Accounting: Tools for Business Decision Making, 6th Edition [Rental Edition]
, by Kimmel, Paul D.; Weygandt, Jerry J.; Kieso, Donald E.![Accounting: Tools for Business Decision Making, 6th Edition [Rental Edition] by Kimmel, Paul D.; Weygandt, Jerry J.; Kieso, Donald E., 9781119624868](https://simages.biggerbooks.com/images/d/4/868/9781119624868.jpg "Accounting: Tools for Business Decision Making, 6th Edition [Rental Edition] by Kimmel, Paul D.; Weygandt, Jerry J.; Kieso, Donald E., 9781119624868")
- ISBN: 9781119624868 | 111962486X
- Cover: Hardcover
- Copyright: 8/6/2019
1 Introduction to Financial Statements 2
Knowing the Numbers 3
LO 1: Study the forms of business organization and the uses of accounting information 4
Forms of Business Organization 4
Users and Uses of Financial Information 5
Ethics in Financial Reporting 7
LO 2: Explain the three principal types of business activity 8
Financing Activities 9
Investing Activities 9
Operating Activities 9
LO 3: Describe the four financial statements and how they are prepared 11
Income Statement 11
Retained Earnings Statement 12
Balance Sheet 13
Statement of Cash Flows 14
Interrelationships of Statements 15
Other Elements of an Annual Report 18
A Look at IFRS 42
2 A Further Look at Financial Statements 44
Just Fooling Around? 45
LO 1: Identity the sections of a classified balance sheet 46
Current Assets 46
Long-Term Investments 48
Property, Plant, and Equipment 48
Intangible Assets 48
Current Liabilities 50
Long-Term Liabilities 50
Stockholders’ Equity 50
LO 2: Use ratios to evaluate a company’s profitability, liquidity, and solvency 51
Ratio Analysis 51
Using the Income Statement 52
Using a Classified Balance Sheet 53
Using the Statement of Cash Flows 57
LO 3: Discuss financial reporting concepts 58
The Standard-Setting Environment 58
Qualities of Useful Information 59
Assumptions in Financial Reporting 60
Principles in Financial Reporting 61
Cost Constraint 62
A Look at IFRS 87
3 The Accounting Information System 90
Accidents Happen 91
LO 1: Analyze the effect of business transactions on the basic accounting equation 92
Accounting Transactions 92
Analyzing Transactions 93
Summary of Transactions 99
LO 2: Explain how accounts, debits, and credits are used to record business transactions 100
Debits and Credits 101
Debit and Credit Procedures 101
Stockholders’ Equity Relationships 104
Summary of Debit/Credit Rules 105
LO 3: Indicate how a journal is used in the recording process 106
The Recording Process 106
The Journal 106
LO 4: Explain how a ledger and posting help in the recording process 109
The Ledger 109
Chart of Accounts 109
Posting 110
The Recording Process Illustrated 111
Summary Illustration of Journalizing and Posting 117
LO 5: Prepare a trial balance 119
Limitations of a Trial Balance 119
A Look at IFRS 148
4 Accrual Accounting Concepts 150
Keeping Track of Groupons 151
LO 1: Explain the accrual basis of accounting and the reasons for adjusting entries 152
The Revenue Recognition Principle 152
The Expense Recognition Principle 152
Accrual versus Cash Basis of Accounting 153
The Need for Adjusting Entries 154
Types of Adjusting Entries 155
LO 2: Prepare adjusting entries for deferrals 156
Prepaid Expenses 156
Unearned Revenues 160
LO 3: Prepare adjusting entries for accruals 163
Accrued Revenues 163
Accrued Expenses 164
Summary of Basic Relationships 167
LO 4: Prepare an adjusted trial balance and closing entries 170
Preparing the Adjusted Trial Balance 170
Preparing Financial Statements 171
Quality of Earnings 172
Closing the Books 175
Summary of the Accounting Cycle 177
LO *5: Appendix 4A: Describe the purpose and the basic form of a worksheet 182
A Look at IFRS 212
5 Merchandising Operations and the Multiple-Step Income Statement 214
Buy Now, Vote Later 215
