1 The Environment and Conceptual Framework of Financial Reporting
1.1 Financial Reporting Environment 1-2
1.2 Conceptual Framework 1-11
1.3 Assumptions and Principles 1-18
1.4 Major Challenges in Financial Reporting 1-27
Analytics in Action Big Data for Big Decisions 1-30
2 The Accounting Information System
2.1 Accounting Information System 2-2
2.2 Analyze and Record Business Transactions 2-8
Analytics in Action This System Is Full of Data 2-19
2.3 Adjusting Entries 2-23
2.4 Preparing Financial Statements 2-37
2.5 Financial Statements for a Merchandising Company 2-45
Appendix 2A: Cash-Basis Accounting versus Accrual-Basis Accounting 2-48
Appendix 2B: Using Reversing Entries 2-54
Appendix 2C: Using a Worksheet: The Accounting Cycle Revisited 2-56
3 Income Statement, Related Information, and Revenue Recognition
3.1 Income Statement 3-2
Analytics in Action Income Statement Dashboards 3-8
,3.2 Reporting Special Income Items 3-11
3.3 Stockholders’ Equity Statements 3-19
3.4 Revenue Recognition—The Fundamentals 3-21
3.5 Quality of Earnings 3-29
Appendix 3A: Accounting Changes and Errors 3-33
4 Balance Sheet and Statement of Cash Flows
4.1 Balance Sheet 4-1
4.2 Statement of Cash Flows 4-16
Appendix 4A: Additional Information 4-26
Appendix 4B: Ratio Analysis—A Reference 4-33
5 Accounting and the Time Value of Money
5.1 Basic Time Value Concepts 5-2
5.2 Single-Sum Problems 5-8
5.3 Annuities (Future Value) 5-14
5.4 Annuities (Present Value) 5-21
5.5 Other Time Value of Money Issues 5-27
Analytics in Action Using Present Value for Investment Analysis 5-31
Appendix 5A: Technology Tools for Time Value of Money Problems 5-34
Time Value of Money Tables 5-60
6 Cash and Receivables
, 6.1 Cash 6-1
6.2 Receivables 6-6
6.3 Valuation of Accounts Receivable 6-13
Analytics in Action Predicting the Future 6-19
6.4 Notes Receivable 6-20
6.5 Other Issues 6-28
Appendix 6A: Cash Controls 6-36
Appendix 6B: Collectibility Assessment Based on Expected Cash Flows 6-42
7 Valuation of Inventories: A Cost-Basis Approach
7.1 Inventory Issues 7-2
7.2 Goods and Costs Included in Inventory 7-8
7.3 Which Cost Flow Assumption to Adopt? 7-14
7.4 Special Issues Related to LIFO 7-24
7.5 Effect of Inventory Errors 7-32
Analytics in Action Inventory Matters 7-35
8 Inventories: Additional Valuation Issues
8.1 Lower-of-Cost-or-Net Realizable Value 8-2
8.2 Lower-of-Cost-or-Market 8-7
Analytics in Action Role of Big Data in Inventory 8-11
8.3 Other Valuation Approaches 8-13
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