Financial accounting by j david spiceland, wayne thomas don herrmann 2nd edition

giáo trình Financial accounting by j david spiceland, wayne thomas don herrmann 2nd edition Financial accounting by j david spiceland, wayne thomas don herrmann 2nd edition Financial accounting by j david spiceland, wayne thomas don herrmann 2nd edition Financial accounting by j david spiceland, wayne thomas don herrmann 2nd edition Financial accounting by j david spiceland, wayne thomas don herrmann 2nd edition Financial accounting by j david spiceland, wayne thomas don herrmann 2nd edition

Confirming Pages Financial Accounting spi10823_fm_i-xxxv.indd i 8/4/10 6:36 PM Confirming Pages FINANCIAL ACCOUNTING Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020 Copyright © 2011, 2009 by The McGraw-Hill Companies, Inc All rights reserved 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 The McGraw-Hill Companies, Inc., 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 WDQ/WDQ ISBN-13: 978-0-07-811082-5 ISBN-10: 0-07-811082-3 Vice president and editor-in-chief: Brent Gordon Editorial director: Stewart Mattson Publisher: Tim Vertovec Senior sponsoring editor: Dana L Woo Director of development: Ann Torbert Senior development editor: Daryl Horrocks Vice president and director of marketing: Robin J Zwettler Senior marketing manager: Kathleen Klehr Vice president of editing, design, and production: Sesha Bolisetty Lead project manager: Pat Frederickson Buyer II: Debra R Sylvester Cover and interior designer: Laurie Entringer Senior photo research coordinator: Jeremy Cheshareck Photo researcher: Ira C Roberts Lead media project manager: Kerry Bowler and Ron Nelms Cover design: tbd Interior design: tbd Typeface: 10/12.5 New Aster Lt Std Compositor: Laserwords Private Limited Printer: Worldcolor Library of Congress Cataloging-in-Publication Data Spiceland, J David, 1949– Financial accounting/J David Spiceland, Wayne Thomas, Don Herrmann.—2nd ed p cm Includes index ISBN-13: 978-0-07-811082-5 (alk paper) ISBN-10: 0-07-811082-3 (alk paper) Accounting I Thomas, Wayne, 1969– II Herrmann, Don III Title HF5636.S77 2011 657—dc22 2010030759 www.mhhe.com spi10823_fm_i-xxxv.indd ii 8/4/10 6:36 PM Confirming Pages Financial Accounting SECOND ED I TI ON J DAVID SPICELAND University of Memphis WAYNE THOMAS University of Oklahoma DON HERRMANN Oklahoma State University spi10823_fm_i-xxxv.indd iii 8/4/10 6:36 PM Rev Confirming Pages Dedicated to: David’s wife Charlene, daughters Denise and Jessica, and three sons Michael David, Michael, and David Wayne’s wife Julee, daughter Olivia, and three sons Jake, Eli, and Luke Don’s wife Mary, daughter Rachel, and three sons David, Nathan, and Micah spi10823_fm_i-xxxv.indd iv 8/12/10 12:23 PM Confirming Pages About the Authors DAVID SPICELAND David Spiceland is professor of accounting at the University of Memphis, where he teaches intermediate accounting and other financial accounting courses at the undergraduate and master’s levels He received his BS degree in finance from the University of Tennessee, his MBA from Southern Illinois University, and his PhD in accounting from the University of Arkansas Professor Spiceland’s primary research interests are in earnings management and educational research He has published articles in a variety of journals including The Accounting Review, Accounting and Business Research, Journal of Financial Research, and Journal of Accounting Education David has received university and college awards and recognition for his teaching, research, and technological innovations in the classroom David is lead author of McGraw-Hill’s best-selling Intermediate Accounting text David is the Memphis Tigers’ No basketball fan He enjoys playing basketball, is a former all-state linebacker, and an avid fisherman Cooking is a passion for David, who served as sous chef for Paula Deen at a Mid-South Fair cooking demonstration WAYNE THOMAS Wayne Thomas is the John T Steed Chair in Accounting at the University of Oklahoma, where he teaches introductory financial accounting to nearly 600 students per year He received his bachelor’s degree in accounting from Southwestern Oklahoma State University, and his master’s and PhD in accounting from Oklahoma State University Professor Thomas’s primary research interests are in markets-based accounting research, financial disclosures, financial statement analysis, and international accounting issues He currently serves as an editor of The Accounting Review and has published articles in a variety of journals including The Accounting Review, Journal of Accounting and Economics, Journal of Accounting Research, Review of Accounting spi10823_fm_i-xxxv.indd v Studies, and Contemporary Accounting Research He has won several research awards, including the American Accounting Association’s Competitive Manuscript Award Professor Thomas has won teaching awards at the university, college, and departmental levels, and has received the Outstanding Educator Award from the Oklahoma Society of CPAs Wayne enjoys playing sports (basketball, tennis, golf, and ping pong), solving crossword puzzles, and coaching little league sports He has participated in several adventure races, like you’ll read about in the Great Adventures continuing problem at the end of each chapter DON HERRMANN Don Herrmann is the Chair of the Accounting Department at Oklahoma State University, where he teaches financial accounting, intermediate accounting, and a doctoral-level course in financial accounting research He received his bachelor’s degree in business from John Brown University, his master’s degree in accounting from Kansas State University, and his PhD in accounting from Oklahoma State University Professor Herrmann’s research interests are in earnings forecasts, segment reporting, financial statement analysis, and international accounting issues He is past president of the American Accounting Association International Section and has served on the