Introduction to Financial Accounting Second Edition Based on International Financial Reporting Standards Henry Dauderis David Annand Copyright © 2014 Henry Dauderis Published by Valley Educational Services Ltd 4910C – 58 St., Athabasca AB T9S 1L5 ISBN 978-0-9936701-2-1 Printed and bound in Canada by Athabasca University Library and Archives Canada Cataloguing in Publication Dauderis, Henry, 1941– Annand, David, 1954– This textbook is licensed under a Creative Commons License, Attribution–Noncommercial–Share Alike 4.0 Canada: see www.creativecommons.org This material may be reproduced for non-commercial purposes and changes may be used by others provided that credit is given to the original authors To obtain permission for uses beyond those outlined in the Creative Commons license, please contact David Annand at davida@athabascau.ca Latest version available at http://business.athabascau.ca/faculty/david-annand-edd/ Please forward suggested changes to davida@athabascau.ca December 8, 2014 Table of Contents Introduction to Financial Accounting A Introduction B Accounting Defined C Business Organizations D Generally Accepted Accounting Principles E Financial Statements F Transactions Analysis and Double-entry Accounting Summary of Chapter Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems 2 7 18 21 22 29 35 The Accounting Process A Accounts B Transactions Analysis Using Accounts C The Trial Balance D Using Formal Accounting Records E The Accounting Cycle Summary of Chapter Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems Decision Problem 41 42 47 54 57 61 63 65 66 78 85 93 Financial Accounting and the Use of Adjusting Entries A The Operating Cycle B Adjusting Entries C The Adjusted Trial Balance D Using the Adjusted Trial Balance to Prepare Financial Statements E The Accounting Cycle F The Closing Process Summary of Chapter Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems Review Problem Decision Problem 95 96 101 112 113 115 116 121 125 126 134 143 151 153 The Classified Balance Sheet and Related Disclosures A Financial Statement Disclosure Decisions B Classified Balance Sheet C Notes to Financial Statements D The Auditor’s Report E Management’s Responsibility for Financial Statements Summary of Chapter Learning Objectives Concept Self-check Problems Alternate Problems 155 156 158 164 168 170 172 175 175 183 Accounting for the Sale of Goods A The Basics of Merchandizing B The Purchase and Payment Cycle of Merchandizing Using the Perpetual Inventory Method C Merchandize Inventory: Sales and Collections Using the Perpetual Inventory Method D Adjusting Merchandize Inventory Using the Perpetual Inventory Method E Merchandizing Income Statement F Closing Entries for a Merchandizer Using the Perpetual Inventory Method Appendix: The Periodic Inventory System Summary of Chapter Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems Decision Problem 191 192 Assigning Costs to Merchandize A Inventory Cost Flow Assumptions B Financial Statement Impact of Different Inventory Cost Flows C Lower of Cost and Net Realizable Value (LCNRV) D Estimating the Balance in Merchandize Inventory Appendix: Inventory Cost Flow Assumptions Under the Periodic System Summary of Chapter Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems Supplementary Problems 263 264 275 278 279 194 198 202 209 211 214 226 229 230 236 248 260 282 286 288 290 300 312 324 Cash and Receivables A Internal Control B Petty Cash C Cash Collections and Payments D Accounts Receivable E Notes Receivable Summary of Chapter Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems Decision Problem 331 332 333 336 353 362 363 365 366 371 381 391 Long-lived Assets A Establishing Cost of Property, Plant, and Equipment (PPE) B Depreciation C Partial Year Depreciation D Revision Depreciation E Impairment of Long-lived Assets F Derecognition of Property, Plant, and Equipment G Intangible Assets H Goodwill I Disclosure Summary of Chapter Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems 393 394 397 403 404 408 409 413 415 416 417 421 423 431 438 Debt Financing: Current and Non-current Liabilities A Current versus Non-current Liabilities B Known Current Liabilities C Estimated Current Liabilities D Non-current Liabilities E Demonstration Problem Summary of Chapter Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems 447 448 448 456 459 464 474 477 477 482 487 10 Debt Financing: Bonds A The Nature of Bonds and the Rights of Bondholders B The Bond