Financial Accounting, Third Edition

360Textbook: Contents
Chapter 1: Introduction to accounting
1.1 The role of accounting information
What is accounting?
Users of accounting information
Financial accounting and management accounting
1.2 The regulatory environment
Generally accepted accounting principles (GAAP)
Financial Accounting Standards Board (FASB)
Securities and Exchange Commission (SEC)
International Accounting Standards Board (IASB)
General principles of accounting
1.3 Business structures
Introduction to business structures
Income tax and business structures
Summary of business structures
1.4 The accounting equation
The accounting equation
Assets
Liabilities
Equity
The expanded accounting equation
Capital
Withdrawals
Revenues
Expenses
1.5 Transaction analysis using the accounting equation
Transaction analysis
Steps in transaction analysis
Recording transactions using the accounting equation
A. Cash investment by owner
B. Purchased an asset with cash
C. Purchased an asset on credit
D. Paid for an asset purchased on credit
E. Received loan
F. Performed services for cash
G. Performed services on credit
H. Received cash from Accounts Receivable
I. Paid expense with cash
J. Owner withdraws cash from business
K. Non business transaction
Summary of transactions A to K introduced in this chapter
1.6 Introduction to financial statements
Financial statements
General points to note about financial statements
Income statement
Statement of changes in owner's equity
Balance sheet
Statement of cash flows
Relation between the financial statements
Chapter 2: Analyzing transactions
2.1 Introducing the accounting cycle
The accounting cycle
Source documents
The account
Asset accounts
Liability accounts
Equity accounts
Revenue accounts
Expense accounts
Chart of accounts
2.2 Introducing debits and credits
Debits, credits and T-accounts
Running balance account
Comparison of account formats
Double-entry accounting
General rules of debits and credits
Extension of the general rules
The normal balance of an account
2.3 General journal and general ledger
Journalizing transactions
The general journal
Posting to the general ledger
Posting entries using the running balance account format
Posting entries using the T-account format
2.4 An illustration of transaction analysis
An illustration of transaction analysis
A. Cash investment by owner
B. Purchased an asset with cash
C. Purchased an asset on credit
D. Paid for an asset purchased on credit
E. Received loan
F. Performed services for cash
G. Performed services on credit
H. Received cash from Accounts Receivable
I. Paid expense with cash
J. Owner withdraws cash from business
K. Non business transaction
L. Prepaid expense
M. Repayment of loan
N. Unearned revenue
O. Compound journal entry - Performed services for cash and credit
Summary of an illustration of transaction analysis
2.5 Trial balance
Trial balance
Preparing a trial balance
Identifying trial balance errors
Error type 1: Missing account
Error type 2: Incorrect debit/credit column used
Error type 3: Transposition or slide errors
Correcting errors
Journalizing correcting entries
Limitations of the trial balance
Preparing the financial statements from the trial balance
Chapter 3: Adjusting the accounts
3.1 Timing and reporting
The accounting period
Time period principle
Cash basis versus accrual basis
Recognizing revenues and expenses
3.2 Introduction to adjusting entries
Adjusting entries
Types of adjustments
Adjusting entries and the accounting cycle
3.3 Recording adjusting entries
Background information for adjusting entries
Prepaid expenses (Deferred expenses)
Depreciation
Unearned revenues
Accrued expenses
Accrued revenues
Summary of adjusting entries
3.4 The adjusted trial balance and financial statements
Adjusted trial balance
Preparing the financial statements from the adjusted trial balance
Appendix 3A: An alternative method of recording deferrals
Recording prepaid expenses in an expense account
Recording unearned revenues in a revenue account
Chapter 4: Completing the accounting cycle
4.1 The accounting worksheet
Accounting worksheet
Benefits of using a worksheet
Preparing a worksheet
Financial statements prepared from the worksheet
The purpose of using a worksheet
4.2 Classified balance sheet