LO 1: Describe merchandising operations and inventory systems 216
Operating Cycles 216
Flow of Costs 217
LO 2: Record purchases under a perpetual inventory system 219
Freight Costs 221
Purchase Returns and Allowances 221
Purchase Discounts 222
Summary of Purchasing Transactions 223
LO 3: Record sales under a perpetual inventory system 224
Sales Returns and Allowances 225
Sales Discounts 226
LO 4: Prepare a multiple-step income statement and a comprehensive income statement 227
Single-Step Income Statement 227
Multiple-Step Income Statement 228
Comprehensive Income Statement 231
LO 5: Determine cost of goods sold under a periodic inventory system 233
LO 6: Compute and analyze gross profit rate and profit margin 234
Gross Profit Rate 234
Profit Margin 235
LO *7: Appendix 5A: Record purchases and sales of inventory under a periodic inventory system 239
Recording Merchandise Transactions 239
Recording Purchases of Merchandise 239
Freight Costs 240
Recording Sales of Merchandise 240
Comparison of Entries—Perpetual vs Periodic 241
A Look at IFRS 264
6 Reporting and Analyzing Inventory 266
“Where is That Spare Bulldozer Blade?” 267
LO 1: Discuss how to classify and determine inventory 268
Classifying Inventory 268
Determining Inventory Quantities 269
LO 2: Apply inventory cost flow methods and discuss their financial effects 271
Specific Identification 272
Cost Flow Assumptions 273
Financial Statement and Tax Effects of Cost Flow Methods 277
Using Inventory Cost Flow Methods Consistently 280
LO 3: Explain the statement presentation and analysis of inventory 281
Presentation 281
Lower-of-Cost-or-Market 281
Analysis 283
Adjustments for LIFO Reserve 284
LO *4: Appendix 6A: Apply inventory cost flow methods to perpetual inventory records 287
First-In, First-Out (FIFO) 287
Last-In, First-Out (LIFO) 288
Average-Cost 289
LO *5: Appendix 6B: Indicate the effects of inventory errors on the financial statements 289
Income Statement Effects 289
Balance Sheet Effects 290
A Look at IFRS 314
7 Fraud, Internal Control, and Cash 316
Minding the Money in Madison 317
LO 1: Define fraud and the principles of internal control 318
Fraud 318
The Sarbanes-Oxley Act 318
Internal Control 319
Principles of Internal Control Activities 320
Limitations of Internal Control 326
LO 2: Apply internal control principles to cash 327
Cash Receipts Controls 328
Cash Disbursements Controls 330
LO 3: Identify the control features of a bank account 333
Electronic Funds Transfer (EFT) System 333
Bank Statements 333
Reconciling the Bank Account 334
LO 4: Explain the reporting of cash and the basic principles of cash management 340
Reporting Cash 340
Managing and Monitoring Cash 341
Cash Budgeting 344
LO *5: Appendix 7A: Explain the operation of a petty cash fund 347
Establishing the Petty Cash Fund 347
Making Payments from Petty Cash 347
Replenishing the Petty Cash Fund 348
A Look at IFRS 371
8 Reporting and Analyzing 374
What’s Cooking? 375
LO 1: Explain how companies recognize accounts receivable 376
Types of Receivables 376
Recognizing Accounts Receivable 376
LO 2: Describe how companies value accounts receivable and record their disposition 378
Valuing Accounts Receivable 378
Disposing of Accounts Receivable 385
LO 3: Explain how companies recognize, value, and dispose of notes receivable 387
Determining the Maturity Date 388
Computing Interest 388
Recognizing Notes Receivable 388
Valuing Notes Receivable 389
Disposing of Notes Receivable 389
LO 4: Describe the statement presentation of receivables and the principles of receivables management 391
Financial Statement Presentation of Receivables 391
Managing Receivables 392
Evaluating Liquidity of Receivables 394
Accelerating Cash Receipts 396
A Look at IFRS 419
9 Reporting and Analyzing Long-Lived Assets 422
A Tale of Two Airlines 423