Accounting Process C Bond Amortization and Interest Appendix 1: Present Value Calculations Appendix 2: The Effective Interest Method of Amortisation Summary of Chapter 10 Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems 493 494 498 502 512 519 525 527 528 533 539 11 Equity Financing A The Corporate Structure B The Debt versus Equity Financing Decision C Recording Share Capital Transactions D Cash Dividends E Book Value Appendix 1: Share Dividends Appendix 2: Retained Earnings Summary of Chapter 11 Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems 545 546 551 553 558 564 566 569 573 577 579 587 594 12 Proprietorships and Partnerships A Proprietorships B Partnerships C Allocation of Partnership Profits and Losses D Admission and Withdrawal of Partners E Liquidation of a Partnership Summary of Chapter 12 Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems Decision Problems 601 602 606 610 615 622 629 651 651 635 640 644 13 Financial Statement Analysis A Introduction to Ratio Analysis B Liquidity Ratios: Analyzing Short-term Cash Needs C Profitability Ratios: Analyzing Returns on Business Activity D Leverage Ratios: Analyzing Financial Statements E Market Ratios: Analysis of Financial Returns to Investors F Overall Analysis of Big Dog’s Financial Statements G Horizontal and Vertical Trend Analysis H Summary of Financial Ratios Appendix: The Scott Formula Summary of Chapter 13 Learning Objectives Concept Self-check Discussion Cases Comprehension Problems Problems Alternate Problems Supplementary Problems Decision Problems 647 648 652 661 665 668 671 672 674 677 688 691 692 696 704 709 714 719 14 The Statement of Cash Flows A Financial Statement Reporting B Preparing the Statement of Cash Flows C Interpreting the Statement of Cash Flows Summary of Chapter 14 Learning Objectives Concept Self-check Comprehension Problems Problems Alternate Problems Decision Problems 729 730 732 751 753 755 756 763 768 774 Index 777 CHAPTER ONE Introduction to Financial Accounting Chapter Learning Objectives LO1 – Define accounting LO2 – Identify and describe the forms of business organizations LO3 – Identify and explain generally accepted accounting principles (GAAP) LO4 – Identify and explain the uses of the four financial statements LO5 – Analyze transactions using the accounting equation CHAPTER ONE / Introduction to Financial Accounting A Introduction Accounting is often called the language of business because it uses a unique vocabulary to communicate information to decision makers In this chapter, we will discuss what financial accounting is and briefly introduce how financial information is communicated through financial statements Then we will study how financial transactions are analyzed and reported on financial statements B Accounting Defined LO1 – Define accounting C Accounting is the process of identifying, measuring, recording, and communicating an organization’s economic activities to users Users need information for decision making Internal users of accounting information work for the organization and are responsible for planning, organizing, and operating the entity The area of accounting known as managerial accounting serves the decision-making needs of internal users External users not work for the organization and include investors, creditors, labour unions, and customers Financial accounting is the area of accounting that presents financial information of interest to external users This book deals with financial accounting Business Organizations LO2 – Identify and describe the forms of business organizations An organization is a group of individuals who come together to pursue a common set of goals and objectives There are typically two types of organizations: business and non-business A business organization sells products or services for profit A non-business organization, such as a charity or hospital, exists to meet various societal needs and does not have profit as a goal All organizations record, report, and, most importantly, use accounting information for making decisions This book focuses on business organizations There are three common forms of business organizations—a proprietorship, a partnership, and a corporation Proprietorship A proprietorship is a business owned by one person It is not a separate legal entity, which means that the business and the owner are considered to be the same For example, the profits of a proprietorship CHAPTER ONE / Introduction to Financial Accounting