 Forms of the Income Statement 79 Chapter 5 The Operating Cycle and Merchandising Operations 94 5.1 Managing Merchandising Businesses 95 5.2 Terms of Sale 98 5.3 Perpetual Inventory System 101 5.4 Periodic Inventory System 104 5.5 Internal Control:Components,Activities and Limitations 108 Chapter 6 Inventories 117 6.1 Managing Inventories 118 6.2 Inventory Costs and Valuation 121 6.3 Inventory Costs Under the Periodic Inventory System 121 Chapter 7 Cash and Receivables 134 7.1 Management Issues Related to Cash and Receivables 135 7.2 Cash Equivalents and Cash Control 138 7.3 Uncollectible Accounts 142 Chapter 8 Current Liabilities 156 8.1 Management Issues Related to Current Liabilities 157 8.2 Common Types of Current Liabilities 161 Chapter 9 Long-term Assets 173 9.1 Management Issues Related to Long-term Assets 174 9.2 Acquisition Cost of Property,Plant and Equipment 176 9.3 Depreciation 178 9.4 Disposal of Depreciable Assets 182 9.5 Intangible Assets 184 Chapter 10 Long-term Liabilities 196 10.1 Management Issues Related to Long-term Debt Financing 197 10.2 The Nature of Bonds 202 10.3 Accounting for the Issuance of Bonds 205 10.4 Amortization of Bond Discounts and Premiums 208 10.5 Retirement and Conversion of Bonds 209 Chapter 11 Stockholders’Equity 219 11.1 Components of Stockholders’Equity 220 11.2 Evaluating Liquidity 222 11.3 Evaluating Financial Risks 223 11.4 Evaluating Operating Asset Management 225 11.5 Supplemental Financial Ratios for Assessing Operating Asset Management and Liquidity 227 11.6 Evaluating Market Strength with Financial Ratios 228 References 235