Financial accounting

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Title:

Personal Author:

Antle, Rick

Publication Information:

Cincinnati, Ohio : Thomson Learning, 2002

ISBN:

9780538846714

Subject Term:

Accounting

Added Author:

Garstka, Stanley J.

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Library	Item Barcode	Call Number	Material Type	Item Category 1	Status
Searching... PSZ JB	30000010018187	HF5635 A72 2002	Open Access Book	Book	Searching... Unknown
Searching... SPACE KL Main Library	30000010018186	HF5635 A72 2002	Open Access Book	Book	Searching... Unknown

Developed to give students a thorough understanding of financial statement analysis, Financial Accounting allows students to see how financial statements are developed and how they are eventually used by business managers.

Part 1 Fundamentals of Accounting	p. 1
1. Introduction to Financial Accounting	p. 2
1.1 What Is Accounting?	p. 3
1.1.1 Framework for Understanding Accounting Information	p. 3
1.1.2 Financial Histories: The Financial Statements	p. 4
1.2 Why Study Accounting?	p. 8
1.2.1 Decision Making	p. 8
1.2.2 Accounting Is More Than Just Numbers	p. 9
1.3 Economic Concepts	p. 12
1.3.1 Financial Value	p. 12
1.3.2 Wealth	p. 13
1.3.3 Economic Income	p. 14
1.3.4 Importance of Financial Value, Wealth, and Economic Income in Accounting	p. 14
1.4 Accounting Conventions	p. 16
1.4.1 Nature of Accounting Conventions	p. 16
1.4.2 Factors Affecting Accounting Conventions	p. 17
1.5 Institutional Context	p. 18
1.6 Conclusion	p. 20
2. Balance Sheet Concepts: Assets, Liabilities and Equities	p. 23
2.1 Basic Definitions, Theory, and Examples	p. 23
2.1.1 The Entity Concept	p. 23
2.1.2 Assets: Definition	p. 24
2.1.3 Assets: Examples	p. 24
2.1.4 Assets: Valuation	p. 28
2.1.5 Liabilities: Definition	p. 28
2.1.6 Liabilities: Examples	p. 28
2.1.7 Liabilities: Valuation	p. 31
2.1.8 Equities: Definition	p. 32
2.1.9 Equities: Examples	p. 32
2.1.10 Examples: Concluding Remarks	p. 33
2.2 Balance Sheet Construction: Using the Accounting Identity	p. 34
2.2.1 An Example: Websell	p. 34
2.3 T-accounts, Debits and Credits	p. 38
2.4 Analyses Using Balance Sheet Information	p. 42
2.5 Conclusion	p. 43
3. Income Statement Concepts: Income, Revenues and Expenses	p. 45
3.1 Income (loss)	p. 47
3.2 Revenues	p. 52
3.3 Expenses	p. 54
3.4 Gains and Losses	p. 57
3.5 Debits and Credits	p. 57
3.5.1 A Word About Ledgers and Journals	p. 59
3.5.2 An Example: Continuing Websell	p. 59
3.5.3 The Processing of Adjusting	p. 62
3.6 Conclusion	p. 69
4. Cash Flow Statements	p. 70
4.1 Cash	p. 71
4.2 Cash Flows versus Net Income	p. 73
4.2.1 An Example: Total Joy Company	p. 73
4.3 The Cash Flow Statement	p. 80
4.3.1 Investing Activities	p. 81
4.3.2 Financing Activities	p. 81
4.3.3 Operating Activities	p. 82
4.3.4 Types of Cash Flows and Types of Accounts	p. 82
4.4 Methods of Deriving Cash Flow Statements	p. 83
4.4.1 Direct Method	p. 83
4.4.2 Indirect Method	p. 85
4.5 Conclusion	p. 94
5. Using the Accounting Framework: America Online, Inc.	p. 97
5.1 AOL: Business and Environment	p. 98