LO 1: Explain the accounting for plant asset expenditures 424
Determining the Cost of Plant Assets 424
Expenditures During Useful Life 427
To Buy or Lease? 428
LO 2: Apply depreciation methods to plant assets 429
Factors in Computing Depreciation 430
Depreciation Methods 430
Revising Periodic Depreciation 435
Impairments 436
LO 3: Explain how to account for the disposal of plant assets 437
Sale of Plant Assets 437
Retirement of Plant Assets 438
LO 4: Identity the basic issues related to reporting intangible assets 439
Accounting for Intangible Assets 440
Types of Intangible Assets 440
LO 5: Discuss how long-lived assets are reported and analyzed 443
Presentation 443
Analysis 444
LO *6: Appendix 9A: Compute periodic depreciation using the declining-balance method and the units-of-activity method 449
Declining-Balance Method 449
Units-of-Activity Method 450
A Look at IFRS 475
10 Reporting and Analyzing Liabilities 478
And Then There Were Two 479
LO 1: Explain how to account for current liabilities 480
What Is a Current Liability? 480
Notes Payable 480
Sales Taxes Payable 481
Unearned Revenues 481
Current Maturities of Long-Term Debt 482
Payroll and Payroll Taxes Payable 483
LO 2: Describe the major characteristics of bonds 485
Types of Bonds 486
Issuing Procedures 486
Determining the Market Price of Bonds 486
LO 3: Explain how to account for bond transactions 489
Issuing Bonds at Face Value 489
Discount or Premium on Bonds 489
Issuing Bonds at a Discount 490
Issuing Bonds at a Premium 492
Redeeming Bonds at Maturity 493
Redeeming Bonds before Maturity 493
LO 4: Discuss how liabilities are reported and analyzed 495
Presentation 495
Analysis 496
LO *5: Appendix 10A: Apply the straight-line method of amortizing bond discount and bond premium 502
Amortizing Bond Discount 502
Amortizing Bond Premium 503
LO *6: Appendix 10B: Apply the effective-interest method of amortizing bond discount and bond premium 504
Amortizing Bond Discount 505
Amortizing Bond Premium 506
LO *7: Appendix 10C: Describe the accounting for long-term notes payable 507
A Look at IFRS 533
11 Reporting and Analyzing Stockholders’ Equity 536
Oh Well, I Guess I’ll Get Rich 537
LO 1: Discuss the major characteristics of a corporation 538
Characteristics of a Corporation 538
Forming a Corporation 541
Stockholder Rights 541
Stock Issue Considerations 542
Corporate Capital 544
LO 2: Explain how to account for the issuance of common and preferred stock, and the purchase of treasury stock 545
Accounting for Common Stock 545
Accounting for Preferred Stock 546
Treasury Stock 547
LO 3: Explain how to account for cash dividends and describe the effect of stock dividends and stock splits 549
Cash Dividends 549
Dividend Preferences 552
Stock Dividends 553
Stock Splits 555
LO 4: Discuss how stockholders’ equity is reported and analyzed 557
Retained Earnings 557
Retained Earnings Restrictions 558
Balance Sheet Presentation of Stockholders’ Equity 558
Analysis of Stockholders’ Equity 560
Debt versus Equity Decision 562
LO *5: Appendix 11A: Prepare entries for stock dividends 565
A Look at IFRS 587
12 Statement of Cash Flows 590
Got Cash? 591
LO 1: Discuss the usefulness and format of the statement of cash flows 592
Usefulness of the Statement of Cash Flows 592
Classification of Cash Flows 592
Significant Noncash Activities 593
Format of the Statement of
Cash Flows 594
LO 2: Prepare a statement of cash flows using the indirect method 595
Indirect and Direct Methods 596
Indirect Method—Computer Services Company 596
Step 1: Operating Activities 598
Summary of Conversion to Net Cash Provided by Operating Activities–Indirect Method 601
Step 2: Investing and Financing Activities 603
Step 3: Net Change in Cash 604
LO 3: Use the statement of cash flows to evaluate a company 607
The Corporate Life Cycle 607
