Financial managerial accounting 4th horngren Giáo trình Financial managerial accounting 4th horngren Giáo trình tài chính kế toán Financial managerial accounting 4th horngren Financial managerial accounting 4th horngren Financial managerial accounting 4th horngren Financial managerial accounting 4th horngren Financial managerial accounting 4th horngren
www.downloadslide.com Horngren’s Financial & Managerial Accounting Fourth edition Tracie Nobles Texas State University–San Marcos Brenda Mattison Tri-County Technical College Ella Mae Matsumura University of Wisconsin–Madison Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo www.downloadslide.com Editor-in-Chief: Donna Battista Acquisitions Editor: Lacey Vitetta Director of Editorial Services: Ashley Santora VP/Director of Development: Steve Deitmer Development Editor: Linda Harrison, Harrison Ridge Services Editorial Project Manager: Nicole Sam Editorial Assistants: Jane Avery and Lauren Zanedis Director of Marketing: Maggie Moylan Leen Marketing Manager: Alison Haskins Marketing Assistant: Kimberly Lovato Managing Editor, Production: Jeff Holcomb Senior Production Project Manager: Roberta Sherman Permissions Project 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in full within the software version specified Microsoft® and Windows® are registered trademarks of the Microsoft Corporation in the U.S.A and other countries This book is not sponsored or endorsed by or affiliated with the Microsoft Corporation Copyright © 2014, 2012, 2009 Pearson Education, Inc All rights reserved Manufactured in the United States of America This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458, or you may fax your request to 201-236-3290 Many of the designations by manufacturers and sellers to distinguish their products are claimed as trademarks Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed in initial caps or all caps Library of Congress Cataloging-in-Publication Data on file 10 ISBN-13: 978-0-13-325124-1 ISBN-10: 0-13-325124-1 www.downloadslide.com In memory of Charles T Horngren 1926–2011 Whose vast contributions to the teaching and learning of accounting impacted and will continue to impact generations of accounting students and professionals www.downloadslide.com About the Authors Tracie L Nobles, CPA, received her bachelor’s and master’s degrees in accounting from Texas A&M University She is currently a Senior Lecturer at Texas State University, San Marco, TX Previously she served as an Associate Professor of Accounting at Austin Community College and has served as department chair of the Accounting, Business, Computer Information Systems, and Marketing/ Management department at Aims Community College, Greeley, CO Professor Nobles has public accounting experience with Deloitte Tax LLP and Sample & Bailey, CPAs Professor Nobles is a recipient of the Texas Society of CPAs Outstanding Accounting Educator Award, NISOD Teaching Excellence Award and the Aims Community College Excellence in Teaching Award She is a member of the Teachers of Accounting at Two Year Colleges, the American Accounting Association, the American Institute of Certified Public Accountants, and the Texas State Society of Certified Public Accountants She is currently serving on the Board of Directors as secretary/webmaster of Teachers of Accounting at Two Year Colleges, as chair of the American Institute of Certified Public Accountants Pre-certification Executive Education committee, and as program chair for the Teaching, Learning and Curriculum section of the American Accounting Association In addition, Professor Nobles served on the Commission on Accounting Higher Education: Pathways to a Profession Tracie has spoken on such topics as using technology in the classroom, motivating non-business majors to learn accounting, and incorporating active learning in the classroom at numerous conferences In her