5.2 AOL's Balance Sheet	p. 99
5.3 AOL's Income Statement	p. 101
5.4 Notes to AOL's Financial Statements	p. 102
5.5 AOL's Cash Flow Statement	p. 105
5.6 Using Articulation to Complete the Picture	p. 107
5.7 Analysis and Discussion	p. 108
5.8 Conclusion	p. 112
Part 2 Valuation Basics and Accounting Measures	p. 99
6. Economic Concepts: Behind the Accounting Numbers	p. 114
6.1 Accounting Adjustment	p. 116
6.1.1 Websell's Adjustments	p. 116
6.2 Adjustment Approach 1: Estimate the Remaining Asset Value	p. 116
6.3 Adjustment Approach 2: Estimate the Amount of Expense for the Period	p. 118
6.3.1 Adjustments and Valuation	p. 119
6.4 Cash Flows and Economic Value	p. 120
6.5 Uncertain Cash Flows: Expected Value	p. 125
6.5.1 Relationship to Accounting	p. 126
6.6. Time and Uncertainty: Combining Present and Expected Values	p. 127
6.7 Conclusion	p. 128
7. Financial Statement Analysis: Connecting Economic Concepts to Accounting Reports	p. 130
7.1 Alternative Measures of Value: A Framework for Financial Statement Analysis	p. 132
7.1.1 The Value of a Firm in the Stock Market	p. 132
7.1.2 GAAP Valuation	p. 133
7.1.3 Financial Statement Analysis	p. 134
7.1.4 Conceptual Framework for Financial Statement Analysis	p. 134
7.2 Harrodsburg First Financial Bancorp, Inc.	p. 137
7.3 Microsoft Corporation	p. 145
7.4 Discussion	p. 152
Part 3 Topics in Financial Reporting	p. 155
8. Accounts Receivable	p. 156
8.1 Nature of Accounts Receivable	p. 157
8.1.1 An Example: LECG, Inc.	p. 157
8.2 Economic Value of Accounts Receivable	p. 160
8.3 GAAP for Accounts Receivable	p. 162
8.3.1 Determining Bad Debt Expense and the Allowance for Bad Debts	p. 166
8.4 Comparison of GAAP and Economic Value	p. 168
8.4.1 Discussion	p. 170
8.5 Financial Statement Analysis of Accounts Receivable	p. 171
8.6 Conclusion	p. 172
9. Inventories	p. 173
9.1 Nature of Inventories	p. 174
9.1.1 An Example: Maytag	p. 175
9.2 Economic Value of Inventories	p. 176
9.3 GAAP for Inventories	p. 179
9.3.1 FIFO (First-in, First-out)	p. 180
9.3.2 LIFO (Last-in, First-out)	p. 181
9.4 Comparison of GAAP and Economic Values	p. 185
9.5 Financial Statement Analysis of Inventory	p. 186
9.6 Conclusion	p. 187
10. Marketable Securities	p. 189
10.1 Nature of Marketable Securities	p. 190
10.1.1 An Example: Merrill Lynch	p. 190
10.2 Economic Value of Marketable Securities	p. 193
10.2.1 An Example	p. 193
10.3 GAAP for Marketable Securities	p. 194
10.3.1 Trading Securities	p. 194
10.3.2 Available-for-Sale Securities	p. 196
10.3.3 Held-to-Maturity Securities	p. 199
10.4 Comparison of GAAP and Economic Values	p. 200
10.5 Financial Statement Analysis of Marketable Securities	p. 202
10.6 Conclusion	p. 203
11. Long-Lived Assets	p. 205
11.1 Nature of Long-Lived Assets	p. 206
11.1.1 An Example: Quaker Oats	p. 206
11.2 Economic Value of Long-Lived Assets	p. 210
11.3 GAAP for Long-Lived Assets	p. 212
11.3.1 Capitalization vs. Expense	p. 212
11.3.2 Valuation	p. 213
11.3.3 Depreciation	p. 213
11.4 Comparison of GAAP and Economic Values	p. 216
11.4.1 Changing Expectations	p. 216
11.4.2 Asset Impairment	p. 218
