Accounting what numbers mean 12e by marshall

page i Twelfth Edition Accounting What the Numbers Mean David H Marshall, MBA, CPA, CMA Wayne W McManus, LLM, JD, MS, MBA, CFA, CPA, CMA, CIA Professor of Accounting and Law International College of the Cayman Islands Daniel F Viele, MS, CPA, CMA Professor of Accounting Dean, School of Adult & Online Education Maryville University page ii ACCOUNTING: WHAT THE NUMBERS MEAN, TWELFTH EDITION Published by McGraw-Hill Education, Penn Plaza, New York, NY 10121 Copyright © 2020 by McGraw-Hill Education All rights reserved Printed in the United States of America Previous editions © 2017, 2014, and 2011 No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning Some ancillaries, including electronic and print components, may not be available to customers outside the United States This book is printed on acid-free paper LWI 21 20 19 ISBN 978-1-259-96952-2 MHID 1-259-96952-5 (bound edition) ISBN 978-1-260-48069-6 (loose-leaf edition) MHID 1-260-48069-0 (loose-leaf edition) Portfolio Manager: Steve Schuetz Product Developers: Jaroslaw Szymanski / Michael McCormick Marketing Manager: Michelle Williams Lead Content Project Managers: Dana M Pauley / Brian Nacik Senior Buyer: Sandy Ludovissy Design: Jessica Cuevas Content Licensing Specialist: Beth Cray Cover Image: ©Ingram Publishing Compositor: SPi Global All credits appearing on page or at the end of the book are considered to be an extension of the copyright page Library of Congress Cataloging-in-Publication Data Names: Marshall, David H., author | McManus, Wayne W., author | Viele, Daniel F., author Title: Accounting : what the numbers mean / David H Marshall, MBA, CPA, CMA, Professor of Accounting Emeritus, Millikin University, Wayne W McManus, LLM, JD, MS, MBA, CFA, CPA, CMA, CIA, Professor of Accounting and Law, International College of the Cayman Islands, Daniel F Viele, MS, CPA, CMA, Professor of Accounting, Dean, School of Adult & Online Education, Maryville University Description: Twelfth edition | New York, NY : McGraw-Hill Education, [2020] Identifiers: LCCN 2018043223 | ISBN 9781259969522 (alk paper) Subjects: LCSH: Accounting | Managerial accounting Classification: LCC HF5636 M37 2020 | DDC 657—dc23 LC record available at https://lccn.loc.gov/2018043223 The Internet addresses listed in the text were accurate at the time of publication The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites mheducation.com/highered page iii   Meet the Authors Courtesy of David H Marshall David H Marshall (1933–2018) was Professor of Accounting Emeritus at Millikin University He taught at Millikin, a small, independent university located in Decatur, Illinois, for 25 years He taught courses in accounting, finance, computer information systems, and business policy, and was recognized as an outstanding teacher The draft manuscript of this book was written in 1986 and used in a one-semester course that was developed for the nonbusiness major Subsequently supplemented with cases, it was used in the business core accounting principles and managerial accounting courses Concurrently, a one-credit-hour accounting laboratory taught potential accounting majors the mechanics of the accounting process Prior to his teaching career, Marshall worked in public accounting and industry and he earned an MBA from Northwestern University Professor Marshall’s interests outside academia included community service, woodturning, sailing, and travel It is with great sadness that we announce his passing on April 17, 2018 Courtesy of Wayne W MacManus Wayne W McManus makes his home in Grand Cayman, Cayman Islands, BWI, where he worked in the private banking sector for several years and is now a semiretired consultant He maintains an ongoing relationship with the International College of the Cayman Islands as an adjunct Professor of Accounting and Law and is the Chair of the College’s Board of Trustees McManus offers the Cayman CPA Review course through the Financial Education Institute Ltd and several professional development courses through the Chamber of Commerce He earned an MS in accounting from Illinois State University, an MBA from the University of Kansas, a law degree from Northern Illinois University, and a master’s of law in taxation from the