spare time she enjoys spending time with her friends and family, and camping, fishing, and quilting Brenda L Mattison has a bachelor’s degree in education and a master’s degree in accounting, both from Clemson University She is currently an Accounting Instructor at Tri-County Technical College in Pendleton, South Carolina Brenda previously served as Accounting Program Coordinator at TCTC and has prior experience teaching accounting at Robeson Community College, Lumberton, North Carolina; University of South Carolina–– Upstate, Spartanburg, South Carolina; and Rasmussen Business College, Eagan, Minnesota She also has accounting work experience in retail and manufacturing businesses Brenda is a member of Teachers of Accounting at Two Year Colleges and the American Accounting Association She is currently serving on the board of directors as Vice President of Registration of Teachers of Accounting at Two Year Colleges Brenda engages in the scholarship of teaching and learning (SOTL) While serving as Faculty Fellow at Tri-County Technical College, her research project was Using Applied Linguistics in Teaching Accounting, the Language of Business Brenda has presented her research findings Other presentations include using active learning and manipulatives, such as building blocks and poker chips, in teaching accounting concepts In her spare time, Brenda enjoys reading and spending time with her family, especially touring the United States in their motorhome She is also an active volunteer in the community, serving her church, local Girl Scouts, and other organizations Ella Mae Matsumura is a professor in the Department of Accounting and Information Systems in the School of Business at the University of Wisconsin– Madison, and is affiliated with the university’s Center for Quick Response Manufacturing She received an A.B in mathematics from the University of California, Berkeley, and M.Sc and Ph.D degrees from the University of British Columbia Matsumura has won two teaching excellence awards at the University of Wisconsin–Madison and was elected as a lifetime fellow of the university’s Teaching Academy, formed to promote effective teaching She is a member of the university team awarded an IBM Total Quality Management Partnership grant to develop curriculum for total quality management education Professor Matsumura was a co-winner of the 2010 Notable Contributions to Management Accounting Literature Award She has served in numerous leadership positions in the American Accounting Association (AAA) She was coeditor of Accounting Horizons and has chaired and served on numerous AAA committees She has been secretary–treasurer and president of the AAA’s Management Accounting Section Her past and current research articles focus on decision making, performance evaluation, compensation, supply chain relationships, and sustainability She coauthored a monograph on customer profitability analysis in credit unions iv www.downloadslide.com Brief Contents Chapter Accounting and the Business Environment Chapter Recording Business Transactions Chapter The Adjusting Process 136 Chapter Completing the Accounting Cycle 210 Chapter Merchandising Operations 280 Chapter Merchandise Inventory 366 Chapter Internal Control and Cash 432 Chapter Receivables 488 Chapter Plant Assets, Natural Resources, and Intangibles Chapter 10 Investments 604 Chapter 11 Current Liabilities and Payroll 640 Chapter 12 Long-Term Liabilities 686 Chapter 13 Stockholders’ Equity 744 Chapter 14 The Statement of Cash Flows 808 Chapter 15 Financial Statement Analysis 884 Chapter 16 Introduction to Managerial Accounting 954 Chapter 17 Job Order Costing 1006 Chapter 18 Process Costing 1068 Chapter 19 Cost Management Systems: Activity-Based, Just-In-Time, and Quality Management Systems 1144 Chapter 20 Cost-Volume-Profit Analysis 1210 Chapter 21 Variable Costing 1268 Chapter 22 Master Budgets 