AP 14–3 Assume the following income statement information at December 31, 2017 and balance sheet at year-end: Service revenue (all cash) Operating expenses Supplies Income before income taxes Income taxes Net income Accounts payable Income taxes payable $500 260 240 100 $140 2017 $26 2016 $32 17 Required: Prepare the cash flow from operating activities section of the SCF AP 14–4 Assume the following balance sheet information at December 31, 2018: Mortgage payable Preferred shares Common shares 2018 $2,000 1,300 200 2017 $1,600 800 150 There were no income statement transactions during the year Required: Calculate the cash provided by financing activities 770 CHAPTER FOURTEEN/ The Statement of Cash Flows AP 14–5 The comparative balance sheets of Sovereign Corporation showed the following information at December 31 2017 2016 $ 22 30 110 16 -0240 124 $550 $ 20 38 104 20 180 80 10 $458 $ 16 26 78 70 300 56 $550 $ 24 18 80 60 240 30 $458 Debits Cash Short-term investments Merchandize inventory Prepaid expenses Land Buildings Machinery Patents, at carrying amount Credits Accounts payable Dividends payable Income taxes payable Accumulated depreciation Non-current borrowings Common shares Retained earnings Additional data for 2017: a Net income for the year amounted to $48, including income taxes expense of $12 b Amortization of patents amounted to $2 c Purchased machinery for $30, paying $10 in cash, and obtained a 5–year loan for the balance d Purchased $50 of machinery by issuing common shares e Paid $60 cash for an addition to the building f Sold land for $24 (gain or loss is included in the income statement) g Declared cash dividends of $22 h Depreciation expense for the year amounted to $16 i Sold machinery for $14 that had originally cost $36; it was one-half depreciated at the time of sale (gain or loss is included in the income statement) j The short-term investments will be sold in 60 days for a known amount of cash CHAPTER FOURTEEN/ The Statement of Cash Flows 771 Required: Explain the appropriate treatment of items c and d above Prepare a cash flow table Prepare a statement of cash flows Explain what the statement of cash flows tells you about Sovereign Corporation AP 14–6 The records of Cambria Corporation showed the following information in the balance sheet accounts at December 31, 2017 and 2016 Debits Cash Short-term investments Merchandize inventory Prepaid expenses Land Equipment, net Credits Accounts payable Demand bank loan Non-current debt Common shares Retained earnings 2017 2016 $ 11 24 53 -0147 $236 $ 10 19 52 10 95 $189 $ 48 150 28 $236 $ 12 39 120 15 $189 Additional information for 2017: a Net income was $24; there were no income taxes b Cash dividends of $11 were paid c Depreciation expense was $3 d Common shares were given in exchange for equipment costing $30 e A building was purchased for $25; $16 was paid in cash and a noncurrent loan was assumed for the difference f Land purchased for $10 was sold for a $6 gain The gain is included in net income g Short-term investments will be sold in 30 days for a known amount 772 CHAPTER FOURTEEN/ The Statement of Cash Flows Required: Explain the appropriate treatment for items d and e above Prepare a cash flow table Prepare a statement of cash flows Explain what the statement of cash flows tells you about the Cambria Corporation AP 14–7 The comparative balance sheets for Sors Limited at December 31 are as follows: Sors Limited Balance Sheets At December 31 2017 2016 $( 6,000) 3,000) 12,000)) 23,000) 40,000) (9,000) $(75,000) $ 7,000) 4,500) 11,000) 10,000 30,000) (8,000) $54,500) Liabilities and Shareholders’ Equity Accounts payable $( 6,000) Non-current borrowings, due in one year 6,000) Non-current borrowings 10,000) Common shares 8,000) Retained earnings 45,000) $(75,000) $ 7,000) 6,000) 16,000) 3,000) 22,500) $54,500) Assets Cash Accounts receivable Merchandize inventory Land Equipment Accumulated depreciation Additional information for 2017: a Net income for the year was $27,500 There were no income taxes b No land was sold c Equipment was purchased for $20,000 in exchange for common shares valued at $5,000, plus $15,000 cash d Equipment costing $10,000 was sold for $12,000 cash; a $4,000 gain was reported in net income e Cash dividends of $5,000 were declared and paid CHAPTER FOURTEEN/ The Statement of Cash Flows 773 f Depreciation expense of $3,000 was included in the net income amount Required: Prepare a cash flow table for the year