editorial and review board of the top research journal in the field of accounting, The Accounting Review He has published articles in a variety of journals including The Accounting Review, Journal of Accounting Research, Accounting Horizons, Journal of Business, Finance, and Accounting, and the Journal of Accounting and Public Policy Don Herrmann and Wayne Thomas often work together, having co-authored over 15 research articles Professor Herrmann has received many teaching awards at the department, college, and university levels, including Professor of the Year in the University Greek System Don, like his co-authors, is a big sports fan He played tennis on scholarship in college and enjoys playing soccer, basketball, running, biking, and swimming He also coaches soccer, basketball, and little league baseball in his home town 8/4/10 6:36 PM Confirming Pages CELEBRATING STUDENT SUCCESS This is simply an outstanding textbook It combines an interesting, engaging, and highly readable writing style with excellent, comprehensive, up-todate, and conceptually rich discussions.— Marianne James, California State University–Los Angeles I read the book in two weekends and was so delighted in the quality of content and the presentation style.—Steven Ault, Montana State University You have created a text that is likely to become the gold standard of Intro texts.—Christian Wurst, Temple University H ave you experienced those moments in your course when students became fully engaged? When the “Aha!” revelations are bursting like li fireworks? David Spiceland, Wayne Thomas, and Don Herrmann have developed a unique textbook D based on over 50 collective years of experience in the b classroom They’ve brought together best practices like highlighting Common Mistakes, offering frequent Let’s Review exercises, integrating the course with a running Continuing Problem, demonstrating the relevance of the course to nonmajors with a Career Corner, and communicating it all in a studentfriendly conversational writing style After the proven success of the first edition of Financial Accounting, we’re confident that the new and improved second edition will not only motivate, engage, and challenge students—it will illuminate the financial accounting course like never before This is an excellent book and I love the writing style I would describe the text as wellwritten with excellent examples that truly describes how accounting information is used to make better business decisions.—Mark Judd, University of San Diego If you like Spiceland’s intermediate text, you will be thrilled with the financial accounting principles text It is written in the same conversational style, addresses topics directly and clearly, and the illustrations are terrific too.—Nancy L Snow, University of Toledo vi spi10823_fm_i-xxxv.indd vi 8/4/10 6:37 PM Confirming Pages Key to Financial Accounting’s remarkable first edition success are the five core precepts around which the textbook is built successfully employ humor and a conversational writing style in developing scenarios, The authors Conversational Writing Style The authors took special care to write a textbook that fosters a friendly dialogue between the text and each individual student The tone of the presentation is intentionally conversational—creating the impression of speaking with the student, as opposed to teaching to the student examples and explanations which remain in the reader’s mind and make these oftentimes complicated subjects understandable.—Dennis L Kovach, Community College of Allegheny County It offers a very readable presentation, with easy to follow pedagogy The writing is clear and crisp—it is not boring.—Al Hartgraves, Emory University Real-World Focus Students learn best when they see how concepts are applied in the real world For that reason, realworld examples from companies, such as Dell and Apple, are used extensively and routinely to enhance the presentation The real-world focus adds realism to discussions and serves as the foundation for exercises, problems, and cases Innovative Pedagogy Reviewers enthusiastically embraced the innovative pedagogy used throughout the book, including Common Mistake boxes that help students avoid common pitfalls of beginning students and Flip Side problems and scenarios that show students the two sides of various accounting transactions Decision Maker’s Perspective Each chapter includes one or more distinctive Decision Maker’s Perspective sections, which offer insights into how the information discussed in the chapters affects decisions made by investors, creditors, managers, and others Each chapter also contains Decision Points highlighting specific decisions in the chapter that can be made using financial accounting information This text has a logical layout and incorporates tools to keep the student’s attention It makes the student think about the impact on the financials based upon the different principles and estimates selected —Victor Stanton, University of California–Berkeley A Strong Supplements Package The authors write all of the major supplements for Financial Accounting, including the Testbank, Solutions Manual, and the Instructor’s Manual With iPod material, narrated PowerPoints, online quizzing, Excel templates, and QuickBooks templates integrated into the end-of-chapter material, Spiceland’s Financial Accounting provides the cutting-edge technology demanded by today’s accounting instructors and students vii spi10823_fm_i-xxxv.indd vii 8/4/10 6:37 PM Confirming Pages viii CHAPTER Chapter Title Runs In Here A LOGICAL ORGANIZATION The sequence of topics is inspired, and I wonder why it hasn’t been done before.—Laurel Bond Mitchell, University of Redlands beautifully set the stage for the finest presentation of financial accounting pedagogy I have read to date in a textbook format.