University of Missouri–Kansas City He serves as an independent director and chairman of the audit committee for Endeavour Mining Corp (EDV on the TSX exchange) He is a member of the Cayman Islands Institute of Professional Accountants and the local chapter of the CFA Institute Professor McManus volunteers as a “professional” Santa each December, enjoys travel, golf, and scuba diving, and is an audio/video enthusiast Courtesy of Daniel F Viele Daniel F Viele is Professor of Accounting and currently serves as Dean of the School of Adult and Online Education and directs the Office of Strategic Information at Maryville University of Saint Louis He has taught courses in financial, managerial, and cost accounting, as well as accounting information systems Prior to joining Maryville, Professor Viele’s previous teaching experience includes 15 years at Webster University and 10 years at Millikin University with Professor Marshall He has also served as a systems consultant to the graphics arts industry Professor Viele has developed and taught numerous online graduate courses, and for his leadership role in pioneering online teaching and learning, he was presented a Presidential Recognition Award His students and colleagues have also cited his dedication to teaching and innovative use of technology for which Webster awarded him its highest honor—the Kemper Award for Teaching Excellence Professor Viele holds an MS in accounting from Colorado State University and has completed the Information Systems Faculty Development Institute at the University of Minnesota and the Advanced Information Systems Faculty Development Institute at Indiana University He is a member of the American Accounting Association and the Institute of Management Accountants, where he has served as president of the Sangamon Valley Chapter and as a member of the National Board of Directors Professor Viele enjoys sports of all kinds, boating, and a good book page iv   In Loving Memory of David H Marshall March 12, 1933 - April 17, 2018 David was our colleague, mentor, and friend The marks that he left on each of our lives are indelible and will never be forgotten Words simply cannot describe what a good man that he was “Write down what you know, and solve for the difference.” Wayne and Dan page v Preface Named after a Chinese word meaning “sparrow,” mah-jongg is a centuries-old game of skill The object of the game is to collect different tiles; players win points by accumulating different combinations of pieces and creating patterns We’ve chosen mah-jongg tiles as our cover image for the twelfth edition of Accounting: What the Numbers Mean because the text is designed to show students how to put the pieces together and understand their relationship to one another to see the larger pattern Accounting has become known as the language of business Financial statements result from the accounting process and are used by owners/investors, employees, creditors, and regulators in their planning, controlling, and decision-making activities as they evaluate the achievement of an organization’s objectives Accounting: What the Numbers Mean takes the user through the basics: what accounting information is, how it is developed, how it is used, and what it means Financial statements are examined to learn what they and not communicate, enhancing the student’s decision-making and problem-solving abilities from a user perspective Achieving expertise in the preparation of financial statements is not an objective of this text Instead, we have designed these materials to assist those who wish to learn “what the numbers mean” in a clear, concise, and conceptual manner, without focusing on the mechanical aspects of the accounting process The user-oriented approach taken by this text will benefit a variety of nonaccounting majors, including students focusing on other areas of business or nonbusiness programs such as engineering, behavioral sciences, public administration, or prelaw Aspiring MBA and other graduate management or administration students who not have an undergraduate business degree will likewise benefit from a course using this text Best wishes for successful use of the information presented here David H Marshall Wayne W McManus Daniel F Viele page vi Students—study more