Financial Accounting
Tools for Business Decision Making
by Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
8th Edition
Publisher: Wiley
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Book Details
| Print ISBN | 9781118953907 |
| eText ISBN | 9781118953815 |
| Publisher | Wiley |
| Publishing Year | 2015 |
| Edition | 8th Edition |
| Language | English |
| Pages | 808 |
Financial Accounting: Tools for Business Decision Making, 8th Edition, is a textbook that introduces the fundamentals of financial reporting and analysis. Beginning with a broad overview of financial statements, the work demonstrates how financial accounting connects to everyday life, business majors, and professional careers.
The text examines foundational topics such as the accounting information system, accrual accounting concepts, internal controls, and the statement of cash flows. It also explores reporting requirements for assets, liabilities, and stockholders' equity.
To reinforce fundamental procedures, the volume illustrates the complete accounting cycle through the ongoing story of Sierra Corp, an outdoor adventure company.
Table of Contents
Chapter 1: Introduction to Financial Statements
- • Knowing the Numbers
- • LO 1: Study the forms of business organization and the uses of accounting information
- • Forms of Business Organization
- • Users and Uses of Financial Information
- • Ethics in Financial Reporting
- • LO 2: Explain the three principal types of business activity
- • Financing Activities
- • Investing Activities
- • Operating Activities
- • LO 3: Describe the four financial statements and how they are prepared
- • Income Statement
- • Retained Earnings Statement
- • Balance Sheet
- • Statement of Cash Flows
- • Interrelationships of Statements
- • Other Elements of an Annual Report
- • A Look at IFRS
Chapter 2: A Further Look at Financial Statements
- • Just Fooling Around?
- • LO 1: Identity the sections of a classified balance sheet
- • Current Assets
- • Long-Term Investments
- • Property, Plant, and Equipment
- • Intangible Assets
- • Current Liabilities
- • Long-Term Liabilities
- • Stockholders’ Equity
- • LO 2: Use ratios to evaluate a company’s profitability, liquidity, and solvency
- • Ratio Analysis
- • Using the Income Statement
- • Using a Classified Balance Sheet
- • Using the Statement of Cash Flows
- • LO 3: Discuss financial reporting concepts
- • The Standard-Setting Environment
- • Qualities of Useful Information
- • Assumptions in Financial Reporting
- • Principles in Financial Reporting
- • Cost Constraint
- • A Look at IFRS
Chapter 3: The Accounting Information System
- • Accidents Happen
- • LO 1: Analyze the effect of business transactions on the basic accounting equation
- • Accounting Transactions
- • Analyzing Transactions
- • Summary of Transactions
- • LO 2: Explain how accounts, debits, and credits are used to record business transactions
- • Debits and Credits
- • Debit and Credit Procedures
- • Stockholders’ Equity Relationships
- • Summary of Debit/Credit Rules
- • LO 3: Indicate how a journal is used in the recording process
- • The Recording Process
- • The Journal
- • LO 4: Explain how a ledger and posting help in the recording process
- • The Ledger
- • Chart of Accounts
- • Posting
- • The Recording Process Illustrated
- • Summary Illustration of Journalizing and Posting
- • LO 5: Prepare a trial balance
- • Limitations of a Trial Balance
- • A Look at IFRS
Chapter 4: Accrual Accounting Concepts
- • Keeping Track of Groupons
- • LO 1: Explain the accrual basis of accounting and the reasons for adjusting entries
- • The Revenue Recognition Principle
- • The Expense Recognition Principle
- • Accrual versus Cash Basis of Accounting
- • The Need for Adjusting Entries
- • Types of Adjusting Entries
- • LO 2: Prepare adjusting entries for deferrals
- • Prepaid Expenses
- • Unearned Revenues
- • LO 3: Prepare adjusting entries for accruals
- • Accrued Revenues
- • Accrued Expenses
- • Summary of Basic Relationships
- • LO 4: Prepare an adjusted trial balance and closing entries
- • Preparing the Adjusted Trial Balance
- • Preparing Financial Statements
- • Quality of Earnings
- • Closing the Books
- • Summary of the Accounting Cycle
- • LO *5: Appendix 4A: Describe the purpose and the basic form of a worksheet
- • A Look at IFRS
Chapter 5: Merchandising Operations and the Multiple-Step Income Statement
- • Buy Now, Vote Later
- • LO 1: Describe merchandising operations and inventory systems
- • Operating Cycles
- • Flow of Costs
- • LO 2: Record purchases under a perpetual inventory system
- • Freight Costs
- • Purchase Returns and Allowances
- • Purchase Discounts
- • Summary of Purchasing Transactions
- • LO 3: Record sales under a perpetual inventory system
- • Sales Returns and Allowances
- • Sales Discounts
- • LO 4: Prepare a multiple-step income statement and a comprehensive income statement
- • Single-Step Income Statement
- • Multiple-Step Income Statement
- • Comprehensive Income Statement
- • LO 5: Determine cost of goods sold under a periodic inventory system
- • LO 6: Compute and analyze gross profit rate and profit margin
- • Gross Profit Rate
- • Profit Margin
- • LO *7: Appendix 5A: Record purchases and sales of inventory under a periodic inventory system
- • Recording Merchandise Transactions
- • Recording Purchases of Merchandise
- • Recording Sales of Merchandise
- • Comparison of Entries—Perpetual vs. Periodic
- • A Look at IFRS
Chapter 6: Reporting and Analyzing Inventory
- • “Where Is That Spare Bulldozer Blade?”
