Principles of Accounting, Volume 1: Financial Accounting

Principles of Accounting, Volume 1: Financial Accounting
Preface
1. About OpenStax
2. About OpenStax resources
3. About Principles of Accounting
4. Additional resources
5. About the authors
Chapter 1. Role of Accounting in Society
Table of Contents
Why It Matters*
1.1. Explain the Importance of Accounting and Distinguish between Financial and Managerial Accounting*
1.2. Identify Users of Accounting Information and How They Apply Information*
1.3. Describe Typical Accounting Activities and the Role Accountants Play in Identifying, Recording, and Reporting Financial Activities*
1.4. Explain Why Accounting Is Important to Business Stakeholders*
1.5. Describe the Varied Career Paths Open to Individuals with an Accounting Education*
Glossary
Summary
Multiple Choice
Questions
Chapter 2. Introduction to Financial Statements
Table of Contents
Why It Matters*
2.1. Describe the Income Statement, Statement of Owner’s Equity, Balance Sheet, and Statement of Cash Flows, and How They Interrelate*
2.2. Define, Explain, and Provide Examples of Current and Noncurrent Assets, Current and Noncurrent Liabilities, Equity, Revenues, and Expenses*
2.3. Prepare an Income Statement, Statement of Owner’s Equity, and Balance Sheet*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 3. Analyzing and Recording Transactions
Table of Contents
Why It Matters*
3.1. Describe Principles, Assumptions, and Concepts of Accounting and Their Relationship to Financial Statements*
3.2. Define and Describe the Expanded Accounting Equation and Its Relationship to Analyzing Transactions*
3.3. Define and Describe the Initial Steps in the Accounting Cycle*
3.4. Analyze Business Transactions Using the Accounting Equation and Show the Impact of Business Transactions on Financial Statements*
3.5. Use Journal Entries to Record Transactions and Post to T-Accounts*
3.6. Prepare a Trial Balance*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 4. The Adjustment Process
Table of Contents
Why It Matters*
4.1. Explain the Concepts and Guidelines Affecting Adjusting Entries*
4.2. Discuss the Adjustment Process and Illustrate Common Types of Adjusting Entries*
4.3. Record and Post the Common Types of Adjusting Entries*
4.4. Use the Ledger Balances to Prepare an Adjusted Trial Balance*
4.5. Prepare Financial Statements Using the Adjusted Trial Balance*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 5. Completing the Accounting Cycle
Table of Contents
Why It Matters*
5.1. Describe and Prepare Closing Entries for a Business*
5.2. Prepare a Post-Closing Trial Balance*
5.3. Apply the Results from the Adjusted Trial Balance to Compute Current Ratio and Working Capital Balance, and Explain How These Measures Represent Liquidity*
5.4. Appendix: Complete a Comprehensive Accounting Cycle for a Business*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 6. Merchandising Transactions
Table of Contents
Why It Matters*
6.1. Compare and Contrast Merchandising versus Service Activities and Transactions*
6.2. Compare and Contrast Perpetual versus Periodic Inventory Systems*
6.3. Analyze and Record Transactions for Merchandise Purchases Using the Perpetual Inventory System*
6.4. Analyze and Record Transactions for the Sale of Merchandise Using the Perpetual Inventory System*
6.5. Discuss and Record Transactions Applying the Two Commonly Used Freight-In Methods*
6.6. Describe and Prepare Multi-Step and Simple Income Statements for Merchandising Companies*
6.7. Appendix: Analyze and Record Transactions for Merchandise Purchases and Sales Using the Periodic Inventory System*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 7. Accounting Information Systems
Table of Contents
Why It Matters*
7.1. Define and Describe the Components of an Accounting Information System*
7.2. Describe and Explain the Purpose of Special Journals and Their Importance to Stakeholders*
7.3. Analyze and Journalize Transactions Using Special Journals*
7.4. Prepare a Subsidiary Ledger*
7.5. Describe Career Paths Open to Individuals with a Joint Education in Accounting and Information Systems*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 8. Fraud, Internal Controls, and Cash
Table of Contents
Why It Matters*
8.1. Analyze Fraud in the Accounting Workplace*
8.2. Define and Explain Internal Controls and Their Purpose within an Organization*
8.3. Describe Internal Controls within an Organization*
8.4. Define the Purpose and Use of a Petty Cash Fund, and Prepare Petty Cash Journal Entries*
8.5. Discuss Management Responsibilities for Maintaining Internal Controls within an Organization*
8.6. Define the Purpose of a Bank Reconciliation, and Prepare a Bank Reconciliation and Its Associated Journal Entries*
8.7. Describe Fraud in Financial Statements and Sarbanes-Oxley Act Requirements*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 9. Accounting for Receivables
Table of Contents