— Spiceland’s Chapter has Accounting Information and Decision Making The Accounting Information System Sherry Gordon, Palomar College I like the overall layout of the chapter Specifically, I like how the authors first cover how a transaction affects the accounting equation, and then cover the details of journal entries.——Martha Lou Fowler, Missouri Western State University STH goes beyond the “textbook” mode and discusses/ presents in pictures, diagrams, etc., and I think it makes the whole adjusting process much easier to understand.—Peter Theuri, Northern Kentucky University The authors provide an excellent chapter on Receivables and Sales They provide a comprehensive discussion, along with effective illustrations I prefer the STH sequence of topics.—Al Nagy, John Carroll University The inventory chapter in Spiceland is the best I’ve ever seen!—James Aitken, Central Michigan The Financial Reporting Process Cash and Internal Controls Inventory and Cost of Goods Sold Receivables and Sales University Good, comprehensive but readable walk through the many types of property transactions Chapter does an especially good job in talking about intangible assets.—Laura Ilcisin, University of Nebraska–Omaha The Spiceland chapter is excellent; it provides comprehensive, yet easy to understand discussions, and effective development of concepts and coverage of the topics related to current liabilities.—Marianne James, California State University– viii Los Angeles spi10823_fm_i-xxxv.indd viii Long-Term Assets Current Liabilities 8/4/10 6:37 PM Confirming Pages CHAPTER Chapter Title Runs In Here ix THAT MAKES LEARNING MORE EFFICIENT Overall, the chapter covers a complex topic in a clear way and in the right amount of detail.—Frank Hodge, 10 11 12 University of Washington Long-Term Liabilities Stockholders’ ders’ Equity I REALLY enjoyed this chapter Spiceland has presented this chapter in a very interesting manner I like the simplicity of the presentation I especially like the “Decision Maker’s Perspectives” throughout the chapter Not only is this chapter well-written, it is interesting!—Steve Teeter, Utah Valley State College Statement of Cash Flowss Financial Statement tatement Analysis STH does a great job of summarizing and illustrating the steps in preparing both the indirect and direct methods In addition, STH is more current than other texts in its references to IFRS.—Nancy Lynch, West Virginia University Wow! I was really impressed with this chapter! The conservative and aggressive accounting example was really a great way to teach students about quality of earnings The rest of the chapter was also put together very well Great ratio illustration with Under Armour and Nike, two companies that students are interested in.—Christa Morgan, Georgia Perimeter College Appendix A Annual Report of American Eagle Outfitters, Inc Appendix B Annual Report of The Buckle, Inc Appendix C Time Value of Money Appendix D Investments Appendix E International Financial Reporting Standards realistic examples, excellent explanations, and illustrated example problems The text contains within the text The EOC material is also well done It is definitely worth looking at for adoption.— Kreag Danvers, Clarion University of Pennsylvania I generally like to cover selected topics in this area, so I would definitely use [this appendix] I think this would be very beneficial.—Stephen Benner, Eastern Illinois University ix spi10823_fm_i-xxxv.indd ix 8/4/10 6:37 PM Confirming Pages SUBJECT INDEX Physical control of assets and records, 170 Physical flow of inventory, 271 Plank, Kevin, 563 Plant assets See Property, plant, and equipment Point in time, 14 Political/economic ties, E-2 Post-closing trial balance, 135, 137, 138 Posting transactions, 55, 75–76, 77, 84 adjusting entries, 124–127, 138 adjusted trial balance and, 126–127, 138 to general ledger, 124–126 closing entries, 134–135, 138 to general ledger, 75–76, 82, 84, 124–126 Predictive value of information, 28, 29 Preemptive right of stockholders, 461 Preferred stock, 466–468, 487 features of, 467–468 financing alternatives compared, 466–467 IFRS on, 467, 467n issuance of, 468 mandatorily redeemable, 467, 467n, 468, E-9 note regarding, E-9 reporting, 479 Premium, 420 Premium bonds accounting for, 427–428, 430 amortization schedule for, 428 interest on, 427 pricing, 419–421, 423, 424 Prepaid expenses, 113–117 adjusting entries for, 123 depreciable assets, 116–117 rent, 59–60, 78, 114–115 supplies purchased, 115–116 Prepaid rent adjusting entries for, 114–115 adjustments for changes in, 518 effects on accounting equation, 59–60 measurement of, 78 Prepayments prepaid expenses, 113–117 adjusting entries for, 123 depreciable assets, 116–117 rent, 59–60, 78, 114–115 supplies purchased, 115–116 unearned revenues from, 113, 378–379, 390 Present value of annuity, C-10–C-12, C-13 examples, C-11–C-12 financial calculator functions, C-11 present value of annuity of $1 table, 418, C-11 using Excel spreadsheets, C-11 of single amount, C-5–C-7, C-13 examples, C-6–C-C-7 financial calculator functions, C-6 formula for, C-5 present value tables, 418, C-5–C-C-6 using Excel spreadsheets, C-6 Present value tables present value of ordinary annuity of $1, 418, C-11 present value of $1 table, 418, C-5–C-C-6 pricing bond issues at discount, 419, 423 at face value, 417–418, 422 at premium, 420, 424 Preventive controls, 169–170 Price-earnings (PE) ratio, 486–487, 578, 581 Principal of bond, 413 Principles-based accounting standards, E-3–E-4 Principles of consolidation, A-10 Private accounting, 27–28 Privately held corporations, 461 Private placement of bonds, 413 Profit See Net income Profitability ratios, 343–346, 348, 578–581, 592 asset turnover, 345, 346, 348, 527, 578, 580 gross profit ratio, 287, 289, 296, 578 price-earnings ratio, 486–487, 578, 581 profit margin, 345, 346, 348, 578, 580 return on assets, 344, 348, 437, 526, 578, 579 return on equity, 437, 483–484, 487, 578, 580–581 review, 582–583 spi10823_sidx_I1-I11.indd I–9 Profit margin ratio, 345, 346, 348, 578, 580 Promissory notes See Notes