CHAPTER 1 RECORDING DEPARTMENTAL PURCHASES AND CASH PAYMENTS 4 Accounting In Your Career 5 1-1 Using Accounting Principles and Records 6 1-2 Journalizing and Posting Purchases and Purchases Returns 12 1-3 Journalizing and Posting Cash Payments and Reconciling the Bank Statement 20 PROFESSIONAL BUSINESS ETHICS 18 CULTURAL DIVERSITY 20 AUTOMATED ACCOUNTING 34 CHAPTER 2 RECORDING DEPARTMENTAL SALES AND CASH RECEIPTS 38 Accounting In Your Career 39 2-1 Departmental Sales on Account and Sales Returns and Allowances 40 2-2 Journalizing and Posting Cash Receipts 48 SMALL BUSINESS SPOTLIGHT 40 GLOBAL PERSPECTIVE 53 AUTOMATED ACCOUNTING 60 28, 55, 85, 125 33, 59, 90, 131 33, 59, 90, 131 33, 59, 90, 131 11, 19, 27, 47, 54, 69, 77, 84, 100, 111, 118, 11, 19, 27, 47, 54, 69, 77, 84, 100, 111, 118, 11, 19, 27, 47, 54, 69, 77, 84, 100, 111, 118, 11, 19, 27, 47, 54, 70, 78, 84, 100, 111, 118, PART 1 Departmentalized Accounting CHAPTER 3 CALCULATING AND RECORDING DEPARTMENTAL PAYROLL DATA 62 Accounting In Your Career 63 3-1 Employee Benefits and Earnings 64 3-2 Completing Payroll Records 71 3-3 Journalizing and Paying Payroll and Payroll Taxes 79 ACCOUNTING AT WORK 75 PROFESSIONAL BUSINESS ETHIC 78 AUTOMATED ACCOUNTING 91 CHAPTER 4 DEPARTMENTALIZED BUSINESS 94 Accounting In Your Career 95 4-1 Interim Departmental Statement of Gross Profit 96 4-2 Preparing a Work Sheet for a Departmentalized Business 102 4-3 Financial Statements for a Departmentalized Business 112 4-4 End-of-Period Work for a Departmentalized Business 119 SMALL BUSINESS SPOTLIGHT 113 LEGAL ISSUES IN ACCOUNTING 101 CULTURAL DIVERSITY 110 AUTOMATED ACCOUNTING 132 End of chapter review and practice 28, 55, 85, 125 29, 56, 86, 126 31, 58, 88, 129 32, 59, 90, 130 Reinforcement Activity 1 Processing and Reporting Departmentalized Accounting Data 135 vii
PART 2 Accounting Control Systems 159, 184 164, 189 164, 189 164, 189 150, 154, 172, 178, 183 150, 154, 158, 172, 178, 183 150, 154, 158, 172, 178, 183 150, 154, 158, 172, 178, 183 CHAPTER 5 A VOUCHER SYSTEM 144 Accounting In Your Career 145 5-1 Vouchers and Voucher Registers 146 5-2 Voucher Check and Check Registers 151 5-3 Selected Transactions in a Voucher System 155 AUTOMATED ACCOUNTING 165 159, 184 160, 185 162, 187 162, 188 CHAPTER 6 INVENTORY PLANNING AND VALUATION 166 Accounting In Your Career 167 6-1 The Nature of Merchandise Inventory 168 6-2 Inventory Costing 173 6-3 Estimating the Inventory 179 TECHNOLOGY FOR BUSINESS 182 AUTOMATED ACCOUNTING 190 viii
CHAPTER 7 ACCOUNTING FOR UNCOLLECTIBLE ACCOUNTS 194 Accounting In Your Career 195 7-1 Direct Write-Off Method of Recording Uncollectible Accounts 196 7-2 Allowance Method of Recording Uncollectible Accounts Expense 199 7-3 Accounts Receivable Turnover Ratio 206 LEGAL ISSUES IN ACCOUNTING 199 GLOBAL PERSPECTIVE 201 AUTOMATED ACCOUNTING 215 CHAPTER 8 ACCOUNTING FOR PLANT ASSETS 216 Accounting In Your Career 217 8-1 Buying Plant Assets 218 8-2 Calculating and Journalizing Depreciation Expense 222 8-3 Disposing of Plant Assets 227 8-4 Other Methods of Depreciation 234 ACCOUNTING AT WORK 232 TECHNOLOGY FOR BUSINESS 236 PROFESSIONAL BUSINESS ETHICS 241 AUTOMATED ACCOUNTING 249 PART 3 General Accounting Adjustments CHAPTER 9 ACCOUNTING FOR NOTES PAYABLE, PREPAID EXPENSES, AND ACCRUED EXPENSES 250 Accounting In