Free Cash Flow 609
LO *4: Appendix 12A: Prepare a statement of cash flows using the direct method 611
Step 1: Operating Activities 613
Step 2: Investing and Financing Activities 617
Step 3: Net Change in Cash 618
LO *5: Appendix 12B: Use the T-account approach to prepare a statement of cash flows 618
A Look at IFRS 643
13 Financial Analysis: The Big Picture 646
It Pays to Be Patient 647
LO 1: Apply the concept of sustainable income and quality of earnings 648
Sustainable Income 648
Quality of Earnings 652
LO 2: Apply horizontal analysis and vertical analysis 654
Horizontal Analysis 655
Vertical Analysis 657
LO 3: Analyze a company’s performance using ratio analysis 660
Price-Earnings Ratio 660
Liquidity Ratios 660
Solvency Ratios 661
Profitability Ratios 661
LO *4: Appendix 13A: Evaluate a company comprehensively using ratio analysis 666
Liquidity Ratios 668
Solvency Ratios 670
Profitability Ratios 672
A Look at IFRS 699
14 Managerial Accounting 702
Just Add Water and Paddle 703
LO 1: Identify the features of managerial accounting and the functions of management 704
Comparing Managerial and Financial Accounting 704
Management Functions 704
Organizational Structure 706
LO 2: Describe the classes of manufacturing costs and the differences between product and period costs 708
Manufacturing Costs 708
Product Versus Period Costs 710
Illustration of Cost Concepts 710
LO 3: Demonstrate how to compute cost of goods manufactured and prepare financial statements for a manufacturer 712
Income Statement 712
Cost of Goods Manufactured 713
Cost of Goods Manufactured Schedule 714
Balance Sheet 714
LO 4: Discuss trends in managerial accounting 716
Service Industries 716
Focus on the Value Chain 717
Balanced Scorecard 718
Business Ethics 719
Corporate Social Responsibility 720
15 Job Order Costing 746
Profiting from the Silver Screen 747
LO 1: Describe cost systems and the flow of costs in a job order system 748
Process Cost System 748
Job Order Cost System 748
Job Order Cost Flow 749
Accumulating Manufacturing Costs 750
LO 2: Use a job cost sheet to assign costs to work in process 752
Raw Materials Costs 753
Factory Labor Costs 755
LO 3: Demonstrate how to determine and use the predetermined overhead rate 757
LO 4: Prepare entries for manufacturing and service jobs completed and sold 760
Assigning Costs to Finished Goods 760
Assigning Costs to Cost of Goods Sold 761
Summary of Job Order Cost Flows 761
Job Order Costing for Service Companies 763
Advantages and Disadvantages of Job Order
Costing 764
LO 5: Distinguish between under- and overapplied manufacturing overhead 765
Under- or Overapplied Manufacturing Overhead 766
16 Process Costing 788
The Little Guy Who Could 789
LO 1: Discuss the uses of a process cost system and how it compares to a job order system 790
Uses of Process Cost Systems 790
Process Costing for Service Companies 791
Similarities and Differences between Job Order Cost and Process Cost Systems 791
LO 2: Explain the flow of costs in a process cost system and the journal entries to assign manufacturing costs 793
Process Cost Flow 793
Assigning Manufacturing Costs—Journal Entries 793
LO 3: Compute equivalent units 796
Weighted-Average Method 796
Refinements on the Weighted-Average Method 797
LO 4: Complete the four steps to prepare a production cost report 799
Compute the Physical Unit Flow (Step 1) 800
Compute the Equivalent Units of Production (Step 2) 800
Compute Unit Production Costs (Step 3) 801
Prepare a Cost Reconciliation Schedule (Step 4) 802
Preparing the Production Cost Report 802
Costing Systems—Final Comments 803
LO *5: Appendix 16A: Compute equivalent units using the FIFO method 806
Equivalent Units Under FIFO 806
Comprehensive Example 807
FIFO and Weighted-Average 811
17 Activity-Based Costing 834
Precor is on Your Side 835