payable; Notes receivable Property, plant, and equipment, 348 asset acquisition, 321–324 basket purchases, 323, 324 buildings, 322 equipment, 322–323 land, 321, 322 land improvements, 322 natural resources, 323–324 depreciation of, 330–339 accumulated, 330–332, 332n activity-based, 335–336, 337, 339 decision maker’s perspective, 336–337 declining balance, 334–335 depletion, 324, 330, 337 double-declining-balance, 332, 334–335, 339 ethical dilemmas, 334 review, 338–339 straight-line, 332–334, 338 sum-of-the-years’-digits, 332n tax depreciation, 337–338, 338n units-of-production depreciation, 335–336 International Accounting Standards, E-7 note regarding, A-12–A-13, A-25, B-13, B-20 purchase of asset as investing activity, 511 reported in classified balance sheet, 129 valuation of, E-7 Property taxes, in acquisition of land, 321, 322 Provision for income taxes, 565 Public accounting, 26–27, 84 Public Company Accounting Oversight Board (PCAOB), 167, 171 Public Company Accounting Reform and Investor Protection Act of 2002 See Sarbanes-Oxley Act of 2002 Publicly held corporations, 460–461 Purchase(s) on account, 60, 78–79 basket purchases, 323, 324 for cash, 59, 69, 73, 78 of inventory in cost of goods sold, 264, 265, 269 periodic inventory system, 290–291 perpetual inventory system, 274–277 of long-term assets See Asset acquisition Purchase discounts, 278–279, 291–292 Purchase returns, 279, 280, 291–292 Qualitative characteristics of accounting information, 28–30 Quality of earnings See Earnings quality Quick assets, 386 Quick (acid-test) ratio, 386–387, 388, 390, 571, 575 Ratio analysis, 570–583 cash flow ratios, 525–527 asset turnover, 345, 346, 348, 527, 578, 580 cash flow to sales, 527 cash return on assets, 526–527, 528 decision maker’s perspective of, 525–526, 526n return on assets, 344, 348, 437, 526, 578, 579 debt ratios, 435–439 debt to equity ratio, 435–437, 439, 571, 575 return on equity ratio, 437, 483–484, 487, 578, 580–581 return on market value of equity ratio, 484–485 times interest earned ratio, 438–439, 571, 575–576 decision maker’s perspective of, 579 equity analysis, 483–487, 488 decision maker’s perspective of, 485 earnings per share See Earnings per share price-earnings ratio, 486–487, 578, 581 return on equity ratio, 437, 483–484, 487, 578, 580–581 return on market value of equity ratio, 484–485 I–9 inventory analysis, 287–289, 296 average days in inventory, 288, 571, 573 gross profit ratio, 287, 289, 296, 578 inventory turnover ratio, 287–288, 289, 296, 571, 573 liquidity ratios, 386–389, 390, 571, 572–575, 576 acid-test ratio, 386–387, 388, 390, 571, 575 average collection period, 237–238, 241, 571, 572–573 average days in inventory, 288, 571, 573 current ratio, 386, 388, 390, 571, 574–575 decision maker’s perspective of, 388–389 ethical dilemma, 574 inventory turnover, 287–288, 289, 296, 571, 573 receivables turnover, 237, 238–239, 241, 571, 572 review of, 387–388 working capital, 386, 387, 388, 390 of long-term assets, 343–346, 348 asset turnover, 345, 346, 348, 527, 578, 580 profit margin, 345, 346, 348, 578, 580 return on assets, 344, 348, 437, 526, 578, 579 profitability ratios, 343–346, 348, 578–581, 592 asset turnover, 345, 346, 348, 527, 578580 gross profit ratio, 287, 289, 296, 578 price-earnings ratio, 486–487, 578, 581 profit margin, 345, 346, 348, 578, 580 return on assets, 344, 348, 437, 526, 578, 579 return on equity, 437, 483–484, 487, 578, 580–581 review, 582–583 receivables management, 236–239 average collection period, 237–238, 241, 571, 572–573 receivables turnover ratio, 237, 238–239, 241, 571, 572 risk analysis, 571–577, 592 liquidity ratios, 571, 572–575 review, 576–577 solvency ratios, 571, 575–576 solvency ratios, 571, 575–576 debt to equity ratio, 435–437, 439, 571, 575 times interest earned, 438–439, 571, 575–576 Raw materials, 263 Receivables, 212–241 accounts receivable See Accounts receivable analysis of, 236–239 average collection period, 237–238 receivables turnover ratio, 237, 238–239, 241 notes receivable See Notes receivable Receivables turnover ratio, 237, 238–239, 241, 571, 572 Reconciliations, 170, 181 Record date, 473 Recording transactions, 55, 72–75 adjusting entries, 137–138 asset acquisitions See Asset acquisition asset impairment losses, 347, E-7 bonds payable See Bonds payable debits and credits, 84 installment notes, 433 interest payable, 372, 390 journal entries, 73 periodic system See Periodic inventory system perpetual system See Perpetual inventory system sales discounts, 216–217 uncollectible accounts, 224, 240–241 Redeemable preferred stock, 467 Related party transactions, B-22, B-29 Relevance of information, 28, 29 Repairs and maintenance, expensing costs of, 328, 329 Replacement cost of inventory, 284, 286 market value as, E-6 Reporting periods, 135 8/23/10 5:18 PM Confirming Pages I–10 SUBJECT INDEX Repurchased shares See Treasury stock Research and Development (R&D) costs, 325, E-7 “Reserves,” E-9 Residual value of asset, 331, 336, 339–340 Restricted stock grants, A-31–A-32 Retailers, 262–263 Retained earnings, 472, 487 closing process and, 137 debits and credits, 84 earned capital, 472–474 increase or decrease in, 69, 522 reporting, 12–13, 128–129, 480 revenues as component of, 61, 62, 69 treasury stock transactions, 471n vertical analysis of, 566 Retained Earnings account, 70, 71, 131–133, 137, 458, 481 Retirement of assets, 342–343 of bonds See Bonds payable Retirement plans, A-32 Return on assets (ROA) ratio, 344, 348, 437, 526, 578, 579 Return on equity (ROE) ratio, 437, 483–484, 487, 578, 580–581 Return on market value of equity ratio, 484–485 Revenue(s) accrued, 113, 121–122, 124 cash-basis vs accrual-basis accounting, 111 as component of retained earnings, 61, 62, 69 earned on bonds, D-12–D-13 interest revenues, 235, 373, 509 measurement of, net revenues, 215–218, 240 nonoperating revenues, 283 other revenues and expenses, 586, A-17 reporting in accrual-basis accounting, 108–110, 