efficiently, retain more and achieve better outcomes Instructors—focus on what you love— teaching SUCCESSFUL SEMESTERS INCLUDE CONNECT FOR INSTRUCTORS You’re in the driver’s seat Want to build your own course? No problem Prefer to use our turnkey, prebuilt course? Easy Want to make changes throughout the semester? Sure And you’ll save time with Connect’s auto-grading too They’ll thank you for it Adaptive study resources like SmartBook® help your students be better prepared in less time You can transform your class time from dull definitions to dynamic debates Hear from your peers about the benefits of Connect at www.mheducation.com/highered/connect Make it simple, make it affordable Connect makes it easy with seamless integration using any of the major Learning Management Systems—Blackboard®, Canvas, and D2L, among others—to let you organize your course in one convenient location Give your students access to digital materials at a discount with our inclusive access program Ask your McGraw-Hill representative for more information ©Hill Street Studios/Tobin Rogers/Blend Images LLC Solutions for your challenges A product isn’t a solution Real solutions are affordable, reliable, and come with training and ongoing support when you need it and how you want it Our Customer Experience Group can also help you troubleshoot tech problems—although Connect’s 99% uptime means you might not need to call them See for yourself at status.mheducation.com page vii FOR STUDENTS ©Shutterstock/wavebreakmedia Effective, efficient studying Connect helps you be more productive with your study time and get better grades using tools like SmartBook, which highlights key concepts and creates a personalized study plan Connect sets you up for success, so you walk into class with confidence and walk out with better grades “I really liked this app—it made it easy to study when you don't have your textbook in front of you.” - Jordan Cunningham, Eastern Washington University Study anytime, anywhere Download the free ReadAnywhere app and access your online eBook when it’s convenient, even if you’re offline And since the app automatically syncs with your eBook in Connect, all of your notes are available every time you open it Find out more at www.mheducation.com/readanywhere No surprises The Connect Calendar and Reports tools keep you on track with the work you need to get done and your assignment scores Life gets busy; Connect tools help you keep learning through it all Learning for everyone McGraw-Hill works directly with Accessibility Services Departments and faculty to meet the learning needs of all students Please contact your Accessibility Services office and ask them to email accessibility@mheducation.com, or visit www.mheducation.com/about/accessibility.html for more information Percentage-of-completion method, 327, 351 Performance guarantees, 244 Performance reporting, 562, 565–568, 577, 586 Period costs, 483, 484, 494, 504 Periodic inventory system, 160, 169, 330–331 Perler, Jeremy, 372, 374 Perpetual inventory system, 160, 161, 169, 329–330 Personal investing, 301–302 Petty cash funds, 141, 169 Phantom profits, 158, 169 Physical inventory, 160, 169, 330 Physical measures of activity, 414 PIA (Printing Industries of America Inc.), 577 Planning, 520–545 See also Budgets and budgeting contribution margin model for, 445–449 cost classifications for, 522–523 defined, 547 in financial vs managerial accounting, 433–435 in management process, 520 software for, 538 standard costs for, 539–543 Point-of-sale technologies, 330 Postaudits, 622, 630 Posting, in bookkeeping, 98, 118 Postretirement plans, 256 Predetermined overhead application rate, 488–489, 504 Preemptive right, 282, 304 Preferred dividend coverage ratio, 407, 419 Preferred stock bonds payable vs., 284 callable, 284, 303 convertible, 284, 303 defined, 282, 304 in paid-in capital, 282–285 Prepaid expenses, 164–165, 169 Prepaid insurance, 164–165, 169 Present value of annuities, 213–215 in bond price calculation, 248–249 in capital budgeting, 619–621 compounding frequency and, 216–217 cost of capital and, 619 defined, 211, 218 financial calculators for, 212 interest calculation with, 238, 239 of lease payments, 201 net, 619–621, 630 tables, 212–214 time value of money and, 211–215 