LO 1: Discuss the difference between traditional costing and activity-based costing 836
Traditional Costing Systems 836
Illustration of a Traditional Costing System 836
The Need for a New Approach 837
Activity-Based Costing 837
LO 2: Apply activity-based costing to a manufacturer 840
Identify and Classify Activities and Assign Overhead to Cost Pools (Step 1) 840
Identify Cost Drivers (Step 2) 840
Compute Activity-Based Overhead Rates (Step 3) 841
Allocate Overhead Costs to Products (Step 4) 841
Comparing Unit Costs 842
LO 3: Explain the benefits and limitations of activity based costing 845
The Advantage of Multiple Cost Pools 845
The Advantage of Enhanced Cost Control 846
The Advantage of Better Management Decisions 848
Some Limitations and Knowing When to Use ABC 849
LO 4: Apply activity-based costing to service industries 850
Traditional Costing Example 851
Activity-Based Costing Example 852
LO *5: Appendix 4A: Explain just-in-time (JIT) processing 855
Objective of JIT Processing 856
Elements of JIT Processing 856
Benefits of JIT Processing 856
18 Cost-Volume-Profit 882
Don’t Worry—Just Get Big 883
LO 1: Explain variable, fixed, and mixed costs and the relevant range 884
Variable Costs 884
Fixed Costs 885
Relevant Range 886
Mixed Costs 887
LO 2: Apply the high-low method to determine the components of mixed costs 888
High-Low Method 889
Importance of Identifying Variable and Fixed Costs 891
LO 3: Prepare a CVP income statement to determine contribution margin 892
Basic Components 892
CVP Income Statement 892
LO 4: Compute the break-even point using three approaches 896
Mathematical Equation 896
Contribution Margin Technique 897
Graphic Presentation 898
LO 5: Determine the sales required to earn target net income and determine margin of safety 899
Target Net Income 899
Margin of Safety 901
19 Cost-Volume-Profit Analysis: Additional Issues 922
Not Even a Flood Could Stop It 923
LO 1: Apply basic CVP concepts 924
Basic Concepts 924
Basic Computations 925
CVP and Changes in the Business Environment 926
LO 2: Explain the term sales mix and its effects on break-even sales 929
Break-Even Sales in Units 929
Break-Even Sales in Dollars 931
LO 3: Determine sales mix when a company has limited resources 933
LO 4: Indicate how operating leverage affects profitability 935
Effect on Contribution Margin Ratio 936
Effect on Break-Even Point 936
Effect on Margin of Safety Ratio 937
Operating Leverage 937
LO *5: Appendix 19A: Explain the differences between absorption costing and variable costing 940
Example: Comparing Absorption Costing with Variable Costing 940
Net Income Effects 942
Decision-Making Concerns 946
Potential Advantages of Variable Costing 948
20 Incremental Analysis 974
Keeping it Clean 975
LO 1: Describe management’s decision-making process and incremental analysis 976
Incremental Analysis Approach 976
How Incremental Analysis Works 977
Qualitative Factors 978
Relationship of Incremental Analysis and Activity-Based Costing 978
Types of Incremental Analysis 979
LO 2: Analyze the relevant costs in accepting an order at a special price 979
LO 3: Analyze the relevant costs in a make-or-buy decision 981
Opportunity Cost 982
LO 4: Analyze the relevant costs in determining whether to sell or process materials further 983
Single-Product Case 984
Multiple-Product Case 984
LO 5: Analyze the relevant costs to be considered in repairing, retaining, or replacing equipment 987
LO 6: Analyze the relevant costs in deciding whether to eliminate an unprofitable segment or product 988
21 Budgetary Planning 1014
What’s in Your Cupcake? 1015
LO 1: State the essentials of effective budgeting and the components of the master budget 1016
Budgeting and Accounting 1016
The Benefits of Budgeting 1016
Essentials of Effective Budgeting 1016
The Master Budget 1019