1314 Chapter 23 Flexible Budgets and Standard Cost Systems 1400 Chapter 24 Responsibility Accounting and Performance Evaluation 1470 Chapter 25 Short-Term Business Decisions 1522 Chapter 26 Capital Investment Decisions 1584 66 548 Appendix A—2011 Green Mountain Coffee Roasters, Inc Annual Report A-1 Appendix B—Present Value Tables B-1 Appendix C—Accounting Information Systems C-2 Glossary G-1 Index I-1 PHOTO CREDITS P-1 v www.downloadslide.com Contents Chapter Accounting and the Business Environment Why Is Accounting Important? Decision Makers: The Users of Accounting Information The Accounting Profession What Are the Organizations and Rules That Govern Accounting? 7 Governing Organizations 7 Generally Accepted Accounting Principles The Economic Entity Assumption The Cost Principle 10 The Going Concern Assumption 11 The Monetary Unit Assumption 11 International Financial Reporting Standards 11 Ethics in Accounting and Business 11 What Is the Accounting Equation? 13 Assets 13 Liabilities 13 Equity 13 How Do You Analyze a Transaction? 15 Transaction Analysis for Smart Touch Learning 15 How Do You Prepare Financial Statements? 21 Income Statement 21 Statement of Retained Earnings 22 Balance Sheet 23 Statement of Cash Flows 24 How Do You Use Financial Statements to Evaluate Business Performance? 26 Green Mountain Coffee Roasters, Inc. 26 Return on Assets (ROA) 26 ■ Review 29 ■ Assess Your Progress 36 ■ Critical Thinking 58 Chapter Recording Business Transactions 66 What Is an Account? 68 Assets 68 Liabilities 69 Equity 70 Chart of Accounts 70 Ledger 71 What Is Double-Entry Accounting? 72 The T-Account 72 Increases and Decreases in the Accounts 72 Expanding the Rules of Debit and Credit 73 The Normal Balance of an Account 73 Determining the Balance of a T-Account 74 How Do You Record Transactions? 75 Source Documents—The Origin of the Transactions 75 Journalizing and Posting Transactions 76 The Ledger Accounts After Posting 87 The Four-Column Account: An Alternative to the T-Account 89 vi What Is the Trial Balance? 91 Preparing Financial Statements From the Trial Balance 91 Correcting Trial Balance Errors 92 How Do You Use the Debt Ratio to Evaluate Business Performance? 93 ■ Review 96 ■ Assess Your Progress 104 ■ Critical Thinking 132 Chapter The Adjusting Process 136 What Is the Difference Between Cash Basis Accounting and Accrual Basis Accounting? 138 What Concepts and Principles Apply to Accrual Basis Accounting? 140 The Time Period Concept 140 The Revenue Recognition Principle 140 The Matching Principle 141 What Are Adjusting Entries and How Do We Record Them? 142 Prepaid Expenses 143 Unearned Revenues 149 Accrued Expenses 150 Accrued Revenues 154 What Is the Purpose of the Adjusted Trial Balance and How Do We Prepare It? 158 What Is the Impact of Adjusting Entries on the Financial Statements? 160 How Could a Worksheet Help in Preparing Adjusting Entries and the Adjusted Trial Balance? 161 Appendix 3A: Alternative Treatment of Recording Prepaid Expenses and Unearned Revenues 164 What Is an Alternative Treatment of Recording Prepaid Expenses and Unearned Revenues? 164 Prepaid Expenses 164 Unearned Revenues 165 ■ Review 167 ■ Assess Your Progress 176 ■ Critical Thinking 202 Chapter Completing the Accounting Cycle 210 How Do We Prepare Financial Statements? 212 Relationships Among the Financial Statements 213 How Could a Worksheet Help in Preparing Financial Statements? 217 Section 5—Income Statement 217 Section 6—Balance Sheet 217 Section 7—Determine Net Income or Net Loss 217 What Is the Closing Process, and How Do We Close the Accounts? 219 Closing Temporary Accounts—Net Income 221 Closing Temporary Accounts—Net Loss 223 www.downloadslide.com How Do We Prepare a Post-Closing Trial Balance? 225 What Is the Accounting Cycle? 227 How Do We Use the Current Ratio to Evaluate Business Performance? 