ended December 31, 2017 Prepare a statement of cash flows What observations about Sors Limited can you make from the SCF? Decision Problems DP 14–1 The balance sheet, income statement, and statement of changes in equity of Big Dog Carworks Corp for the years ended December 31, 2019 through 2021 were presented in Figure 13-1 of chapter 13 Refer to these Additional information: Short-term investments are held to meet on-going cash requirements and are liquidated 120 days after acquisition Accounts receivable consist of the following ($000s): Trade accounts receivable Allowance for doubtful accounts Net trade receivables Insurance proceeds from warehouse fire (see Note below) Total 2021 $600 (56) 544 2020 $406 (36) 370 2019 $302 (45) 257 -0$544 50 $420 -0$257 Inventory at December 31, 2021 was reduced by $200,000 due to obsolescence of some items During 2020, a warehouse building costing $100,000 and with a carrying amount of $47,000 was destroyed by fire Insurance proceeds of $50,000 were received in 2009 and recorded as part of accounts receivable at December 31, 2020 (see note above) The gain on disposal was recorded as part of selling, general, and administrative expenses on the 2020 income statement There were no other disposals of property, plant, and equipment in 2020 and 2021 774 CHAPTER FOURTEEN/ The Statement of Cash Flows Borrowings consist of the following ($000s): Demand bank loan Amount due to shareholder Total 2021 $600 225 $825 2020 $570 -0$570 2019 $ -0-0$ -0- The shareholder loan is subordinated to the demand bank loan That is, it may not be repaid before the bank loan Accounts payable at December 31, 2021 include $80,000 of dividends payable (2020 and 2019: $-0-) Required: Prepare cash flow tables for 2020 and 2021 State any assumptions you make Prepare a comparative statement of cash flows for the years ended December 31, 2020 and 2021 Interpret the SCF results DP 14–2 Refer to DP 13-4 in Chapter 13 (Acme Auto Parts Ltd.) Required: Prepare cash flow tables for 2018 and 2019 State any assumptions you make Prepare a comparative statement of cash flows for the years ended December 31, 2018 and 2019 Interpret the SCF results Does this affect your decision as the loans officer to grant Acme’s request for a $10M loan? CHAPTER FOURTEEN/ The Statement of Cash Flows 775 776 CHAPTER FOURTEEN/ The Statement of Cash Flows Index Accelerated depreciation, 402 Accelerated method of depreciation, 402 Account balance, 46 Account form balance sheet, 161 Account, 42 Accounting cycle, 63 Accounting equation, 12 Accounting, Accounts payable, 10, 43 Accounts receivable collection period, 658 Accounts receivable, 10, 42 Accrual accounting, 99 Accrued expense, 102, 108 Accrued revenue, 102, 108 Accumulated depreciation, 106 Acid-test ratio, 656 Additions (to PPA), 404 Adjusted trial balance, 112 Adjusting entries, 102 After-tax cost of borrowing, 678 After-tax operating profit ratio, 682 Ageing of accounts receivable, 356 Allocation of partnership profits, 610 Allowance for doubtful accounts, 354 Amortization (of bonds), 502 Amortization (of intangible assets), 415 Articles of incorporation, 547 Assets, 10 Audit, 168 Auditor’s report, 168 Authorization (of a bond issue), 494 Authorized shares, 547 INDEX Bad debts, 354 Balance sheet method (bad debts), 356 Balance sheet, Bank loans, 43 Bank reconciliation, 336 Bank statement, 337 Bearer bonds, 496 Board of directors, 3, 547 Bond carrying amount, 500 Bond indenture, 494 Bonds, 459 494 Bonus (to partner), 617 Book value per share, 564 Buildings, 43 Business organization, Call provision (of a bond), 509 Callable bonds, 497 Capital assets, 105, 393 Capital expenditure, 394 Capitalization (intangibles), 414 Carrying amount, 107, 399 Cash equivalents, 730 Cash flow table, 736 Cash, 10, 42 Certificate of incorporation, 547 Chart of accounts, 47 Classes of shares, 547 Classified balance sheet, 158 Classified financial statements, 158 Closing entries, 116 Common shares, 549 777 Index (continued) Common-size financial statements, 672 Comparability, Compound entry, 59 Compound interest, 512 Computer software, 414 Contingent liability, 458 Contra account, 106 Conversion provision (of a bond), 509 Convertible bonds, 497 Co-ownership of partnership assets, 607 Copyright, 413 Corporate income taxes, 454 Corporation, Cost flow assumptions, 266 Cost of goods sold, 192 Cost-benefit judgments, 157 Credit (entry), 44 Creditor, 11 Cumulative dividends, 561 Cumulative preferred shares, 