Present value ratio, 620–621, 630 Price, transfer, 580, 587 Price/earnings (P/E) ratio, 403–405, 419 Price variance, 569, 571 PricewaterhouseCoopers, 5, 386 Pricing decisions, 607–610 Prime rate, 237, 260 Principal, 71, 84 Principles for Business (CRT), 17 Printing Industries of America Inc (PIA), 577 Prior period adjustments, 286 Private equity firms, 410 Proceeds cash, 240 defined, 218, 260 from sale of depreciable assets, 199 Process costing system, 495–496, 504 Product costing system, 485, 488–493, 541–542 Product costs, 482, 484, 485, 488–493, 505 Production standards, 435, 461 Product warranties, 244, 256 Profitability index, 620–621, 630 Profit and loss statements, 34, 52 Profit and profitability See also Cost–volume–profit (CVP) analysis; Return on equity (ROE); Return on investment (ROI) defined, 52 ethical conduct and, 17 gross, 35, 52, 331–333, 350 on income statements, 34, 35 inventory, 158, 168 measures of, 402–407 phantom, 158, 169 Profit centers, 580, 586 Projected benefit obligation, 376 Property, plant and equipment See Buildings and equipment Proprietor’s capital, 276, 304 Proprietorships, 30, 52, 298 Prospectus, 379, 390 Provision for income taxes, 35 Proxies, 379, 390 Proxy statements, 379 Public accounting, 5, 7–8, 12, 25 Public Company Accounting Oversight Board (PCAOB) auditing standards from, 7, 12, 385 authority and role of, 2, 11 defined, 25 establishment of, 11, 370 role of, 368 website of, 15 Purchase returns and allowances, 330, 351 Purchases/production budget, 527–528, 530–532 Q Quaker Oats Limited, 45 Qualified audit opinions, 385, 386 Quality control standards, 542 Quantity variance, 569, 586 QuickBooks, 103, 655 Quick ratio, 77 R Radio frequency identification tags, 160, 657 Rate of return See also Return on equity (ROE); Return on investment (ROI) accounting, 625–626, 629 calculation of, 70–71 defined, 84 internal, 621, 627 as profitability measure, 71–72 Rate variance, 569, 571 Ratios, defined, 69 See also Financial ratios Raw materials, defined, 482–483, 505 Raw materials inventory, 160, 169, 485–487, 505 Raw materials price variance, 570–571, 586 Raw materials purchase price variance, 574, 586 Raw materials usage variance, 570–571, 586 Realization of revenue, 324–325, 351 Reasonableness tests, 142 Reasonably estimable losses, 256 Recession See Financial crisis (2008–2009) Reclassifications, 107 Recognition of revenues, 46, 326, 328 Record date for dividends, 288, 304 Recovery plans, 104 Redemption value of preferred stock, 283–284, 304 Registered bonds, 253, 260 Regression analysis, 441, 527 Regular dividends, 407, 419 Relevant costs, 605–617 in allocation of scarce resources, 616–617 in continue or discontinue segment decisions, 613–616 defined, 605, 630 in make or buy decisions, 611–613 in sell or process further decision, 606–607 in special pricing decisions, 607–610 in target costing question, 610–611 Relevant range assumption, 438, 439, 461 Repair and maintenance expenditures, 197 Replacement costs, 192 Reporting See Financial reporting; Performance reporting Research and development expenses, 329, 333, 378 Reserve, use of term, 256 Residual equity, 282 Residual income, 582, 586 Resources, scarce, 616–617 Responsibility centers, 580, 586 Responsibility reporting, 565, 586 Retained earnings capitalized, 289 cash dividends, 286–287 defined, 37, 53, 285, 304 statement of changes in, 36, 37, 53 stock dividends, 287–290 in stockholders’ equity, 285–290 Retirement benefits, 255–256 Retirement of long-term debt, 251–253 Return on assets (ROA), 72, 84 Return on equity (ROE) calculation of, 75–76 defined, 75, 84 financial leverage and, 245–246 inventory cost-flow assumptions and, 156 as measure of profitability, 402–403 treasury stock purchases and, 295 trend analysis of, 79–82 page 733 Return on investment (ROI) actual vs budgeted, 581–582 in balanced scorecards, 583 calculation of, 70–75 in capital budgeting, 617 in cost of capital, 618 defined, 72, 84 DuPont model expansion on, 73–75 financial leverage and, 245–246 inventory cost-flow assumptions and, 156 as measure of profitability, 402–403 as profitability measure, 71–72 significance of, 72 trend analysis of, 79–82 value chain and, 479 Returns and allowances, 325, 330, 351 Revaluation, 190 Revenues in bookkeeping, 100 defined, 