137, 187 accrued interest on note, 235 in income statement, 11 revenue recognition principle, 108, 110, 137 timing of, 187 unearned See Unearned revenues Revenue accounts, 133, 216, 218, 222 Revenue recognition IFRS vs GAAP on, E-5 notes regarding, 228, 378, A-15–A-16, B-12 Revenue recognition principle, 108, 110, 137 Risk analysis, 571–577, 592 liquidity ratios in, 571, 572–575 review, 576–577 solvency ratios in, 571, 575–576 Risk assessment, 168, 169 ROA (return on assets) ratio, 344, 348, 437, 526, 578, 579 ROE (return on equity) ratio, 437, 483–484, 487, 578, 580–581 Romero, S., 319n Rudolph, Vernon, 187 Rules-based accounting standards, E-3–E-4 Salaries, 63–64, 71, 80, 119 Sales, 274–277, 281 Sales allowances, 217–218, 240 Sales commissions, 321, 322 Sales discounts, 215–217, 240 credit sales with, 216–217 credit sales without, 217 Sales on account See Credit sales Sales returns, 217, 240 Sales returns and allowances account, 217–218 Sales tax payable, 380, 390 Salvaged materials, 321, 322 Salvage life See Residual value of asset Sandberg, J., 319n Sarbanes-Oxley Act of 2002, 24–25, 167–168 accounting scandals and, 189 documentation of internal controls requirement, E-5 major provisions of, 167 S corporation, 463 Seasonal businesses, D-2 spi10823_sidx_I1-I11.indd I–10 Seasoned equity offerings (SEOs), 460 SEC See Securities and Exchange Commission Secured bonds, 414, 415 Securities Act of 1933, 22 Securities and Exchange Commission (SEC), 22–23, 461 acceptance of IFRS, E-1 certification by, B-29 investigation of Arthur Andersen, 167 requirements of, 84, 374 Securities Exchange Act of 1934, 22 Segment information, A-17–A-18, B-26 Self-insurance liabilities, A-13 Selling, general, and administrative expenses, A-16 SEOs (seasoned equity offerings), 460 Separation of duties, 165, 169–170, 173, 176 Serial bonds, 414, 415 Service companies, 262, 264 Service fees, 174, 175, 180 Service life of asset, 331, 334, 339, 340 Services, provision of on account, 62–63, 79 for cash, 61–62, 69, 79 Services on account See Credit sales Share buybacks See Treasury stock Shareholders’ equity See Stockholders’ equity Share rights of stockholders, 461 Short-term assets See Current assets Short-term investments cash equivalents, 172–173 notes regarding, A-11, A-18–A-20 Short-term liabilities See Current liabilities Significant influence, D-3, D-8–D-10 Simple interest, C-1, C-13 Single-step income statement, 282 Sinking funds, 414 Skimming cash receipts, 165 Small stock dividends, 465, 478, 478n Social Security taxes, 375, 376 Sole proprietorship, 9, 459 Solomon, D., 319n Solvency, 571 Solvency ratios, 571, 575–576 debt to equity ratio, 435–437, 439, 571, 575 times interest earned, 438–439, 571, 575–576 Source documents, 54 Specific identification method, 265, 266 Spiceland, J David, 478n Stated rate of interest on bonds payable, 416, 425, 426 discount bonds, 419, 425 issued at face value, 418 premium bonds, 421 Stated value, 465, 466 Statement of cash flows, 130, 506–537 cash flow analysis, 525–527 asset turnover, 527 cash flow to sales, 527 cash return on assets, 526–527, 528 decision maker’s perspective of, 525–526, 526n return on assets, 526 cash flows from financing activities See Financing activities cash flows from investing activities See Investing activities cash reporting, 184–186 classification of transactions, 508–512 as operating activities, 512 reporting cash flow activities, 508–510 reporting noncash activities, 511 review, 511 components of, 15–16, 17 conservative vs aggressive accounting, 588, 590 consolidated, example of, A-8 ethical dilemma, 528 examples of, A-8, B-11 financial information communicated through, 32 format of, 512, 514, E-9 IFRS on, E-9 illustrated, 508, 523 links with other financial statements, 16, 17, 18 operating activities direct method See Direct method indirect method See Indirect method preparation of, 512–525 basic format of, 512, 514 financing activities, 521n, 521–523 investing activities, 520n, 520–521 operating activities (direct method) See Direct method operating activities (indirect method) See Indirect method review, 524–525 steps in, 512–514 Statement of comprehensive income, D-6 Statement of financial position See Balance sheet(s) Statement of stockholders’ equity, 128–129, 480–481, 487 components of, 12–13, 128–129 net income (loss), 16, 17, 128 retained earnings, 12–13, 128–129 dividends reported in, 474 examples of, A-7, B-10 financial information communicated through, 32 links with other financial statements, 16, 17, 18 prepared from trial balance, 83–84 review, 483 Statements of Financial Accounting Concepts No 6: “Elements of Financial Statements” (FASB), 370n Statements of operations, A-5 State Unemployment Tax Act (SUTA), 376 Stock-based compensation, A-28–A-29, B-23–B-25 Stock dividends, 476–478, 487 ethical dilemmas, 479 large stock dividends, 476–477 small stock dividends, 465, 478, 478n Stockholders, 460, 461, 466, B-29 Stockholders’ equity, 456–488 debits and credits, 76 decreased by stock repurchase, 469 earned capital, 472–478 ethical dilemma, 479 retained earnings and dividends, 472–474 review, 474–475 stock dividends and stock splits, 476–478, 479 equity analysis, 483–487, 488 decision maker’s perspective of, 485 earnings per share See Earnings per share price-earnings ratio, 486–487, 578, 581 return on equity ratio, 437, 483–484, 487, 578, 580–581 return on market value of equity ratio, 484–485 FASB on, 467, 467n IFRS on, E-9 invested capital, 459–472 common stock See Common stock corporations, 459–463 preferred stock, 466–468 treasury stock, 469–472 measurement of, reporting, 479–483, 487 in balance sheet, 14, 15, 16, 17, 458, 479–480, 481 review, 482–483 in statement of stockholders’ equity See Statement of stockholders’ equity Stockholders’ equity accounts, 54 common mistake, 67 as liability accounts, 54, 67, 70 Retained Earnings account, 70, 71, 131–133, 137, 458, 481 Stockholders’ rights, 461, 466 Stock market crash