Financial managerial accounting 4th horngren

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