53, 324, 351 earned, 324–328, 350 on income statements, 34, 35, 324–328 realization of, 324–325, 351 recognition of, 46, 326, 328 sales, 35 from sales, 325 unearned, 241–242, 260 Reverse stock splits, 290 Revolving line of credit, 237, 260 Right-of-use assets, 201 Risk cost of capital and, 618–619 credit, 78, 83 data security and, 103–104 defined, 71, 84 financial leverage and, 80 margin of safety as measure of, 454 ROA (return on assets), 72, 84 ROE See Return on equity ROI See Return on investment Rolling budget, 525, 547 Rounding, 47 Royalties, 205 S Safety, margin of, 454, 461 Sage 50, 103, 655 Sales on account, 97, 118 of assets, 344 defined, 325, 351 forecasting, 526–527, 547 net, 34–35, 52, 325, 351 number of days in accounts receivable, 400–402, 419 number of days in inventory, 400–402, 419 number of days outstanding, 401 1-cent, 454 revenue from, 325 Sales forecasts, 526–527, 547 Sales mix in breakeven analysis, 452 cost–volume–profit analysis and, 449, 450 defined, 351, 449, 461 gross profit/gross margin and, 332 Sales returns and allowances, 325, 351 Sales revenue, 35 Salvage value, 48, 195, 197 SAP, 103, 656 Sarbanes–Oxley (SOX) Act of 2002 on auditing standards, 13 corporate governance and, 370, 371, 650 on internal control systems, 17 management’s statement of responsibility and, 382 objectives of, 11 purpose of, regulatory environment under, 651 SAS analytic software, 502 Scanning devices, 103, 160, 330, 657 Scarce resources, allocation of, 616–617 Scattergrams, of cost–volume relationship, 441, 442 Schilit, Howard, 372, 374 Scope paragraph of audits, 385 SEC See Securities and Exchange Commission Securities, short-term marketable, 144–146 Securities Act of 1933, 10, 379 Securities and Exchange Act of 1934, 10, 379 Securities and Exchange Commission (SEC) auditing standards from, 12, 13, 383 on corrupt financial reporting, 651 defined, 25 disclosures required by, 47, 379, 382 EDGAR system of, 379 Enron and WorldCom bankruptcies and, financial reporting misstatements and, 371 history of, 10 on IFRS and FASB standards, 14 on internal control systems, 17 on international accounting standards, 654–655 on management’s discussion and analysis, 382 Regulation S-K from, 381 reporting to, 379 on revenue recognition, 328 as users of accounting information, website of, 15 Security of data, 103–104 Segment information, 381–382 Segment margin, 579, 587 Segments business, 381–382, 389 decisions regarding, 613–616 defined, 578, 586 reporting for, 578–580 Selling, general, and administrative expenses, 35, 333, 441, 483, 494 Sell or process further decision, 606–607 Semilogarithmic graphs, 82, 84 Semivariable costs, 438, 461 Separation of duties, 142 Serial bonds, 253, 260 Service charge, of banks, 99, 143, 167 Service levels, standards for, 542 Service organizations, cost accounting in, 498 Shakedown costs, 190 Share consolidation, 290 Shareholders, as users of accounting information, Shares See Stock Shipping terms, 327, 351 Short-run decision analysis, 605–617 allocation of scarce resources, 616–617 continue or discontinue segment decisions, 613–616 defined, 605 make or buy decisions, 611–613 sell or process further decision, 606–607 special pricing decisions, 607–610 target costing questions, 610–611 Short-term debt, 34, 237–240 Short-term marketable securities, 144–146, 169 Significant accounting policies, 375–378, 390 Simple interest calculation, 238 Simple regression analysis, 441 Single-period budget, 525, 547 Single-step format for income statements, 337–339, 351 Slack, budget, 533–534, 546 Slate voting for corporate directors, 280, 304 SLC (System Life Cycle) methodology, 103 Social responsibility, 17, 369 Software accounting information systems, 103 activity-based costing/management solutions, 502 planning and budgeting, 538 Source documents, 102, 118 SOX Act See Sarbanes–Oxley Act of 2002 Special pricing decisions, 607–610 Specific identification cost-flow assumption, 154, 169 Spending variance, 569, 571 “Spread” (markup), 526 SQL (Structured Query Language), 658 Stakeholders, 17 Standard & Poor’s, 302, 399 Standard costs, 521, 539–543, 547 Standard cost variance analysis, 569–578 accounting for variances in, 578 calculation of, 571–573 of fixed overhead variances, 574–577 of variable cost variances, 