- • LO 1: Discuss how to classify and determine inventory
- • Classifying Inventory
- • Determining Inventory Quantities
- • LO 2: Apply inventory cost flow methods and discuss their financial effects
- • Specific Identification
- • Cost Flow Assumptions
- • Financial Statement and Tax Effects of Cost Flow Methods
- • Using Inventory Cost Flow Methods Consistently
- • LO 3: Explain the statement presentation and analysis of inventory
- • Presentation
- • Lower-of-Cost-or-Market
- • Analysis
- • Analysts’ Adjustments for LIFO Reserve
- • LO *4: Appendix 6A: Apply inventory cost flow methods to perpetual inventory records
- • First-In, First-Out (FIFO)
- • Last-In, First-Out (LIFO)
- • Average-Cost
- • LO *5: Appendix 6B: Indicate the effects of inventory errors on the financial statements
- • Income Statement Effects
- • Balance Sheet Effects
- • A Look at IFRS
Chapter 7: Fraud, Internal Control, and Cash
- • Minding the Money in Madison
- • LO 1: Define fraud and the principles of internal control
- • Fraud
- • The Sarbanes-Oxley Act
- • Internal Control
- • Principles of Internal Control Activities
- • Limitations of Internal Control
- • LO 2: Apply internal control principles to cash
- • Cash Receipts Controls
- • Cash Disbursements Controls
- • LO 3: Apply the control features of a bank account
- • Electronic Funds Transfer (EFT) System
- • Bank Statements
- • Reconciling the Bank Account
- • LO 4: Explain the reporting of cash and the basic principles of cash management
- • Reporting Cash
- • Managing and Monitoring Cash
- • Cash Budgeting
- • LO *5: Appendix 7A: Explain the operation of a petty cash fund
- • Establishing the Petty Cash Fund
- • Making Payments from Petty Cash
- • Replenishing the Petty Cash Fund
- • A Look at IFRS
Chapter 8: Reporting and Analyzing Receivables
- • What’s Cooking?
- • LO 1: Explain how companies recognize accounts receivable
- • Types of Receivables
- • Recognizing Accounts Receivable
- • LO 2: Describe how companies value accounts receivable and record their disposition
- • Valuing Accounts Receivable
- • Disposing of Accounts Receivable
- • LO 3: Explain how companies recognize, value, and dispose of notes receivable
- • Determining the Maturity Date
- • Computing Interest
- • Recognizing Notes Receivable
- • Valuing Notes Receivable
- • Disposing of Notes Receivable
- • LO 4: Describe the statement presentation of receivables and the principles of receivables management
- • Financial Statement Presentation of Receivables
- • Managing Receivables
- • Evaluating Liquidity of Receivables
- • Accelerating Cash Receipts
- • A Look at IFRS
Chapter 9: Reporting and Analyzing Long-Lived Assets
- • A Tale of Two Airlines
- • LO 1: Explain the accounting for plant asset expenditures
- • Determining the Cost of Plant Assets
- • Expenditures During Useful Life
- • To Buy or Lease?
- • LO 2: Apply depreciation methods to plant assets
- • Factors in Computing Depreciation
- • Depreciation Methods
- • Revising Periodic Depreciation
- • Impairments
- • LO 3: Explain how to account for the disposal of plant assets
- • Sale of Plant Assets
- • Retirement of Plant Assets
- • LO 4: Identity the basic issues related to reporting intangible assets
- • Accounting for Intangible Assets
- • Types of Intangible Assets
- • LO 5: Discuss how long-lived assets are reported and analyzed
- • Presentation
- • Analysis
- • LO *6: Appendix 9A: Compute periodic depreciation using the declining-balance method and the units-of-activity method
- • Declining-Balance Method
- • Units-of-Activity Method
- • A Look at IFRS
Chapter 10: Reporting and Analyzing Liabilities
- • And Then There Were Two
- • LO 1: Explain how to account for current liabilities
- • What Is a Current Liability?