Why It Matters*
9.1. Explain the Revenue Recognition Principle and How It Relates to Current and Future Sales and Purchase Transactions*
9.2. Account for Uncollectible Accounts Using the Balance Sheet and Income Statement Approaches*
9.3. Determine the Efficiency of Receivables Management Using Financial Ratios*
9.4. Discuss the Role of Accounting for Receivables in Earnings Management*
9.5. Apply Revenue Recognition Principles to Long-Term Projects*
9.6. Explain How Notes Receivable and Accounts Receivable Differ*
9.7. Appendix: Comprehensive Example of Bad Debt Estimation*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 10. Inventory
Table of Contents
Why It Matters*
10.1. Describe and Demonstrate the Basic Inventory Valuation Methods and Their Cost Flow Assumptions*
10.2. Calculate the Cost of Goods Sold and Ending Inventory Using the Periodic Method*
10.3. Calculate the Cost of Goods Sold and Ending Inventory Using the Perpetual Method*
10.4. Explain and Demonstrate the Impact of Inventory Valuation Errors on the Income Statement and Balance Sheet*
10.5. Examine the Efficiency of Inventory Management Using Financial Ratios*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 11. Long-Term Assets
Table of Contents
Why It Matters*
11.1. Distinguish between Tangible and Intangible Assets*
11.2. Analyze and Classify Capitalized Costs versus Expenses*
11.3. Explain and Apply Depreciation Methods to Allocate Capitalized Costs*
11.4. Describe Accounting for Intangible Assets and Record Related Transactions*
11.5. Describe Some Special Issues in Accounting for Long-Term Assets*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 12. Current Liabilities
Table of Contents
Why It Matters*
12.1. Identify and Describe Current Liabilities*
12.2. Analyze, Journalize, and Report Current Liabilities*
12.3. Define and Apply Accounting Treatment for Contingent Liabilities*
12.4. Prepare Journal Entries to Record Short-Term Notes Payable*
12.5. Record Transactions Incurred in Preparing Payroll*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 13. Long-Term Liabilities
Table of Contents
Why It Matters*
13.1. Explain the Pricing of Long-Term Liabilities*
13.2. Compute Amortization of Long-Term Liabilities Using the Effective-Interest Method*
13.3. Prepare Journal Entries to Reflect the Life Cycle of Bonds*
13.4. Appendix: Special Topics Related to Long-Term Liabilities*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 14. Corporation Accounting
Table of Contents
Why It Matters*
14.1. Explain the Process of Securing Equity Financing through the Issuance of Stock*
14.2. Analyze and Record Transactions for the Issuance and Repurchase of Stock*
14.3. Record Transactions and the Effects on Financial Statements for Cash Dividends, Property Dividends, Stock Dividends, and Stock Splits*
14.4. Compare and Contrast Owners’ Equity versus Retained Earnings*
14.5. Discuss the Applicability of Earnings per Share as a Method to Measure Performance*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 15. Partnership Accounting
Table of Contents
Why It Matters*
15.1. Describe the Advantages and Disadvantages of Organizing as a Partnership*
15.2. Describe How a Partnership Is Created, Including the Associated Journal Entries*
15.3. Compute and Allocate Partners’ Share of Income and Loss*
15.4. Prepare Journal Entries to Record the Admission and Withdrawal of a Partner*
15.5. Discuss and Record Entries for the Dissolution of a Partnership*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Chapter 16. Statement of Cash Flows
Table of Contents
Why It Matters*
16.1. Explain the Purpose of the Statement of Cash Flows*
16.2. Differentiate between Operating, Investing, and Financing Activities*
16.3. Prepare the Statement of Cash Flows Using the Indirect Method*
16.4. Prepare the Completed Statement of Cash Flows Using the Indirect Method*
16.5. Use Information from the Statement of Cash Flows to Prepare Ratios to Assess Liquidity and Solvency*
16.6. Appendix: Prepare a Completed Statement of Cash Flows Using the Direct Method*
Glossary
Summary
Multiple Choice
Questions
Exercise Set A
Exercise Set B
Problem Set A
Problem Set B
Thought Provokers
Appendix A. Financial Statement Analysis*
A.1. Financial Statement Analysis
A.2. Horizontal Analysis
A.3. Vertical Analysis
A.4. Overview of Financial Ratios
A.5. Advantages and Disadvantages of Financial Statement Analysis
Appendix B. Time Value of Money*
B.1. Present Value of $1 Table
B.2. Present Value of an Ordinary Annuity Table
B.3. Future Value of $1 Table
B.4. Future Value of an Ordinary Annuity Table
Appendix C. Suggested Resources*
C.1. Sample Financial Statements
C.2. Accounting Software and Tools
C.3. Personal Finance
C.4. Accounting-Related Organizations
C.5. Accounting Exams and Certificates
Solutions
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Index
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