228 Appendix 4A: Reversing Entries: An Optional Step 230 What Are Reversing Entries? 230 Accounting for Accrued Expenses 230 Accounting Without a Reversing Entry 231 Accounting With a Reversing Entry 232 ■ Review 234 ■ Assess Your Progress 244 ■ Critical Thinking 272 Comprehensive Problem for Chapters 1–4 275 Comprehensive Problem for Chapters 1–4 277 Chapter Merchandising Operations 280 What Are Merchandising Operations? 282 The Operating Cycle of a Merchandising Business 282 Merchandise Inventory Systems: Perpetual and Periodic Inventory Systems 284 How Are Purchases of Merchandise Inventory Recorded in a Perpetual Inventory System? 285 Purchase of Merchandise Inventory 286 Purchase Discounts 287 Purchase Returns and Allowances 288 Transportation Costs 290 Cost of Inventory Purchased 291 How Are Sales of Merchandise Inventory Recorded in a Perpetual Inventory System? 292 Sale of Merchandise Inventory 292 Sales Discounts 294 Sales Returns and Allowances 295 Transportation Costs—Freight Out 296 Net Sales Revenue and Gross Profit 297 What Are the Adjusting and Closing Entries for a Merchandiser? 298 Adjusting Merchandise Inventory Based on a Physical Count 298 Closing the Accounts of a Merchandiser 299 Worksheet for a Merchandising Business—Perpetual Inventory System 299 How Are a Merchandiser’s Financial Statements Prepared? 302 Income Statement 302 Statement of Retained Earnings and the Balance Sheet 304 How Do We Use the Gross Profit Percentage to Evaluate Business Performance? 304 Appendix 5A: Accounting for Merchandise Inventory in a Periodic Inventory System 306 How Are Merchandise Inventory Transactions Recorded in a Periodic Inventory System? 306 Purchases of Merchandise Inventory 306 Sale of Merchandise Inventory 308 Adjusting and Closing Entries 308 Preparing Financial Statements 311 ■ Review 316 ■ Assess Your Progress 328 ■ Critical Thinking 357 Comprehensive Problem for Chapters 1–5 361 Chapter Merchandise Inventory 366 What Are the Accounting Principles and Controls That Relate to Merchandise Inventory? 368 Accounting Principles 368 Control Over Merchandise Inventory 369 How Are Merchandise Inventory Costs Determined Under a Perpetual Inventory System? 370 Specific Identification Method 372 First-In, First-Out (FIFO) Method 373 Last-In, First-Out (LIFO) Method 374 Weighted-Average Method 377 How Are Financial Statements Affected by Using Different Inventory Costing Methods? 379 Income Statement 380 Balance Sheet 380 How Is Merchandise Inventory Valued When Using the Lower-of-Cost-or-Market Rule? 383 Computing the Lower-of-Cost-or-Market 383 Recording the Adjusting Journal Entry to Adjust Merchandise Inventory 383 What Are the Effects of Merchandise Inventory Errors on the Financial Statements? 385 How Do We Use Inventory Turnover and Days’ Sales in Inventory to Evaluate Business Performance? 388 Inventory Turnover 388 Days’ Sales in Inventory 388 Appendix 6A: Merchandise Inventory Costs Under a Periodic Inventory System 389 How Are Merchandise Inventory Costs Determined Under a Periodic Inventory System? 389 First-In, First-Out (FIFO) Method 391 Last-In, First-Out (LIFO) Method 391 Weighted-Average Method 391 Appendix 6B: Estimating Ending Merchandise Inventory 393 How Can the Cost of Ending Merchandise Inventory Be Estimated? 393 Gross Profit Method 393 The Retail Method 394 ■ Review 396 ■ Assess Your Progress 405 ■ Critical Thinking 425 Chapter Internal Control and Cash 432 What Is Internal Control and How Can It Be Used to Protect a Company’s Assets? 434 Internal Control and the Sarbanes-Oxley Act 434 The Components of Internal Control 435 Contents vii www.downloadslide.com Internal Control Procedures 436 The Limitations of Internal Control—Costs and Benefits 439 What Are the Internal Control Procedures With Respect to Cast Receipts? 440 Cash Receipts Over the Counter 440 Cash Receipts by Mail 440 What Are the Internal Control Procedures With Respect to Cash Payments? 