562 Current assets, 159 Current liabilities, 160, 448 Current portion of non-current liabilities, 160 Current ratio, 654 Date of declaration (of dividends), 560 Date of payment (of dividends), 560 Date of record (of dividends), 560 Debentures, 496 Debit, 44 Debt to shareholders’ equity ratio, 666 Debt, 10 Depreciation, 106, 397 Derecognition (of depreciable assets), 409 Disclosure (of long-lived assets), 416 778 Discount (on bonds), 501 Discounting, 512 Dividend yield ratio, 670 Dividends, 8, 558 Dividends in arrears, 562 Double-declining balance depreciation, 402 Double-entry accounting, 47 Earnings per share (EPS), 668 Effective interest method (bonds), 519 Estimated current liabilities, 448, 456 Ethics, Expenditure, 394 Expenses, External users (of financial statements), Face value (of a bond), 497 Faithful representation, FIFO (First-in, first-out), 266 Finance lease, 459 Financial accounting, Financial capital, 679 Financial ratio, 648 Financial statements, Financial structure, 665 Financial transaction, 12 First-in, First out (FIFO), 266 Fiscal year, 18 fob destination, 197 fob shipping point, 197 Franchise, 414 Full disclosure, 209 Function of expense income statement, 209 Future value (of money), 513 GAAP (Generally accepted accounting principles), General journal, 57 INDEX Index (continued) General ledger, 42, 57 Generally accepted accounting principles, Goods and services tax (GST), 452 Goodwill, 416 Gross pay, 448 Gross profit method (inventory valuation), 281 Gross profit percentage, 193 Gross profit ratio, 661 Gross profit, 192 GST (Goods and services tax), 452 Half-year rule, 403 Horizontal analysis (financial statements), 672 Impairment of PPE, 408 IASB (International Accounting Standards Board), IFRS (International Financial Reporting Standards), Income statement method (bad debts), 355 Income statement, Income summary account, 116 Income tax installments, 454 Income tax liabilities, 454 Indefinite life, 548 Industry averages, 648 Intangible assets, 160, 394 Interest on partners’ capital balances, 612 Interest, 362 Internal controls, 168, 332 Internal users (of financial statements), International Accounting Standards Board, International Financial Reporting Standards, Inventory record card, 268 Inventory, 42 Issued shares, 550 Journal entry, 57 Journalizing, 57 Known current liabilities, 448 INDEX Laid-down cost, 278 Land, 43 LCNRV (Lower of cost and net realizable value), 278 Ledger account, 59 Letters patent, 547 Leverage, 677 Liability, 10 Limited liability, 3, 548 Limited participating shares, 562 Liquidation (of a partnership), 622 Liquidity crisis, 653 Liquidity, 159, 448, 652 List price, 196 Loans (non-current), 459 Long-lived assets, 105, 393 Long-term investments, 159 Long-term liabilities, 160, 448 Lower of cost and net realizable value, 278 Major component (of PPA), 408 Managerial accounting, Mark-up, 282 Matching principle, 101 Materiality, 164 Maturity date (of bonds), 494 Memorandum of association, 547 Merchandize inventory, 42, 193 Merchandizer, 192 Mixed account, 102 Mortgage bonds, 496 Mortgage, 160 Mutual agency (in a partnership), 607 Nature of expense income statement, 209 Net assets, 11 Net book value, 107, 399 Net financial debt, 679 779 Index (continued) Net income, Net loss, Net pay, 449 Net profit ratio, 662 Net realizable value, 278 Nominal value of shares, 553 Non-business organization, Non-cumulative preferred shares, 562 Non-current assets, 159 Non-current liabilities, 160, 448 Normal (account) balance, 46 Notes receivable, 42 Notes to the financial statements, 11, 164 NRV (Net realizable value), 278 Number of days of sales in inventory, 659 On account, 198 Operating capital, 679 Operating cycle, 96 Operating profit ratio, 662 Organization costs, 554 Organization, Outstanding cheques, 337 Outstanding shares, 550 Partial year depreciation, 403 Participating feature (of dividends), 561 Participating preferred shares, 562 Partners’ capital accounts, 609 Partners’ withdrawals, 609 Partnership agreement, 606 Par-value (of a bond), 498 Par-value shares, 553 Patent, 413 Periodic inventory system, 193 Permanent accounts, 116 Perpetual inventory system, 193 780 Petty cash fund, 333 Physical inventory count, 269 Post-closing trial balance, 120 Posting, 57 PPE (Property, plant, and equipment), 159,394 Pre-emptive right, 550 Preferred shares, 550 Premium (on a bond), 499 Prepaid expenses, 10, 42 Present value (of money), 512 Price-earnings (P/E) ratio, 669 Principal (of