of 1929, 22 Stock options, A-29–A-31 Stock repurchase, A-14–A-15 Stock splits, 476–477, 487 note regarding, B-14 reasons for, 477–478 recorded as stock dividend, 477 8/23/10 5:18 PM Confirming Pages SUBJECT INDEX Straight-line amortization, 340, 425n Straight-line depreciation, 332–334 change in depreciation estimate, 333–334 depreciation schedule, 332, 338 formula for, 332 partial-year, 333 Subsequent events, A-36–A-37 Subsidiary, D-11 Sullivan, Scott, 319 Summary of significant accounting policies American Eagle Outfitters, Inc., A-10–A-18 The Buckle, Inc., B-12–B-26 Sum-of-the-years’-digits depreciation, 332n Supplies, purchase of, 60, 78–79, 115–116 Sustainability of natural resources, 324 T-accounts, 66, 76, 84, 385 Tangible assets, 320 Tax accounting, 272 Taxation deferred taxes, 381, 390 deferred tax liability, 381, 390 double taxation of corporations, 10, 462, 463 income taxes See Income taxes payroll liabilities, 375–378 employee costs, 375–376, 377 employer costs, 375, 376–378 property taxes, 321, 322 sales tax payable, 380, 390 tax depreciation method (MACRS), 337–338, 338n tax laws, E-2 tax reporting, 220n, 230–231 tax savings, 272 tax tables, 376 Tax preparation/planning, 26–27 Temporary accounts, 131–133, 293, 474 Term bonds, 414, 415 Theft, 165, 166, 177 Ticket sales, 378, 379 Timeliness of information, 28, 30, 31 Time-series analysis, 567 Times interest earned ratio, 438–439, 571, 575–576 Time value of money, C-1–C-13 annuities, C-8–C-12, C-13 future value, C-8–C-10 present value, C-10–C-12 review, C-12 materiality of, E-8 spi10823_sidx_I1-I11.indd I–11 simple vs compound interest, C-1–C-2 single amount, C-2–C-7, C-13 future value of, C-2–C-5 present value of, C-5–C-7 review, C-7 Timing, 111, 187, E-8 Timing differences, 177, 178 Title insurance, 321, 322 Total debt, 21 Trade accounts payable, 60, 375 Trade discounts, 215 Trademarks, 326 Trade receivables, 214 Trading securities, D-3, D-5, D-5n, D-13–D-14 Treadway Commission, 168 Treasury bills, 172 Treasury stock, 458, 464, 469–472, 487 accounting for, 470–472, 471n decision maker’s perspective of, 469 IFRS on, E-9 note regarding, A-14–A-15 reissuing, 470–471 reporting in balance sheet, 480 Trend analysis, 567 Trial balance, 82–84 adjusted, 126–127, 130, 138 common mistakes in, 82 order of accounts in, 83–84 post-closing, 135, 137, 138 preparation of, 55 unadjusted, 126 Unadjusted trial balance, 126 Uncollectible accounts estimation of aging method, 227–228, 229, 241 balance sheet method, 221, 239 conservative vs aggressive accounting, 588 decision maker’s perspective, 231n, 231–232 fraud by income manipulation, 231, 231n percentage-of-credit-sales method, 239n, 239–240, 241 percentage-of-receivables method, 221, 226, 239 recording, 224 uncompensated healthcare, 213, 225, 226, 229 writing off by allowance method, 220n, 220–230, 241 by direct write-off method, 220n, 230–231 Understandability of information, 28, 30 Underwriters, 460 I–11 Underwriting, 413 Unearned revenues adjusting entries for, 117–119, 123 cash receipts, 63, 80 as current liabilities, 378–379, 390 expanded accounting equation and, 63 from prepayments, 113, 378–379, 390 Unemployment taxes, 376 Units-of-production depreciation, 335–336 Unrealized Holding Gain–Net Income, D-5 Unsecured bonds, 414, 415 Unusual nature of item, 584, 586 Useful life See Service life of asset Utilities, 119–120 Value stocks, 486, 581 Venture capital firms, 460 Verifiability of information, 28, 30 Vertical analysis, 564–566, 592 of balance sheet, 566 of income statement, 564–565 Vickrey, Don, 478n Voluntary deductions, 375, 376 Voting rights of stockholders, 461 Walton, Sam, 53 Warranties, 384–385 Watered shares, 465 Waymire, G., 4n Weighted-average cost method, 265, 268–269, 270, 295 Wholesalers, 262 Wilson, G P., 231n Winters, Alan J., 478n Withholdings, 375, 378 Working capital ratio, 386, 387, 388, 390 Work-in-process inventory, 263 Work papers, 167 Write-down of inventory, 285, 287, 588 www.acfe.com, 165, 166 www.aicpa.org, 26 www.amusementtoday.com, 411 www.bls.gov/oco/ocos001.htm, 26 www.coso.org, 168 www.fasb.org, 21 www.forbes.com, 53 www.iasb.org, 22 Yamamura, Jeanne H., 526n Zero balances, 133 8/23/10 5:18 PM Confirming Pages Company Index Note: Detailed entries for the financial statements of American Eagle Outfitters, Inc and The Buckle, Inc may be found in the Subject Index Abercrombie, 343–346 Academy Sports, 572 Allstate Insurance, 262 Amazon.com, 278, 279, 472 AMC Theatres, 108 Amedisys, 457 American Airlines, 11, 116–117, 369 American Eagle Outfitters, Inc., 6, 108, 378, 458, 459, 465, 466, 469, 472, 473, 478, 479, 480, A-1–A-38 Apple, Inc., 6, 19, 30, 118–119, 263, 339, 378–379, 507, 525–527, 579 Arthur Andersen, 24, 167 AT&T, D-2 Bally, 457 Bank of America, 371–373, 413 Berkshire Hathaway, 478, 579 Best Buy Co., Inc., 108, 261, 262–263, 265, 288, 289 Blockbuster, 11 Blue Coat Systems, 289 Boeing, 389 British Airways plc, E-7 British Petroleum, 382 The Buckle, Inc., B-1–B-30 Burlington Northern, 579 Cadbury Schweppes plc, E-6 Cargill, 461 Carnival Cruise Lines, 108–110 CBS, 11 Cedar Fair Entertainment Company, 411, 418 Cedar Point, 435 Chase Bank, 373–374 Chili’s, 378 Chrysler Corporation, 382, 461 Cingular Wireless, D-2 Cisco, 461 Citibank, 413 Citigroup, 460 Clean Harbors, 457 Coca-Cola Company, 6, 133, 263, 324, 325, 326, 412, 435–439, D-2 Compaq Computer Corporation, 326 ConocoPhillips, 11 Darden Restaurants, 320 Deckers Outdoor, 457, 483–487 Dell Incorporated, 3, 19, 23, 27, 30, 31, 263, 289, 384, 525–527 Deloitte, 26, 382, 383 Delta Airlines, 369, 373–374 Dick’s Sporting Goods, 572 Disney, 324, 411 Dollar General, 579 Ford Motor Company, 6, 11, 263, 412 Fruit of the Loom, 579 Gap Inc., 262–263, 469 Gateway, 11, 30 GEICO, 108, 579 General Electric (GE), 324, 461, D-1 General Mills, E-6 Goldman Sachs, 460, 579 Goodyear Tire and Rubber, 11 Google, 320, 324, 461, 478 Gottschalks, Inc., E-10 Green Mountain Coffee, 457 Hansen Natural, 457 