441 Controls Over Payment by Check 441 How Can a Petty Cash Fund Be Used for Internal Control Purposes? 444 How Do We Use the Acid-Test Ratio, Accounts Receivable Turnover Ratio, and Days’ Sales in Receivables to Evaluate Business Performance? 512 Acid-Test (or Quick) Ratio 513 Accounts Receivable Turnover Ratio 514 Days’ Sales in Receivables 514 ■ Review 516 ■ Assess Your Progress 523 ■ Critical Thinking 543 Setting Up the Petty Cash Fund 444 Replenishing the Petty Cash Fund 445 Changing the Amount of the Petty Cash Fund 447 Chapter Plant Assets, Natural Resources, and Intangibles 548 How Can the Bank Account Be Used as a Control Device? 448 How Does a Business Measure the Cost of a Plant Asset? 550 Signature Card 448 Deposit Ticket 448 Check 448 Bank Statement 449 Electronic Funds Transfer 450 Bank Reconciliation 450 Examining a Bank Reconciliation 453 Journalizing Transactions From the Bank Reconciliation 454 How Can the Cash Ratio Be Used to Evaluate Business Performance? 455 ■ Review 457 ■ Assess Your Progress 466 ■ Critical Thinking 484 Chapter Receivables 488 What Are Common Types of Receivables and How Are Credit Sales Recorded? 490 Types of Receivables 490 Exercising Internal Control Over Receivables 491 Recording Sales on Credit 491 Recording Credit Card and Debit Card Sales 492 Factoring and Pledging Receivables 494 How Are Uncollectibles Accounted for When Using the Direct Write-Off Method? 495 Recording and Writing Off Uncollectible Accounts—Direct Write-Off Method 495 Recovery of Accounts Previously Written Off—Direct Write-Off Method 496 Limitations of the Direct Write-Off Method 496 How Are Uncollectibles Accounted for When Using the Allowance Method? 497 Recording Bad Debts Expense—Allowance Method 497 Writing Off Uncollectible Accounts—Allowance Method 498 Recovery of Accounts Previously Written Off—Allowance Method 499 Estimating and Recording Bad Debts Expense—Allowance Method 500 Comparison of Accounting for Uncollectibles 505 How Are Notes Receivable Accounted For? 507 Indentifying Maturity Date 508 Computing Interest on a Note 509 Accruing Interest Revenue and Recording Honored Notes Receivable 509 Recording Dishonored Notes Receivable 512 viii Contents Land and Land Improvements 551 Buildings 552 Machinery and Equipment 552 Furniture and Fixtures 553 Lump-Sum Purchase 553 Capital and Revenue Expenditures 554 What Is Depreciation and How Is It Computed? 556 Factors in Computing Depreciation 556 Depreciation Methods 557 Partial-Year Depreciation 563 Changing Estimates of a Depreciable Asset 563 Reporting Plant Assets 564 How Are Disposals of Plant Assets Recorded? 565 Discarding Plant Assets 565 Selling Plant Assets 567 How Are Natural Resources Accounted For? 572 How Are Intangible Assets Accounted For? 573 Accounting for Intangibles 573 Specific Intangibles 573 Reporting of Intangible Assets 576 How Do We Use the Asset Turnover Ratio to Evaluate Business Performance? 577 Appendix 9A: Exchanging Plant Assets 578 How Are Exchanges of Plant Assets Accounted For? 578 Exchange of Plant Assets—Gain Situation 578 Exchange of Plant Assets—Loss Situation 579 ■ Review 581 ■ Assess Your Progress 587 ■ Critical Thinking 600 10 Chapter Investments 604 Why Do Companies Invest? 606 Debt Securities Versus Equity Securities 606 Reasons to Invest 606 Classification and Reporting of Investments 607 How Are Investments in Debt Securities Accounted For? 609 Purchase of Debt Securities 609 Interest Revenue 609 Disposition at Maturity 609 www.downloadslide.com How Are Investments in Equity Securities Accounted For? 610 Equity Securities With Less Than 20% Ownership (Cost Method) 610 Equity Securities With 20% or More, But Less Than 50%, Ownership (Equity Method) 611 Equity Securities With 50% or More Ownership (Consolidations) 614 How Are Debt and Equity Securities Reported? 