a loan), 362 Private enterprise, Privately-held shares, 546 Productive output (of PPE), 398 Profit, Profitability ratios, 661 Property, plant, and equipment, 159, 394 Proprietor’s capital account, 602 Proprietorship withdrawals, 603 Proprietorship, 2, 602, 605 Proxy statement, 547 Publicly accountable enterprise, Publicly-held shares, 546 Purchase discounts, 195, 215 Purchase returns and allowances, 195, 215 Purchases, 214 Purchasing power, 157 Qualified auditor’s report, 168 Quick ratio, 656 Ratio analysis, 648 Reconciling items, 337 Recoverable amount (of PPE), 408 Registered bonds, 496 INDEX Index (continued) Relevance, Replacement (of PPE), 404 Report form balance sheet, 161 Residual value (of PPE), 398 Restricted retained earnings, 548, 569 Retail inventory method (inventory), 282 Retained earnings, Return on leveraging, 684, 686 Return on operating capital, 682 Return on shareholders’ equity ratio, 665 Return on total assets ratio, 664 Revenue expenditure, 395 Revenue operating cycle, 660 Revenue recognition, 97 Revenue, Revision of depreciation estimates, 404 ROA (Return on assets), 664 ROL (Return on leveraging), 684, 686 ROSE (Return on shareholders’ equity), 665 Salaries to partners, 612 Sale or retirement of PPE, 410 Sales allowance, 199 Sales discounts, 200 Sales return, 199 Sales returns and allowances, 199 Sales tax, 452 Sales to operating capital ratio, 682 Sales to total assets ratio, 663 SCF (Statement of cash flows), 11, 729 Scott formula, 677, 686 Secured bonds, 496 Serial bonds, 497 Share capital, 8, 546 Share dividend, 566 Share split, 557 INDEX Shareholders, 3, 546 Shareholders’ equity, 11 Shares, 3, 546 Short-term liabilities, 160, 448 Short-term note payable, 453 Shrinkage, 205 Simplified balance sheet method, 358 Sinking fund bonds, 497 Source documents, 12 Specific identification, 265 Stated value of shares, 553 Statement of cash flows, 11, 729 Statement of changes in equity, Statement of partners’ capital, 614 Statement of partnership liquidation, 627 Stock exchange, Straight-line method of depreciation, 401 Sub-ledger, 275 Subsequent capital expenditures, 404 Subsidiary ledger, 275 T-account, 44 Tangible capital assets, 394 Temporary accounts, 116 Timeliness, Times interest earned ratio, 667 Trade discounts, 196 Trade-in (of PPE), 412 Trademark, 414 Transportation-in, 216 Treasury shares, 550 Trial balance, 54 Trustee, 494 Unadjusted trial balance, 101 Uncollectible accounts, 354 781 Index (continued) Understandability, Unearned revenue, 11,43 Unissued shares, 550 Unlimited liability, 602, 606 Unlimited participating shares, 562 Unqualified auditor’s report, 168 Unrestricted retained earnings, 569 Unused supplies, 42 Usage based methods (of depreciation), 398 Useful life (of PPE), 105, 398 782 Verifiability, Vertical analysis (financial statements), 672 Wages payable, 43 Warranty, 456 Weighted average, 267 Withdrawals, 609 Working capital from operations, 679 Working capital, 654 Write-off (of bad debts), 359 Year-end, 18 INDEX Copyright © 2014 Henry Dauderis Published by Valley Educational Services Ltd 4910C – 58 St., Athabasca AB T9S 1L5 ISBN 978-0-9936701-2-1 Printed and bound in Canada by Athabasca University Library and Archives Canada Cataloguing in Publication Dauderis, Henry, 1941– Annand, David, 1954– This textbook is licensed under a Creative Commons License, Attribution–Noncommercial–Share Alike 4.0 Canada: see www.creativecommons.org This material may be reproduced for non-commercial purposes and changes may be used by others provided that credit is given to the original authors To obtain permission for uses beyond those outlined in the Creative Commons license, please contact David Annand at davida@athabascau.ca Latest version available at http://business.athabascau.ca/faculty/david-annand-edd/ Please forward suggested changes to davida@athabascau.ca December 8, 2014 ... global accounting standards through a process of open and transparent discussions among corporations, financial institutions, and accounting firms around the world CHAPTER ONE / Introduction to Financial. .. countries, is based on International Financial Reporting Standards (IFRS) IFRS are issued by the International Accounting Standards Board (IASB) The IASB’s mandate is to promote the adoption of a single... of Contents Introduction to Financial Accounting A Introduction B Accounting Defined C Business Organizations D Generally Accepted Accounting Principles E Financial Statements F Transactions