Test Bank for Financial Accounting Tools for Business Decision Making, 6th Edition: Kimmel

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Product details:

• ISBN-10 ‏ : ‎ 0470917555
• ISBN-13 ‏ : ‎ 978-0470917558
• Author: Paul D. Kimmel; Jerry J. Weygandt;  Donald E. Kieso

This successful book continues to provide accountants with an understanding of the fundamental concepts necessary to use accounting effectively. The sixth edition offers new discussions on IFRS, including new codification numbers, examples of IFRS financial statements, and additional exercises. A look at more recent frauds such as the Bernie Madoff scandal have been added. Enhanced discussions of ethics and international accounting are presented. The coverage of non-cash items and their impact on decision making has been expanded. In addition, comprehensive case studies and problems help accountants tie the material together. 

Table of contents:

1 Introduction to Financial Statements 1-1

Knowing the Numbers: Columbia Sportswear Company 1-1

1.1 Business Organization and Accounting Information Uses 1-2

Forms of Business Organization 1-3

Users and Uses of Financial Information 1-4

Data Analytics 1-6

Ethics in Financial Reporting 1-7

1.2 The Three Types of Business Activity 1-8

Financing Activities 1-9

Investing Activities 1-9

Operating Activities 1-10

1.3 The Four Financial Statements 1-11

Income Statement 1-12

Retained Earnings Statement 1-13

Balance Sheet 1-14

Statement of Cash Flows 1-16

Interrelationships of Statements 1-17

Elements of an Annual Report 1-20

Appendix 1A: Career Opportunities in Accounting 1-23

“Show Me the Money” 1-24

2 A Further Look at Financial Statements 2-1

Just Fooling Around?: The Motley Fool 2-2

2.1 The Classified Balance Sheet 2-3

Current Assets 2-3

Long-Term Investments 2-5

Property, Plant, and Equipment 2-5

Intangible Assets 2-5

Current Liabilities 2-7

Long-Term Liabilities 2-7

Stockholders’ Equity 2-7

2.2 Analyzing the Financial Statements Using Ratios 2-8

Ratio Analysis 2-8

Using the Income Statement 2-9

Using a Classified Balance Sheet 2-10

2.3 Financial Reporting Concepts 2-14

The Standard-Setting Environment 2-14

Qualities of Useful Information 2-16

Assumptions in Financial Reporting 2-17

Principles in Financial Reporting 2-18

Cost Constraint 2-18

3 The Accounting Information System 3-1

Accidents Happen: MF Global Holdings Ltd 3-1

3.1 Using the Accounting Equation to Analyze Transactions 3-3

Accounting Transactions 3-3

Analyzing Transactions 3-4

Summary of Transactions 3-10

3.2 Accounts, Debits, and Credits 3-11

Debits and Credits 3-11

Debit and Credit Procedures 3-12

Stockholders’ Equity Relationships 3-15

Summary of Debit/Credit Rules 3-16

3.3 Using a Journal 3-17

The Recording Process 3-17

The Journal 3-18

3.4 The Ledger and Posting 3-20

The Ledger 3-20

Chart of Accounts 3-21

Posting 3-21

The Recording Process Illustrated 3-22

Summary Illustration of Journalizing and Posting 3-28

3.5 The Trial Balance 3-30

Limitations of a Trial Balance 3-31

4 Accrual Accounting Concepts 4-1

Keeping Track of Groupons: Groupon 4-1

4.1 Accrual-Basis Accounting and Adjusting Entries 4-2

The Revenue Recognition Principle 4-3

The Expense Recognition Principle 4-4

Accrual versus Cash Basis of Accounting 4-5

The Need for Adjusting Entries 4-5

Types of Adjusting Entries 4-6

4.2 Adjusting Entries for Deferrals 4-7

Prepaid Expenses 4-7

Unearned Revenues 4-12

4.3 Adjusting Entries for Accruals 4-15

Accrued Revenues 4-15

Accrued Expenses 4-17

Summary of Basic Relationships 4-20

4.4 The Adjusted Trial Balance and Closing Entries 4-23

Preparing the Adjusted Trial Balance 4-23

Preparing Financial Statements 4-24

Quality of Earnings 4-24

Closing the Books 4-27

Summary of the Accounting Cycle 4-30

Appendix 4A: Using a Worksheet 4-34

5 Merchandising Operations and the Multiple-Step Income Statement 5-1

Buy Now, Vote Later: REI 5-1

5.1 Merchandising Operations and Inventory Systems 5-2

Operating Cycles 5-3

Flow of Costs 5-4

5.2 Recording Purchases Under a Perpetual System 5-6

Freight Costs 5-8

Purchase Returns and Allowances 5-9

Purchase Discounts 5-10

Summary of Purchasing Transactions 5-11

5.3 Recording Sales Under a Perpetual System 5-11

Sales Returns and Allowances 5-13

Sales Discounts 5-14

Data Analytics and Credit Sales 5-15

5.4 Preparing the Multiple-Step Income Statement 5-16

Single-Step Income Statement 5-16

Multiple-Step Income Statement 5-17

5.5 Cost of Goods Sold Under a Periodic System 5-21

5.6 Gross Profit Rate and Profit Margin 5-23

Gross Profit Rate 5-23

Profit Margin 5-24

Appendix 5A: Periodic Inventory System 5-27

Recording Merchandise Transactions 5-27

Recording Purchases of Merchandise 5-28