LO 2: Prepare budgets for sales, production, and direct materials 1021
Sales Budget 1021
Production Budget 1022
Direct Materials Budget 1023
LO 3: Prepare budgets for direct labor, manufacturing overhead, and selling and administrative expenses, and a budgeted income statement 1026
Direct Labor Budget 1026
Manufacturing Overhead Budget 1027
Selling and Administrative Expense Budget 1028
Budgeted Income Statement 1028
LO 4: Prepare a cash budget and a budgeted balance sheet 1030
Cash Budget 1030
Budgeted Balance Sheet 1033
LO 5: Apply budgeting principles to nonmanufacturing companies 1035
Merchandisers 1035
Service Companies 1036
Not-for-Profit Organizations 1037
22 Budgetary Control and Responsibility Accounting 1064
Pumpkin Madeleines and a Movie 1065
LO 1: Describe budgetary control and static budget reports 1066
Budgetary Control 1066
Static Budget Reports 1067
LO 2: Prepare flexible budget reports 1069
Why Flexible Budgets? 1069
Developing the Flexible Budget 1072
Flexible Budget—A Case Study 1072
Flexible Budget Reports 1074
LO 3: Apply responsibility accounting to cost and profit centers 1076
Controllable Versus Noncontrollable Revenues and Costs 1078
Principles of Performance Evaluation 1078
Responsibility Reporting System 1080
Types of Responsibility Centers 1082
LO 4: Evaluate performance in investment centers 1085
Return on Investment (ROI) 1085
Responsibility Report 1086
Judgmental Factors in ROI 1087
Improving ROI 1087
LO *5: Appendix 22A: Explain the difference between ROI and residual income 1091
Residual Income Compared to ROI 1091
Residual Income Weakness 1092
23 Standard Costs and Balanced Scorecard 1118
80,000 Different Caffeinated Combinations 1119
LO 1: Describe standard costs 1120
Distinguishing Between Standards and Budgets 1121
Setting Standard Costs 1121
LO 2: Determine direct materials variances 1125
Analyzing and Reporting Variances 1125
Direct Materials Variances 1126
LO 3: Determine direct labor and total manufacturing overhead variances 1129
Direct Labor Variances 1129
Manufacturing Overhead Variances 1131
LO 4: Prepare variance reports and balanced scorecards 1133
Reporting Variances 1133
Income Statement Presentation of Variances 1134
Balanced Scorecard 1135
LO *5: Appendix 23A: Identify the features of a standard cost accounting system 1139
Journal Entries 1139
Ledger Accounts 1141
LO *6: Appendix 23B: Compute overhead controllable and volume variances 1142
Overhead Controllable Variance 1142
Overhead Volume Variance 1143
24 Planning for Capital Investments 1166
Floating Hotels 1167
LO 1: Describe capital budgeting inputs and apply the cash payback technique 1168
Cash Flow Information 1168
Illustrative Data 1169
Cash Payback 1169
LO 2: Use the net present value method 1171
Equal Annual Cash Flows 1172
Unequal Annual Cash Flows 1173
Choosing a Discount Rate 1174
Simplifying Assumptions 1175
Comprehensive Example 1175
LO 3: Identify capital budgeting challenges and refinements 1176
Intangible Benefits 1176
Profitability Index for Mutually Exclusive Projects 1178
Risk Analysis 1180
Post-Audit of Investment Projects 1180
LO 4: Use the internal rate of return method 1182
Comparing Discounted Cash Flow Methods 1183
LO 5: Use the annual rate of return method 1184
A Specimen Financial Statements: Apple Inc. A-1
B Specimen Financial Statements: Columbia Sportswear Company B-1
C Specimen Financial Statements: VF Corporation C-1
D Specimen Financial Statements: Amazon.com, Inc D-1
E Specimen Financial Statements: Wal-Mart Stores, Inc E-1
F Specimen Financial F Statements: Louis Vuitton F-1
G Time Value of Money G-1
LO 1: Compute interest and future values G-1
Nature of Interest G-1
Future Value of a Single Amount G-3
Future Value of an Annuity G-4
LO 2: Compute present values G-7
Present Value Variables G-7