Harley-Davidson, 263 HealthSouth Corporation, 232 Heineken, E-7 Hewlett-Packard (HP), 19, 30, 326, 507 hhgregg, Inc., 283–284 Hitachi, 583 The Home Depot, 262, 366 Honda, 573 HP (Hewlett-Packard), 19, 30, 326, 507 IBM, 264, 324, 583 Intel, 324, 461 International Paper Company, 273 J C Penney, 53 J.M Smucker Company, 326, 328–329 Johnson & Johnson, 469 JPMorgan, 413 Koch Industries, 461 Kodak, 385 KPMG, 26 Krispy Kreme, 187–189 LifePoint Hospitals, 236–239 The Limited, 262, 469 Lowe’s, 262–263 Macy’s, 262–263 Marie Callender’s, 586 Marriott Hotels, 262 MasterCard, 174 McDonald’s, 8, 262–263, 324, C-12 McDonnell Douglas, 389 MCI, 319 Microsoft Corporation, 6, 324, 340, 412, 461, 462, 469, 473, 507 Midas Muffler, 123–124 Minute Maid, D-2 Morgan Stanley, 460 Motorola, 382 PepsiCo, 412, 435–439, D-2 Philip Morris, 382 Pixar Productions, C-9–C-10 Polaroid Corporation, 3, 385 PricewaterhouseCoopers, 26 Procter & Gamble, 465 Publix Super Markets, 262 Quality Systems, 457 Radio Shack Corporation, 288, 289 Reebok, 108, 563 Regal Entertainment Group, 165, 166, 169, 171, 172 Rite Aid Corporation, 272–273 Saks Fifth Avenue, 579 Sally Beauty Supply, 366 Sara Lee, 263 Sears, 262–263 See’s Candies, 579 Sirius Satellite Radio, 11 Six Flags, 411, 418, 431, 435 Sony, 263, 280–281 Southwest Airlines, 369, 371–373, 381, 386, 387–389 Southwestern Energy, 457 Sports Illustrated, 378 Sprint PCS, 11 Starbucks Corporation, 6, 187, 188–189, 330, 376, 457, 473, D-1 Subway, 326 Sysco Corporation, 262 Target, 262–263, 289 Tenet Healthcare Corporation, 213, 225, 226, 229, 236–239 Terra Nitrogen, 457 Timberland, 483–487 Toyota, 324 Tropicana, D-2 UnderArmour, 563, 564–568, 570–581, 583 Unilever, E-9 United Airlines, 369, 370, 371, 382, 384, 386, 387–389 United Healthcare, 262 United Way, 376 UPS, 262 U.S Cellular, 11 US Airways, 369 Vail Ski Resort, 376 Visa, 174 Eastman Kodak, 11 Electrolux, E-8 Embassy Suites, 378 Enron Corporation, 24, 166–167 Ernst & Young, 26 ExxonMobil, 263, 323, 461 National Football League, 563 Nike, 376, 414, 465, 563, 564–566, 569, 570–583 Nokia, 324 Northwest Airlines, 369 Walmart Stores, Inc., 53, 55–56, 75, 289, 343–346, 461, 473 Wendy’s, 56 Weyerhaeuser, 323 Winnebago, 320 WorldCom, 166–167, 319 OfficeMax, 11 XTO Energy, 457 Fandango, 378 Federal Express (FedEx), 107, 108 Pampered Chef, 579 Payless ShoeSource, 262 I–12 spi10823_nidx_I12.indd I–12 8/24/10 9:57 AM spi10823_PVtable_P1-P6.indd P–1 1.09369 1.14339 1.19509 1.24886 1.30477 1.36290 1.42331 1.48610 1.55133 1.61909 1.10462 1.16054 1.21899 1.28008 1.34392 1.41060 1.48024 1.55297 1.62889 1.70814 1.11567 1.17795 1.24337 1.31209 1.38423 1.45997 1.53945 1.62285 1.71034 1.80209 1.12683 1.19562 1.26824 1.34489 1.42576 1.51107 1.60103 1.69588 1.79586 1.90121 1.13809 1.21355 1.29361 1.37851 1.46853 1.56396 1.66507 1.77220 1.88565 2.00577 1.14947 1.23176 1.31948 1.41297 1.51259 1.61869 1.73168 1.85194 1.97993 2.11609 1.16097 1.25023 1.34587 1.44830 1.55797 1.67535 1.80094 1.93528 2.07893 2.23248 1.17258 1.26899 1.37279 1.48451 1.60471 1.73399 1.87298 2.02237 2.18287 2.35526 1.18430 1.28802 1.40024 1.52162 1.65285 1.79468 1.94790 2.11338 2.29202 2.48480 1.19615 1.30734 1.42825 1.55966 1.70243 1.85749 2.02582 2.20848 2.40662 2.62147 1.20811 1.32695 1.45681 1.59865 1.75351 1.92250 2.10685 2.30786 2.52695 2.76565 1.22019 1.34686 1.48595 1.63862 1.80611 1.98979 2.19112 2.41171 2.65330 2.91776 1.23239 1.36706 1.51567 1.67958 1.86029 2.05943 2.27877 2.52024 2.78596 3.07823 1.28243 1.45095 1.64061 1.85394 2.09378 2.36324 2.66584 3.00543 3.38635 3.81339 1.34785 1.56308 1.81136 2.09757 2.42726 2.80679 3.24340 3.74532 4.32194 4.98395 1.48886 1.81402 2.20804 2.68506 3.26204 3.95926 4.80102 5.81636 7.03999 8.51331 10.28572 14.97446 21.72452 31.40942 45.25926 65.00087 93.05097 1469.77160 10 11 12 13 14 15 16 17 18 19 20 21 25 30 40 5.74349 4.29187 3.39956 3.20714 3.02560 2.85434 2.69277 2.54035 2.39656 2.26090 2.13293 2.01220 1.89830 1.79085 1.68948 6.84848 5.03383 4.66096 4.31570 3.99602 3.70002 3.42594 3.17217 2.93719 2.71962 2.51817 2.33164 2.15892 1.99900 1.85093 7.40025 6.72750 6.11591 5.55992 5.05447 4.59497 4.17725 3.79750 3.45227 3.13843 2.85312 2.59374 2.35795 2.14359 9.64629 8.61276 7.68997 6.86604 6.13039 5.47357 4.88711 4.36349 3.89598 3.47855 3.10585 2.77308 2.47596 2.21068 1.97382 8.94917 10.80385 8.06231 7.26334 6.54355 5.89509 5.31089 4.78459 4.31044 3.88328 3.49845 3.15176 2.83942 2.55804 2.30454 2.07616 1.87041 8.62308 10.83471 13.58546 17.00006 6.10881 5.60441 5.14166 4.71712 4.32763 3.97031 3.64248 3.34173 3.06580 2.81266 2.58043 2.36736 2.17189 1.99256 1.94872 1.77156 7.61226 10.06266 13.26768 17.44940 22.89230 29.95992 5.42743 4.14056 3.86968 3.61653 3.37993 3.15882 2.95216 2.75903 2.57853 2.40985 2.25219 2.10485 1.96715 1.83846 1.71819 1.82804 1.67710 237.37631 95.39622 46.00512 38.33760 31.94800 26.62333 22.18611 18.48843 15.40702 12.83918 10.69932 8.91610 7.43008 6.19174 5.15978 4.29982 3.58318 2.98598 2.48832 2.07360 1.72800 1.44000 1.20000 20.0% 1.59385 1.71382 1.58687 1.76234 1.57352 1.40493 1.25440 1.12000 12.0% 1.08286 1.12649 1.17166 1.21840 1.26677 1.31681 1.36857 1.42210 1.47746 1.53469 1.60578 1.50073 1.68506 1.51807 1.36763 1.23210 1.11000 11.0% 1.50363 1.41852 1.61051 1.46410 1.33100 1.21000 1.10000 10.0% 1.07214 1.10984 1.14869 1.18869 1.22987 1.27228 1.31593 1.36086 1.40710 1.45468 1.53862 1.41158 1.29503 1.18810 1.09000 9.0% 1.06152 1.09344 1.12616 1.15969 1.19405 1.22926 1.26532 1.30226 1.34010 1.37884 1.46933 1.36049 1.25971 1.16640 1.08000 8.0% 1.40255 1.31080 1.22504 1.14490 1.07000 7.0% 1.33823 1.26248 1.19102 1.12360 1.06000 6.0% 1.05101 1.07728 1.10408 1.13141 1.15927 1.18769 1.21665 1.24618 1.27628 1.30696 5.5% 5.0% 1.04060 1.06136 1.08243 1.10381 1.12551 1.14752 1.16986 1.19252 1.21551 1.23882 4.5% 4.0% 1.03030 1.04568 1.06121 1.07689 1.09273 1.10872 1.12486 1.14117 1.15763 1.17424 3.5% 3.0% 1.02010 1.03022 1.04040 1.05063 1.06090 1.07123 1.08160 1.09203 1.10250 1.11303 2.5% 1.01000 