- • Notes Payable
- • Sales Taxes Payable
- • Unearned Revenues
- • Current Maturities of Long-Term Debt
- • Payroll and Payroll Taxes Payable
- • LO 2: Describe the major characteristics of bonds
- • Types of Bonds
- • Issuing Procedures
- • Determining the Market Price of Bonds
- • LO 3: Explain how to account for bond transactions
- • Issuing Bonds at Face Value
- • Discount or Premium on Bonds
- • Issuing Bonds at a Discount
- • Issuing Bonds at a Premium
- • Redeeming Bonds at Maturity
- • Redeeming Bonds before Maturity
- • LO 4: Discuss how liabilities are reported and analyzed
- • Presentation
- • Analysis
- • LO *5: Appendix 10A: Apply the straight-line method of amortizing bond discount and bond premium
- • Amortizing Bond Discount
- • Amortizing Bond Premium
- • LO *6: Appendix 10B: Apply the effective-interest method of amortizing bond discount and bond premium
- • LO *7: Appendix 10C: Describe the accounting for long-term notes payable
- • A Look at IFRS
Chapter 11: Reporting and Analyzing Stockholders’ Equity
- • Oh Well, I Guess I’ll Get Rich
- • LO 1: Discuss the major characteristics of a corporation
- • Characteristics of a Corporation
- • Forming a Corporation
- • Stockholder Rights
- • Stock Issue Considerations
- • Corporate Capital
- • LO 2: Explain how to account for the issuance of common and preferred stock, and the purchase of treasury stock
- • Accounting for Common Stock
- • Accounting for Preferred Stock
- • Treasury Stock
- • LO 3: Explain how to account for cash dividends and describe the effect of stock dividends and stock splits
- • Cash Dividends
- • Dividend Preferences
- • Stock Dividends
- • Stock Splits
- • LO 4: Discuss how stockholders’ equity is reported and analyzed
- • Retained Earnings
- • Retained Earnings Restrictions
- • Balance Sheet Presentation of Stockholders’ Equity
- • Analysis of Stockholders’ Equity
- • Debt versus Equity Decision
- • LO *5: Appendix 11A: Prepare entries for stock dividends
- • A Look at IFRS
Chapter 12: Statement of Cash Flows
- • Got Cash?
- • LO 1: Discuss the usefulness and format of the statement of cash flows
- • Usefulness of the Statement of Cash Flows
- • Classification of Cash Flows
- • Significant Noncash Activities
- • Format of the Statement of Cash Flows
- • LO 2: Prepare a statement of cash flows using the indirect method
- • Indirect and Direct Methods
- • Indirect Method—Computer Services Company
- • Step 1: Operating Activities
- • Summary of Conversion to Net Cash Provided by Operating Activities–Indirect Method
- • Step 2: Investing and Financing Activities
- • Step 3: Net Change in Cash
- • LO 3: Use the statement of cash flows to evaluate a company
- • The Corporate Life Cycle
- • Free Cash Flow
- • LO *4: Appendix 12A: Prepare a statement of cash flows using the direct method
- • LO *5: Appendix 12B: Use the T-account approach to prepare a statement of cash flows
- • A Look at IFRS
Chapter 13: Financial Analysis: The Big Picture
- • It Pays to Be Patient
- • LO 1: Apply the concept of sustainable income and quality of earnings
- • Sustainable Income
- • Quality of Earnings
- • LO 2: Apply horizontal analysis and vertical analysis
- • Horizontal Analysis
- • Vertical Analysis
- • LO 3: Analyze a company’s performance using ratio analysis
- • Price-Earnings Ratio
- • Liquidity Ratios
- • Solvency Ratios
- • Profitability Ratios
- • LO *4: Appendix 13A: Evaluate a company comprehensively using ratio analysis
- • A Look at IFRS
Chapter A: Specimen Financial Statements: Apple Inc.
Chapter B: Specimen Financial Statements: Columbia Sportswear Company
Chapter C: Specimen Financial Statements: VF Corporation
Chapter D: Specimen Financial Statements: Amazon.com, Inc.
Chapter E: Specimen Financial Statements: Wal-Mart Stores, Inc.
Chapter F: Specimen Financial Statements: Louis Vuitton
Chapter G: Time Value of Money
- • LO 1: Compute interest and future values
- • Nature of Interest
- • Future Value of a Single Amount
- • Future Value of an Annuity
- • LO 2: Compute present values
- • Present Value Variables
- • Present Value of a Single Amount
- • Present Value of an Annuity
- • Time Periods and Discounting
- • Present Value of a Long-Term Note or Bond
- • LO 3: Use a financial calculator to solve time value of money problems
- • Present Value of a Single Sum
- • Useful Applications of the Financial Calculator
Chapter H: Reporting and Analyzing Investments
- • LO 1: Explain how to account for debt investments
- • Why Corporations Invest
- • Accounting for Debt Investments
- • LO 2: Explain how to account for stock investments
- • Holdings of Less than 20%
- • Holdings Between 20% and 50%
- • Holdings of More than 50%
- • LO 3: Discuss how debt and stock investments are reported in the financial statements
- • Categories of Securities
- • Balance Sheet Presentation
- • Presentation of Realized and Unrealized Gain or Loss
- • Statement of Cash Flows Presentation
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