Your Career 251 9-1 Notes Payable 252 9-2 Prepaid Expenses 256 9-3 Accrued Expenses 262 SMALL BUSINESS SPOTLIGHT 252 LEGAL ISSUES IN ACCOUNTING 256 CULTURAL DIVERSITY 267 AUTOMATED ACCOUNTING 274 CHAPTER 10 ACCOUNTING FOR NOTES RECEIVABLE, UNEARNED REVENUE, AND ACCRUED REVENUE 276 Accounting In Your Career 277 10-1 Notes Receivable 278 10-2 Unearned and Accrued Revenue 283 TECHNOLOGY FOR BUSINESS 284 LEGAL ISSUES IN ACCOUNTING 286 AUTOMATED ACCOUNTING 293 209, 242, 269, 289 214, 247, 273, 292 214, 247, 273, 292 214, 248, 273, 292 198, 205, 208, 221, 226, 240, 255, 261, 268, 282, 287 198, 205, 208, 221, 226, 233, 240, 255, 261, 268, 282, 287 198, 205, 208, 221, 226, 233, 241, 255, 261, 268, 282, 287 198, 205, 208, 221, 226, 233, 241, 255, 261, 268, 282, 288 209, 242, 269, 289 210, 243, 270, 290 212, 246, 271, 291 213, 247, 272, 291 ix
PART 4 Corporation Accounting CHAPTER 11 ORGANIZING A CORPORATION AND PAYING DIVIDENDS 296 Accounting In Your Career 297 11-1 Starting a Corporation 298 11-2 Stock Subscriptions and the Balance Sheet 306 11-3 Calculating and Journalizing Dividends for a Corporation 310 GLOBAL PERSPECTIVE 301 CULTURAL DIVERSITY 305 ACCOUNTING AT WORK 311 AUTOMATED ACCOUNTING 319 314, 341, 370 318, 345, 375 318, 345, 375 318, 345, 375 CHAPTER 12 ACQUIRING ADDITIONAL CAPITAL FOR A CORPORATION 320 Accounting In Your Career 321 12-1 Capital Stock Transactions 322 12-2 Treasury Stock Transactions 329 12-3 Bonds Payable Transactions 334 TECHNOLOGY FOR BUSINESS 328 SMALL BUSINESS SPOTLIGHT 330 PROFESSIONAL BUSINESS ETHICS 338 LEGAL ISSUES IN ACCOUNTING 340 AUTOMATED ACCOUNTING 346 CHAPTER 13 FINANCIAL ANALYSIS AND REPORTING FOR A CORPORATION 348 Accounting In Your Career 349 13-1 Work Sheet for a Corporation 350 13-2 Financial Statements and Analysis 355 13-3 Other End-of-Fiscal Period Work 363 ACCOUNTING AT WORK 366 GLOBAL PERSPECTIVE 368 AUTOMATED ACCOUNTING 376 304, 309, 313, 327, 333, 339, 354, 362 304, 309, 313, 327, 333, 339, 354, 362, 369 304, 309, 313, 327, 333, 339, 354, 362, 369 305, 309, 313, 328, 333, 340, 354, 362, 369 314, 341, 370 315, 342, 371 316, 343, 373 317, 344, 374 Reinforcement Activity 2 Processing and Reporting Accounting Data for a Corporation 378 x
CHAPTER 14 BUDGETARY PLANNING AND CONTROL 386 Accounting In Your Career 387 14-1 Budget Planning 388 14-2 Budgeted Income Statement 393 14-3 Cash Budgets and Performance Reports 402 CULTURAL DIVERSITY 397 TECHNOLOGY FOR BUSINESS 403 AUTOMATED ACCOUNTING 415 CHAPTER 15 ACCOUNTING INFORMATION FOR MANAGEMENT DECISIONS 416 Accounting In Your Career 417 15-1 Cost Characteristics that Influence Decisions 419 15-2 Determining Breakeven 423 15-3 Decisions that Affect Net Income 427 ACCOUNTING AT WORK 421 PROFESSIONAL BUSINESS ETHICS 425 TECHNOLOGY FOR BUSINESS 433 AUTOMATED ACCOUNTING 441 CHAPTER 16 FINANCIAL STATEMENT ANALYSIS 442 Accounting In Your Career 443 16-1 Trend Analysis and Component Percentages 444 16-2 Calculating Earnings Performance and Efficiency Analysis 452 16-3 Calculating Financial Strength Analysis 461 LEGAL ISSUES IN ACCOUNTING 446 GLOBAL PERSPECTIVE 457 AUTOMATED ACCOUNTING 473 CHAPTER 17 STATEMENT OF CASH FLOWS 474 Accounting In Your Career 475 17-1 Understanding Cash Flow Analysis 476 17-2 Preparing the Operating Activities Section of a Statement of Cash Flows 482 17-3 Completing the Statement of Cash Flows 488 SMALL BUSINESS SPOTLIGHT 476 TECHNOLOGY FOR BUSINESS 480 ACCOUNTING AT WORK 486 PROFESSIONAL BUSINESS ETHICS 492 AUTOMATED ACCOUNTING 499 PART 5 Management Accounting 409, 435, 466, 494 414, 440, 472, 498 414, 440, 472, 498 414, 440, 472, 498 481 481, 487, 493 481, 487, 493 481, 487, 493 409, 435, 466, 494 410, 436, 467, 495 412, 438, 469, 497 413, 439, 470, 498 xi