11.5 Financial Statement Analysis	p. 220
11.6 Conclusion	p. 220
12. Long-Term Liabilities	p. 223
12.1 Nature of Long-Term Liabilities	p. 224
12.1.1 General Characteristics of Financial Instruments	p. 224
12.1.2 Classification of Long-Term Financing Instruments	p. 227
12.1.3 An Example: Northwest Airlines	p. 227
12.1.4 Conclusion	p. 229
12.2 Economic Value of Long-Term Liabilities	p. 230
12.3 GAAP for Long-Term Liabilities	p. 234
12.3.1 Operating and Capital Leases	p. 235
12.3.2 Retirement of Long-Term Liabilities	p. 237
12.4 Comparison of GAAP and Economic Values	p. 238
12.5 Financial Statement Analysis of Long-Term Liabilities	p. 241
12.6 Conclusion	p. 245
13. Equities	p. 254
13.1 The Nature of Equities	p. 255
13.1.1 Ownership	p. 255
13.1.2 Equity, Debt, and Hybrid Financial Instruments	p. 257
13.1.3 An Example: 3M	p. 258
13.2 Economic Value Equities	p. 262
13.3 GAAP for Equities	p. 263
13.3.1 Issuance and Retirement	p. 263
13.3.2 Treasury Stock	p. 263
13.3.3 Conversion	p. 266
13.3.4 Distributions to Shareholders	p. 266
13.3.5 Stock Splits and Stock Dividends	p. 267
13.3.6 Conclusion	p. 268
13.4 Financial Statement Analysis of Equities	p. 269
13.4.1 Earnings per Share	p. 269
13.4.2 Employee Stock Options	p. 271
13.4.3 Conclusion	p. 272
14. Income Taxes	p. 274
14.1 Nature of Income Taxes	p. 275
14.1.1 An Example: Northwest Airlines	p. 276
14.1.2 Example of TAP Financial Statements	p. 283
14.2 Economic Value of Deferred Income Taxes	p. 288
14.2.1 Example of Deferred Tax Liability Creation: Depreciation	p. 288
14.2.3 Example of Deferred Tax Asset Creation: Warranties	p. 290
14.3 GAAP for Deferred Income Taxes	p. 291
14.4 GAAP vs. TAP Accounts for NetService and the GAAP Tax Adjustments	p. 294
14.5 Comparison of GAAP and Economic Values for Deferred Income Taxes	p. 296
14.6 Analysis of Deferred Income Taxes	p. 296
14.7 Conclusion	p. 297
15. Active Investments in Corporations	p. 298
15.1 The Nature of Active Investments	p. 300
15.1.1 An Example: Xerox Corporation	p. 301
15.2 The Economics of Active Investments	p. 305
15.3 GAAP for Active Investments	p. 306
15.3.1 The Equity Method	p. 306
15.3.2 Consolidation Method	p. 308
15.3.3 Purchase Method	p. 309
15.3.4 Pooling of Interests	p. 310
15.4 Do GAAP Capture the Economics?	p. 311
15.5 Ratio Analysis of Consolidated Statements	p. 311
15.6 Conclusion	p. 312
16. Financial Statement Analysis and the Valuation of Common Stock	p. 323
16.1 Background: Valuation of a Company Using Discounted Cash Flow Analysis	p. 325
16.2 Coldwater Creek	p. 326
16.2.1 Coldwater's Balance Sheets	p. 328
16.2.2 Catalog Costs	p. 330
16.2.3 Executive Loans	p. 330
16.3 Time-Series Benchmarks	p. 331
16.3.1 Current Ratio	p. 331
16.3.2 Quick Ratio	p. 332
16.3.3 Debt-to-Equity	p. 332
16.3.4 Long-Term Debt-to-Equity	p. 332
16.4 Cross-Sectional Benchmarks	p. 334
16.4.1 Coldwater's Income Statements	p. 335
16.4.2 Key Step: Articulation	p. 336
16.5 Projections	p. 339
16.6 Valuation	p. 345
16.7 Conclusion	p. 346
Glossary	p. 1
Answers to Review Questions	p. 1
Index	p. 1

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