Classified balance sheet
4.3 Closing entries
Closing the accounts
Temporary and permanent accounts
Recording closing entries
Summary of closing entries
4.4 Post-closing trial balance
Post-closing trial balance
4.5 Summary of the accounting cycle
Summary of the accounting cycle
4.6 The accounting cycle for partnerships and corporations
Completing the accounting cycle of a partnership
Completing the accounting cycle of a corporation
Appendix 4A: Reversing entries
Reversing entries
Illustration of reversing entries
The purpose of reversing entries
Chapter 5: Accounting for merchandising operations
5.1 Merchandising operations
Merchandising operations
The operating cycle of a merchandiser
Perpetual and periodic inventory systems
5.2 Recording purchases of merchandise (Perpetual inventory system)
Background information
Invoice
Purchase of merchandise for cash
Purchase of merchandise on credit
Purchase returns and allowances
Trade discounts on purchases
Purchase discounts
Transportation costs
5.3 Recording sales of merchandise (Perpetual inventory system)
Sale of merchandise on credit
Sales returns and allowances
Trade discounts on sales
Sales discounts
Sales taxes
5.4 Completing the accounting cycle of a merchandiser
Adjusting entries
Financial statements of a merchandiser
Closing entries of a merchandiser
5.5 The financial statements of a merchandiser
Multiple-step income statement
Single-step income statement
Classified balance sheet
Appendix 5A: Periodic inventory system
Periodic inventory system
Inventory transactions: periodic vs perpetual
Adjusting entries: periodic vs perpetual
Closing entries: periodic vs perpetual
The cost of goods sold under the periodic inventory system
Financial statements under the periodic inventory system
Appendix 5B: The accounting worksheet for merchandisers
Worksheet - (perpetual inventory)
Worksheet - (periodic inventory)
Chapter 6: Inventories
6.1 Inventory fundamentals
Defining inventory
Identifying inventory
Determining inventory costs
6.2 Inventory costing methods (perpetual inventory system)
Inventory costing methods
An illustration of inventory cost flow methods - perpetual inventory system
Specific identification - perpetual inventory system
First-in, first-out (FIFO) - perpetual inventory system
Last-in, first-out (LIFO) - perpetual inventory system
Moving average - perpetual inventory system
Comparison of inventory costing methods
Selecting an inventory costing method
Characteristics of each inventory costing method
6.3 Recording returns of merchandise using inventory cards (perpetual
inventory system)
Recording purchase returns into inventory cards - perpetual inventory
Recording sales returns into inventory cards - perpetual inventory
An illustration of returns using inventory cards - perpetual inventory
6.4 Valuing inventory at other than cost
Lower of cost or market
Calculating the ending balance of inventory using the LCM rule
Journalizing the adjusting entry to record inventory at LCM
Inventory errors and their effects on the financial statements
Appendix 6A: Inventory costing methods (Periodic inventory system)
An illustration of inventory cost flow methods - Periodic inventory system
Specific identification - periodic inventory system
First-in, first-out (FIFO) - periodic inventory system
Last-in, first-out (LIFO) - periodic inventory system
Weighted average - periodic inventory system
Chapter 7: Special journals and subsidiary ledgers
7.1 Introduction to special journals and subsidiary ledgers
Special journals
Control accounts and subsidiary ledgers
7.2 Sales cycle: the sales journal and cash receipts journal
Sales journal - perpetual inventory system
Sales journal - periodic inventory system
Cash receipts journal - perpetual inventory system
Cash receipts journal - periodic inventory system
Schedule of accounts receivable
7.3 Purchases cycle: the purchases journal and cash payments journal
Purchases journal - perpetual inventory system
Multi-purpose purchases journal
Purchases journal - periodic inventory system
Cash payments journal - perpetual inventory system
Cash payments journal - periodic inventory system
Schedule of accounts payable
7.4 Using the general journal with special journals and subsidiary ledgers
How special journals affect the general journal