569–574 Standards See also Financial Accounting Standards Board (FASB) attainable, 540, 546 auditing, 7–8, 12, 29, 384–385 cost accounting, 12 financial accounting, 10–11 governmental accounting, 12 ideal, 539–540, 547 international accounting, 13–14, 654–655 managerial accounting, 12 past experience, 540, 547 production, 435, 461 public accounting, 12 quality control, 542 Stated rate, 248–250, 260 Stated value of common stock, 281, 304 State income tax withholdings, 243 Statement of cash flows, 341–347 content and format of, 38–40, 341–346 defined, 53, 341, 351 example of, 39 interpreting, 346–347 overview, 320–324 purpose of, 38 Statement of changes in capital stock, 36, 53 Statement of changes in fund balances, 299 Statement of changes in owners’ equity, 36 Statement of changes in retained earnings, 36, 53 Statement of changes in stockholders’ equity, 36–38, 53, 293, 295–296 Statement of cost of goods manufactured, 493–495, 505 Statement of earnings, 34, 53 Statement of equity, 36, 53, 296 Statement of Ethical Professional Practice (IMA), 15 Statement of financial position, 31, 53 Statement of operations, 34, 53 Statement of stockholders’ equity, 36, 53, 296 Statements of Financial Accounting Concepts (FASB), 10, 16 Statements of Financial Accounting Standards (SFAS), 10, 25 Stock See also Common stock capital, 278, 303 convertible bonds and, 253 defined, 30, 53 dividends as, 287–290 no-par-value, 37, 280 par value of, 37, 52, 280 preferred, 282–285, 303, 304 splits in, 290, 304 treasury, 281–282, 285, 294–295, 304, 346 Stock dividends, 287–290, 304 Stockholders, defined, 30, 53 Stockholders’ equity, 276–298 accumulated other comprehensive income (loss), 290–293 additional paid-in capital and, 285 on balance sheets, 31–34, 276–277 in bookkeeping, 100 cash dividends, 286–287 common stock and, 278–282 defined, 32–33, 53, 276 on financial statements, 279 noncontrolling interest, 296–298 paid-in capital, 278–285 preferred stock and, 282–285 reporting changes in equity accounts, 295–296 retained earnings, 285–290 statement of changes in, 36–38, 53, 293, 295–296 stock dividends and splits, 287–290 treasury stock, 294–295 Stockholders’ liability, 30 Stock option plans, 377–378, 390 Stock purchase plans, 378 Stock splits, 290, 304 Straight-interest calculation, 238, 260 Straight-line amortization, 251 Straight-line depreciation, 193–195, 218 Structured Query Language (SQL), 658 Suboptimization, 582, 587 Subprime mortgages, 651 Subsidiaries in consolidated financial statements, 256 defined, 53 page 734 as guarantors of indebtedness of other entities, 380 noncontrolling interest in, 256 parent corporations of, 45 Sum-of-the-years’-digits depreciation method, 193, 195 Sunk costs, 604–605, 607, 630 Suppliers, as users of accounting information, Surplus, 285 System Life Cycle (SLC) methodology, 103 T T-accounts, 100, 118 Take-home pay, 242 Takeovers, 410 Tangible assets, defined, 32 Target costing, 607, 610–611, 630 Tax Cuts and Jobs Act of 2017, 376 Taxes See also Income taxes accounting for, 9, 12 business organizations and, 30 deferred, 254–255, 259, 376 FICA, 242–243, 259 on income statements, 35 payroll, 242–243 Tax Reform Act of 1986, 198 Technology in accounting, 103, 655–660 Temporary difference items, 254–255 Term bonds, 253, 260 Term loans, 239 Texas Instruments, 212 Theft by customers, 141 Throughput, 543 Timeline model for financial statements, 34, 36–38, 40 Times interest earned ratio, 410–411, 419 Time value of money, 209–217 accounting rate of return and, 625 compounding frequency and, 209, 216–217 future value calculation, 209–211 present value calculation, 211–215 Top-down budgeting, 524, 547 Toshiba Corp., 386, 650 Total asset turnover, 398 Total costs, 437–439, 522–523 Total operating assets, 398 Total shareowner return (TSR), 378 Toyota, 654 Trademarks, 48, 204, 205, 218 Trading securities, 146 Transaction analysis methodology, 110–115, 118 Transactions accounting concepts/principles related to, 45 authorization of, 142 in bookkeeping, 95–98, 102–105 business-to-business, 103 in computerized accounting systems, 103 credit, 99 defined, 29, 53, 118 electronic, 657 financial statements flowing from, 29–30, 102–105 revenue recognition, 153 source documents of, 102, 118 Transaction summary, 96 Transfer