Freight Costs 5-28

Recording Sales of Merchandise 5-28

Comparison of Entries—Perpetual vs. Periodic 5-29

Appendix 5B: Adjusting Entries for Credit Sales with Returns and Allowances 5-30

Data Analytics in Action 5-52

6 Reporting and Analyzing Inventory 6-1

“Where Is That Spare Bulldozer Blade?”: Caterpillar 6-1

6.1 Classifying and Determining Inventory 6-2

Classifying Inventory 6-2

Determining Inventory Quantities 6-4

6.2 Inventory Methods and Financial Effects 6-7

Specific Identification 6-7

Cost Flow Assumptions 6-8

Financial Statement and Tax Effects of Cost Flow Methods 6-13

Using Inventory Cost Flow Methods Consistently 6-15

6.3 Inventory Presentation and Analysis 6-17

Presentation 6-17

Lower-of-Cost-or-Net Realizable Value 6-17

Financial Analysis and Data Analytics 6-18

Adjustments for LIFO Reserve 6-21

Appendix 6A: Inventory Cost Flow Methods in Perpetual Inventory Systems 6-24

First-In, First-Out (FIFO) 6-24

Last-In, First-Out (LIFO) 6-25

Average-Cost 6-26

Appendix 6B: Effects of Inventory Errors 6-27

Income Statement Effects 6-27

Balance Sheet Effects 6-28

Data Analytics in Action 6-49

7 Fraud, Internal Control, and Cash 7-1

Minding the Money in Madison: Barriques 7-1

7.1 Fraud and Internal Control 7-3

Fraud 7-3

The Sarbanes-Oxley Act 7-3

Internal Control 7-4

Principles of Internal Control Activities 7-5

Data Analytics and Internal Controls 7-10

Limitations of Internal Control 7-11

7.2 Cash Controls 7-12

Cash Receipts Controls 7-12

Cash Disbursements Controls 7-14

Petty Cash Fund 7-16

7.3 Control Features of a Bank Account 7-17

Electronic Banking 7-18

Bank Statements 7-18

Reconciling the Bank Account 7-20

7.4 Reporting Cash 7-25

Cash Equivalents 7-26

Restricted Cash 7-26

Managing and Monitoring Cash 7-27

Cash Budgeting 7-29

Appendix 7A: Operation of a Petty Cash Fund 7-32

Establishing the Petty Cash Fund 7-33

Making Payments from the Petty Cash Fund 7-33

Replenishing the Petty Cash Fund 7-34

Data Analytics in Action 7-56

8 Reporting and Analyzing Receivables 8-1

What’s Cooking?: Nike 8-1

8.1 Recognition of Accounts Receivable 8-3

Types of Receivables 8-3

Recognizing Accounts Receivable 8-3

8.2 Valuation and Disposition of Accounts Receivable 8-5

Valuing Accounts Receivable 8-5

Disposing of Accounts Receivable 8-13

8.3 Notes Receivable 8-15

Determining the Maturity Date 8-16

Computing Interest 8-16

Recognizing Notes Receivable 8-17

Valuing Notes Receivable 8-17

Disposing of Notes Receivable 8-17

8.4 Receivables Presentation and Management 8-20

Financial Statement Presentation of Receivables 8-20

Managing Receivables 8-21

Evaluating Liquidity of Receivables 8-23

Accelerating Cash Receipts 8-24

Data Analytics and Receivables Management 8-25

Data Analytics in Action 8-46

9 Reporting and Analyzing Long-Lived Assets 9-1

A Tale of Two Airlines: American Airlines 9-1

9.1 Plant Asset Expenditures 9-3

Determining the Cost of Plant Assets 9-3

Expenditures During Useful Life 9-6

To Buy or Lease? 9-7

9.2 Depreciation Methods 9-8

Factors in Computing Depreciation 9-9

Depreciation Methods 9-9

Revising Periodic Depreciation 9-14

Impairments 9-15

9.3 Plant Asset Disposals 9-16

Sale of Plant Assets 9-16

Retirement of Plant Assets 9-18

9.4 Intangible Assets 9-19

Accounting for Intangible Assets 9-19

Types of Intangible Assets 9-20

Research and Development Costs 9-22

9.5 Statement Presentation and Analysis 9-23

Presentation 9-23

Analysis 9-25

Appendix 9A: Other Depreciation Methods 9-30

Declining-Balance Method 9-30

Units-of-Activity Method 9-31

Data Analytics in Action 9-55

10 Reporting and Analyzing Liabilities 10-1

And Then There Were Two: Maxwell Car Company 10-1

10.1 Accounting for Current Liabilities 10-3

What Is a Current Liability? 10-3

Notes Payable 10-3

Sales Taxes Payable 10-4

Unearned Revenues 10-5

Current Maturities of Long-Term Debt 10-6

Payroll and Payroll Taxes Payable 10-6

10.2 Characteristics of Bonds 10-9

Types of Bonds 10-9

Issuing Procedures 10-10

Bond Trading 10-10

Determining the Market Price of a Bond 10-11

10.3 Accounting for Bond Transactions 10-14

Issuing Bonds at Face Value 10-14

Discount or Premium on Bonds 10-14

Issuing Bonds at a Discount 10-15

Issuing Bonds at a Premium 10-17

Redeeming Bonds at Maturity 10-19

Redeeming Bonds Before Maturity 10-19

10.4 Presentation and Analysis 10-20

Presentation 10-20

Analysis 10-22

Appendix 10A: Straight-Line Amortization 10-26

Amortizing Bond Discount 10-26

Amortizing Bond Premium 10-28

Appendix 10B: Effective-Interest Amortization 10-29

Amortizing Bond Discount 10-29

Amortizing Bond Premium 10-31

Appendix 10C: Accounting for Long-Term Notes Payable 10-32

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