615 Trading Investments 615 Available-for-Sale Investments 616 Held-to-Maturity Investments 618 How Do We Use the Rate of Return on Total Assets to Evaluate Business Performance? 619 ■ Review 621 ■ Assess Your Progress 627 ■ Critical Thinking 636 11 Chapter Current Liabilities and Payroll 640 How Are Current Liabilities of Known Amounts Accounted For? 642 Accounts Payable 642 Sales Tax Payable 643 Unearned Revenues 643 Short-Term Notes Payable 644 Current Portion of Long-Term Notes Payable 645 How Do Companies Account for and Record Payroll? 646 Gross Pay and Net (Take-Home) Pay 647 Employee Payroll Withholding Deductions 647 Payroll Register 650 Journalizing Employee Payroll 651 Employer Payroll Taxes 651 Internal Control Over Payroll 653 How Are Current Liabilities That Must Be Estimated Accounted For? 654 Bonus Plans 654 Vacation, Health, and Pension Benefits 655 Warranties 655 How Are Contingent Liabilities Accounted For? 657 Remote Contingent Liability 658 Reasonably Possible Contingent Liability 658 Probable Contingent Liability 658 How Do We Use the Times-Interest-Earned Ratio to Evaluate Business Performance? 660 ■ Review 662 ■ Assess Your Progress 669 ■ Critical Thinking 682 12 Chapter Long-Term Liabilities 686 How Are Long-Term Notes Payable and Mortgages Payable Accounted For? 688 Long-Term Notes Payable 688 Mortgages Payable 689 What Are Bonds? 692 Types of Bonds 693 Bond Prices 693 Present Value 694 Bond Interest Rates 695 Bond Financing Versus Issuing Stock 696 How Are Bonds Payable Accounted for Using the Straight-Line Amortization Method? 697 Issuing Bonds Payable at Face Value 697 Issuing Bonds Payable at a Discount 698 Issuing Bonds Payable at a Premium 700 How Is the Retirement of Bonds Payable Accounted For? 703 Retirement of Bonds at Maturity 703 Retirement of Bonds Before Maturity 703 How Are Liabilities Reported on the Balance Sheet? 705 How Do We Use the Debt to Equity Ratio to Evaluate Business Performance? 707 Appendix 12A: The Time Value of Money 708 What Is the Time Value of Money, and How Is the Present Value of a Future Amount Calculated? 708 Time Value of Money Concepts 708 Present Value of a Lump Sum 711 Present Value of an Annuity 711 Present Value of Bonds Payable 712 Appendix 12B: Effective-Interest Method of Amortization 714 How Are Bonds Payable Accounted for Using the EffectiveInterest Amortization Method? 714 Effective-Interest Amortization for a Bond Discount 714 Effective-Interest Amortization of a Bond Premium 715 ■ Review 718 ■ Assess Your Progress 724 ■ Critical Thinking 738 13 Chapter Stockholders’ Equity 744 What Is a Corporation? 746 Characteristics of Corporations 746 Stockholders’ Equity Basics 747 How Is the Issuance of Stock Accounted For? 750 Issuing Common Stock at Par Value 750 Issuing Common Stock at Premium 751 Issuing Common Stock at a Discount 752 Issuing No-Par Common Stock 752 Issuing Stated Value Common Stock 753 Issuing Common Stock for Assets Other Than Cash 753 Issuing Preferred Stock 754 How Are Dividends and Stock Splits Accounted For? 755 Cash Dividends 755 Stock Dividends 758 Stock Splits 762 Cash Dividends, Stock Dividends, and Stock Splits Compared 763 How Is Treasury Stock Accounted For? 764 Treasury Stock Basics 764 Purchase of Treasury Stock 764 Sale of Treasury Stock 765 Retirement of Stock 768 Contents ix ... Chapter 15 951 16 Chapter Introduction to Managerial Accounting 954 Why Is Managerial Accounting Important? 956 Financial Versus Managerial Accounting 956 Management Accountability 957... The Users of Accounting Information Financial Accounting The field of accounting that focuses on providing information for external decision makers Managerial Accounting The field of accounting. .. information for internal decision makers We can divide accounting into two major fields financial accounting and managerial accounting Financial accounting provides information for external decision