PART 6 Cost Accounting CHAPTER 18 COST ACCOUNTING FOR A MERCHANDISING BUSINESS 502 Accounting In Your Career 503 18-1 Responsibility Accounting for a Merchandising Business 504 18-2 Responsibility Statements for a Merchandising Business 512 SMALL BUSINESS SPOTLIGHT 502 CULTURAL DIVERSITY 514 AUTOMATED ACCOUNTING 522 CHAPTER 19 COST ACCOUNTING FOR A MANUFACTURING BUSINESS 524 Accounting In Your Career 525 19-1 Elements of Manufacturing Cost 526 19-2 Maintaining Manufacturing Records 531 ACCOUNTING AT WORK 529 AUTOMATED ACCOUNTING 545 CHAPTER 20 ACCOUNTING TRANSACTIONS AND MANUFACTURING BUSINESS 546 Accounting In Your Career 547 20-1 Journalizing Manufacturing Accounting Transactions 548 20-2 Preparing End-of-Fiscal Period Statements 557 GLOBAL PERSPECTIVE 556 AUTOMATED ACCOUNTING 569 517, 539, 564 521, 544, 568 521, 544, 568 521, 544, 568 511, 516, 530, 538, 555, 563 511, 516, 530, 538, 555, 563 511, 516, 530, 538, 555, 563 511, 516, 530, 538, 556, 563 517, 539, 564 518, 540, 565 519, 542, 566 520, 543, 567 Reinforcement Activity 3 Processing and Reporting Cost Accounting Data for a Manufacturing Business 570 xii
CHAPTER 21 ORGANIZATIONAL STRUCTURE OF A PARTNERSHIP 580 Accounting In Your Career 581 21-1 Forming a Partnership 582 21-2 Admitting Partners to Existing Partnerships 587 LEGAL ISSUES IN ACCOUNTING 585 PROFESSIONAL BUSINESS ETHICS 591 SMALL BUSINESS SPOTLIGHT 600 AUTOMATED ACCOUNTING 601 CHAPTER 22 PARTNERSHIP 602 Accounting In Your Career 603 22-1 Distribution and Withdrawal of Partnership Earnings 604 22-2 End-of-Fiscal Period Work for a Partnership 610 22-3 Liquidation of a Partnership 619 ACCOUNTING AT WORK 609 TECHNOLOGY FOR BUSINESS 621 AUTOMATED ACCOUNTING 629 PART 7 Other Accounting Systems CHAPTER 24 NOT-FOR-PROFIT ORGANIZATION 660 Accounting In Your Career 661 24-1 Preparing a Work Sheet for a Governmental Organization 662 24-2 Preparing Financial Statements for a Governmental Organization 668 24-3 Recording Adjusting and Closing Entries for a Governmental Organization 672 AUTOMATED ACCOUNTING 681 594, 624, 653, 675 599, 628, 657, 680 599, 628, 657, 680 600, 628, 657, 680 CHAPTER 23 BUDGETING AND ACCOUNTING FOR A NOT-FOR-PROFIT ORGANIZATION 630 Accounting In Your Career 631 23-1 Not-for-Profit Organizations 632 23-2 Journalizing Revenues 641 23-3 Journalizing Expenditures, Encumbrances, and Other Transactions 645 GLOBAL PERSPECTIVE 650 AUTOMATED ACCOUNTING 658 APPENDICES Appendix A: Accounting Concepts A-1 Appendix B: Using a Calculator and Computer Keypad B-1 Appendix C: Recycling Problems C-1 Appendix D: Answers to D-1 GLOSSARY G-1 INDEX/PHOTO CREDITS I-1 586, 592, 618, 623, 640, 644, 651 586, 592, 608, 618, 623, 640, 644, 651, 667, 671, 674 586, 592, 608, 618, 623, 640, 644, 651, 667, 671,674 586, 593, 609, 618, 623, 640, 644, 652, 667, 671,674 594, 624, 653, 675 595, 625, 654, 676 597, 627, 655, 677 598, 627, 656, 679 xiii