Present Value of a Single Amount G-7
Present Value of an Annuity G-9
Time Periods and Discounting G-11
Present Value of a Long-Term Note or Bond G-11
LO 3: Use a financial calculator to solve time value of money problems G-13
Present Value of a Single Sum G-14
Present Value of an Annuity G-15
Useful Applications of the Financial Calculator G-15
H Reporting and Analyzing Investments H-1
LO 1: Explain how to account for debt investments H-1
Why Corporations Invest H-1
Accounting for Debt Investments H-3
LO 2: Explain how to account for stock investments H-4
Holdings of Less than 20% H-4
Holdings Between 20% and 50% H-5
Holdings of More than 50% H-6
LO 3: Discuss how debt and stock investments are reported in the financial statements H-7
Categories of Securities H-7
Balance Sheet Presentation H-10
Presentation of Realized and Unrealized Gain or Loss H-11
Statement of Cash Flows Presentation H-12
*I Payroll Accounting I-1
LO 1: Record the payroll for a pay period I-1
Determining the Payroll I-2
Recording the Payroll I-5
LO 2: Record employer payroll taxes I-8
FICA Taxes I-8
Federal Unemployment Taxes I-8
State Unemployment Taxes I-8
Recording Employer Payroll Taxes I-9
Filing and Remitting Payroll Taxes I-9
LO 3: Discuss the objectives of internal control for payroll I-10
*J Subsidiary Ledgers and Special Journals J-1
LO 1: Describe the nature and purpose of a subsidiary ledger J-1
Subsidiary Ledger Example J-2
Advantages of Subsidiary Ledgers J-3
LO 2: Record transactions in special journals J-4
Sales Journal J-4
Cash Receipts Journal J-7
Purchases Journal J-11
Cash Payments Journal J-13
Effects of Special Journals on the General Journal J-16
Cyber Security: A Final Comment J-17
*K Accounting for Partnerships K-1
LO 1: Discuss and account for the formation of a partnerships K-1
Characteristics of Partnerships K-2
Organizations with Partnerships K-3
Advantages and Disadvantages of Partnerships K-3
The Partnership Agreement K-5
Accounting for a Partnership Formation K-5
LO 2: Explain how to account for net income or net loss of a partnership K-6
Dividing Net Income or Net Loss K-6
Partnership Financial Statements K-9
LO 3: Explain how to account for the liquidation of a partnerships K-10
No Capital Deficiency K-11
Capital Deficiency K-12
LO 4: Prepare Journal entries when a partner is either admitted or withdraws K-14
Admission of a Partner K-14
Withdrawal of a Partner K-18
*L Accounting for Sole Proprietorships L-1
LO 1: Identify the differences in equity accounts between a corporation and a sole proprietorship L-1
LO 2: Understand what accounts increase and decrease owner’s equity L-2
Owner’s Equity in a Sole Proprietorship L-2
Recording Transactions of a Proprietorship L-3
LO 3: Describe the differences between a retained earnings statement and an owner’s equity statement L-3
LO 4: Explain the process of closing the books for a sole proprietorship L-4
Preparing a Post-Closing Trail Balance for a Proprietorship L-7
*M Pricing M-1
LO 1: Compute a target cost when the market determines a product price M-2
Target Costing M-3
LO 2: Compute a target selling price using cost-plus pricing M-3
Cost-Plus Pricing M-3
Variable-Cost Pricing M-6
LO 3: Use time-and-material pricing to determine the cost of services provided M-7
LO 4: Determine a transfer price using the negotiated, cost-based, and market-based approaches M-9
Negotiated Transfer Prices M-10
Cost-Based Transfer Prices M-13
Market-Based Transfer Prices M-14
Effect of Outsourcing on Transfer Pricing M-15
Transfers between Divisions in Different Countries M-15
LO 5: Determine prices using absorption-cost pricing and variable-cost pricing M-15
Absorption-Cost Pricing M-16
Variable-Cost Pricing M-17
Company Index CI-1
Subject Index SI-1
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