price, 580, 587 Transparency of financial reporting process, Treasury stock on balance sheet, 282 defined, 281, 285, 304 outstanding shares due to, 285 purchasing, 294 recording, 294–295 reporting, 346 Trend analysis, 69–70, 79–82, 84 Trend comparisons, 402, 403 Tropicana Products Inc., 45 Trust, breaches of, 104 Trustee of bonds, 253, 260 TSR (total shareowner return), 378 Turnover, 74–75, 83, 84, 398–400 U Uncollectible accounts, 147–149, 168, 169 Underapplied overhead, 489, 505 Underfunded pension plans, 256 Unearned revenue, 241–242, 260 Unfavorable variance, 565, 569–570, 587 Uniform Standards of Professional Appraisal Practice (USPAP), 47 Unit costs, 569 United Way, 5, 543 Unit of measurement, 45 Units-of-production depreciation, 193–195, 218 Unqualified audit opinions, 385 Unrealized gains or losses, 146, 189 Unregistered bonds, 253 Usage variance, 569, 571 Useful life of assets, 195, 197 USPAP (Uniform Standards of Professional Appraisal Practice), 47 US SIF, 17 V Valuation adjustments to, 147–148, 169 of balance sheets, 144–146, 163–164 of common stock, 280–281, 304 inventory, 375 revaluation, 190 of subprime mortgages, 651 Valuation accounts, 149, 169 Valuation adjustment, 147–148, 169 Value See also Carrying value; Par value of stock; Present value; Time value of money book, 192, 218, 251, 259 future, 209–211, 216–217 market, 146 net realizable, 147, 164, 168 redemption, 283–284, 304 salvage, 48, 195, 197 stated, 281, 304 Value chains, 478–479, 505, 660–661 Value Line Publishing Inc., 399 Variable costing, 496–498, 505 Variable costs analysis of variances in, 569–574 in cost formula, 438 in cost structures, 458 defined, 461, 547 planning for, 522–523 in total cost to volume of activity relationship, 437–439 Variable overhead efficiency variance, 571, 587 Variable overhead spending variance, 571, 587 Variance analysis, 569–578 accounting for variances in, 578 calculation of, 571–573 defined, 545 of fixed overhead variances, 574–577 of variable cost variances, 569–574 Variances accounting for, 578 budget, 569, 574, 586 defined, 563, 587 favorable, 565, 569–570, 586 fixed overhead, 574–577 unfavorable, 565, 569–570, 587 variable cost, 569–574 volume, 575, 587 Verification, in bank reconciliation, 144 Vertical common size financial statements, 413 Vinney, Les C., 667 Virus protection, 104 Vision Project (AICPA), 653, 654 Volkswagen, 654 Volume of activity, 437–439, 522–523, 563–564 See also Cost–volume–profit (CVP) analysis Volume variance, 575, 587 Voting for corporate directors, 280, 304 W Wall Street Journal, 82, 405, 544 Wall Street Reform and Consumer Protection Act of 2010 (Dodd–Frank Act), 370–371, 650 Walmart, 152, 402 Warranties, 244, 256 Waste Management, 650 Websites for accounting information systems, 103 for accounting organizations, 14–15 on accounting scandals, 651 Activity Based Costing Association, 500 for balanced scorecards, 583 “Big 4” CPA firms, on bonds, 247 for business ethics, 17 on CPA examination, 653 EDGAR system, 379 Federal Trade Commission, 610 for investment information, 302 for performance reporting, 577 for planning and budgeting software, 538 SAS, 502 XBRL, 658 Weighted-average cost-flow assumption, 154–156, 169 Withholdings, 242–243 Working capital defined, 76, 84 investment in, 624 liquidity measures and, 76–79 trend analysis of, 79–82 Working capital loans, 237, 260 Work in process inventory, 160–161, 169, 485–487, 505 WorldCom Inc., 2, 11, 369, 371, 377 “Worry point” guide, cost of capital as, 618 Write-offs, 148–149, 169 X XBRL (Extensible Business Reporting Language), 658–659 Xerox Corp., 290 Y Yahoo Finance, 302 Z Zero-based budgeting, 524, 547 Zero defects, 543 ... organization’s objectives Accounting: What the Numbers Mean takes the user through the basics: what accounting information is, how it is developed, how it is used, and what it means Financial statements... Data Names: Marshall, David H., author | McManus, Wayne W., author | Viele, Daniel F., author Title: Accounting : what the numbers mean / David H Marshall, MBA, CPA, CMA, Professor of Accounting. .. work on Accounting: What the Numbers Mean Wayne W McManus Daniel F Viele page xv Brief Contents 1.? ?Accounting? ??Present and Past Part 1: Financial Accounting 2. Financial Statements and Accounting