1.01500 1.02000 1.02500 1.03000 1.03500 1.04000 1.04500 1.05000 1.05500 2.0% 1.5% FV = $1 (1 + i )n Future Value of $1 n/i 1.0% TABLE Confirming Pages Present and Future Value Tables This table shows the future value of $1 at various interest rates (i) and time periods (n) It is used to calculate the future value of any single amount P–1 8/19/10 6:20 PM spi10823_PVtable_P1-P6.indd P–2 0.95147 0.92826 0.90573 0.88385 0.86261 0.84197 0.82193 0.80245 0.78353 0.76513 0.94205 0.91454 0.88797 0.86230 0.83748 0.81350 0.79031 0.76790 0.74622 0.72525 0.93272 0.90103 0.87056 0.84127 0.81309 0.78599 0.75992 0.73483 0.71068 0.68744 0.92348 0.88771 0.85349 0.82075 0.78941 0.75941 0.73069 0.70319 0.67684 0.65160 0.91434 0.87459 0.83676 0.80073 0.76642 0.73373 0.70259 0.67290 0.64461 0.61763 0.90529 0.86167 0.82035 0.78120 0.74409 0.70892 0.67556 0.64393 0.61391 0.58543 0.89632 0.84893 0.80426 0.76214 0.72242 0.68495 0.64958 0.61620 0.58468 0.55491 0.88745 0.83639 0.78849 0.74356 0.70138 0.66178 0.62460 0.58966 0.55684 0.52598 0.87866 0.82403 0.77303 0.72542 0.68095 0.63940 0.60057 0.56427 0.53032 0.49856 0.86996 0.81185 0.75788 0.70773 0.66112 0.61778 0.57748 0.53997 0.50507 0.47257 0.86135 0.79985 0.74301 0.69047 0.64186 0.59689 0.55526 0.51672 0.48102 0.44793 0.85282 0.78803 0.72845 0.67362 0.62317 0.57671 0.53391 0.49447 0.45811 0.42458 0.84438 0.77639 0.71416 0.65720 0.60502 0.55720 0.51337 0.47318 0.43630 0.40245 0.83602 0.76491 0.70016 0.64117 0.58739 0.53836 0.49363 0.45280 0.41552 0.38147 0.82774 0.75361 0.68643 0.62553 0.57029 0.52016 0.47464 0.43330 0.39573 0.36158 0.81954 0.74247 0.67297 0.61027 0.55368 0.50257 0.45639 0.41464 0.37689 0.34273 0.81143 0.73150 0.65978 0.59539 0.53755 0.48557 0.43883 0.39679 0.35894 0.32486 0.78757 0.69954 0.62172 0.55288 0.49193 0.43796 0.39012 0.34770 0.31007 0.27666 0.77977 0.68921 0.60953 0.53939 0.47761 0.42315 0.37512 0.33273 0.29530 0.26223 0.75684 0.65910 0.57437 0.50088 0.43708 0.38165 0.33348 0.29157 0.25509 0.22332 0.74934 0.64936 0.56311 0.48866 0.42435 0.36875 0.32065 0.27902 0.24295 0.21168 0.74192 0.63976 0.55207 0.47674 0.41199 0.35628 0.30832 0.26700 0.23138 0.20064 0.73458 0.63031 0.54125 0.46511 0.39999 0.34423 0.29646 0.25550 0.22036 0.19018 0.67165 0.55126 0.45289 0.37243 0.30656 0.25257 0.20829 0.17193 0.14205 0.11746 10 11 12 13 14 15 16 17 18 19 20 21 24 25 28 29 30 31 40 5.5% 5.0% 0.96098 0.94218 0.92385 0.90595 0.88849 0.87144 0.85480 0.83856 0.82270 0.80722 4.5% 4.0% 0.97059 0.95632 0.94232 0.92860 0.91514 0.90194 0.88900 0.87630 0.86384 0.85161 3.5% 0.98030 0.97066 0.96117 0.95181 0.94260 0.93351 0.92456 0.91573 0.90703 0.89845 3.0% 2.5% 2.0% (1 + i )n $1 _ 0.99010 0.98522 0.98039 0.97561 0.97087 0.96618 0.96154 0.95694 0.95238 0.94787 1.5% PV = Present Value of $1 n/i 1.0% TABLE 0.09722 0.16425 0.17411 0.18456 0.19563 0.23300 0.24698 0.29416 0.31180 0.33051 0.35034 0.37136 0.39365 0.41727 0.44230 0.46884 0.49697 0.52679 0.55839 0.59190 0.62741 0.66506 0.70496 0.74726 0.79209 0.83962 0.89000 0.94340 6.0% 0.06678 0.12277 0.13137 0.14056 0.15040 0.18425 0.19715 0.24151 0.25842 0.27651 0.29586 0.31657 0.33873 0.36245 0.38782 0.41496 0.44401 0.47509 0.50835 0.54393 0.58201 0.62275 0.66634 0.71299 0.76290 0.81630 0.87344 0.93458 7.0% 0.04603 0.09202 0.09938 0.10733 0.11591 0.14602 0.15770 0.19866 0.21455 0.23171 0.25025 0.27027 0.29189 0.31524 0.34046 0.36770 0.39711 0.42888 0.46319 0.50025 0.54027 0.58349 0.63017 0.68058 0.73503 0.79383 0.85734 0.92593 8.0% 0.03184 0.06915 0.07537 0.08215 0.08955 0.11597 0.12640 0.16370 0.17843 0.19449 0.21199 0.23107 0.25187 0.27454 0.29925 0.32618 0.35553 0.38753 0.42241 0.46043 0.50187 0.54703 0.59627 0.64993 0.70843 0.77218 0.84168 0.91743 9.0% 0.02209 0.05210 0.05731 0.06304 0.06934 0.09230 0.10153 0.13513 0.14864 0.16351 0.17986 0.19784 0.21763 0.23939 0.26333 0.28966 0.31863 0.35049 0.38554 0.42410 0.46651 0.51316 0.56447 0.62092 0.68301 0.75131 0.82645 0.90909 10.0% 0.01538 0.03935 0.04368 0.04849 0.05382 0.07361 0.08170 0.11174 0.12403 0.13768 0.15282 0.16963 0.18829 0.20900 0.23199 0.25751 0.28584 0.31728 0.35218 0.39092 0.43393 0.48166 0.53464 0.59345 0.65873 0.73119 0.81162 0.90090 11.0% 0.01075 0.02980 0.03338 0.03738 0.04187 0.05882 0.06588 0.09256 0.10367 0.11611 0.13004 0.14564 0.16312 0.18270 0.20462 0.22917 0.25668 0.28748 0.32197 0.36061 0.40388 0.45235 0.50663 0.56743 0.63552 0.71178 0.79719 0.89286 12.0% 20.0% 0.00068 0.00351 0.00421 0.00506 0.00607 0.01048 0.01258 0.02174 0.02608 0.03130 0.03756 0.04507 0.05409 0.06491 0.07789 0.09346 0.11216 0.13459 0.16151 0.19381 0.23257 0.27908 0.33490 0.40188 0.48225 0.57870 0.69444 0.83333 Confirming Pages This table shows the present value of $1 at various interest rates (i) and time periods (n) It is used to calculate the present value of any single amount P–2 8/19/10 6:20 PM spi10823_PVtable_P1-P6.indd P–3 8.8923 9.0517 9.2142 7.8983 6.6330 8.1152 9.9299 23.2392 24.4705 25.7833 27.1833 28.6765 30.2695 31.9692 34.7849 37.5387 40.5681 43.9027 47.5754 51.6227 56.0849 48.8864 54.2679 60.4020 67.4026 75.4013 84.5503 95.0255 107.0303 120.7998 136.6056 154.7620 199.6351 259.0565 337.8824 442.5926 581.8261 767.0914 7343.8578 30 40 61.0071 33.7831 66.4388 35.7193 33.0660 72.4355 37.7861 34.8683 79.0582 39.9927 36.7856 33.7600 30.9057 50.4229 45.7620 41.4463 37.4502 56.7645 51.1601 46.0185 41.3013 64.0025 57.2750 51.1591 45.5992 72.2651 64.2028 56.9395 50.3959 44.5008 39.1899 81.6987 72.0524 63.4397 55.7497 48.8837 42.7533 87.4421 225.0256 186.6880 154.7400 128.1167 105.9306 94.4608 113.2832 136.3075 164.4940 199.0209 241.3327 1181.8816 44.8652 40.9955 37.3790 33.9990 40.5447 35.9497 72.0351 59.1959 48.4966 39.5805 32.1504 25.9587 20.7989 16.4991 12.9159 21 31.3714 32.1027 29.4812 36.9737 33.0034 37.2797 32.3926 28.0291 24.1331 20.6546 17.5487 14.7757 12.2997 10.0890 7.4416 5.3680 22.0190 23.1237 24.2974 25.5447 26.8704 28.2797 29.7781 30.5390 28.1324 33.7502 30.3243 34.4054 30.0949 26.2116 22.7132 19.5614 16.7220 14.1640 11.8594 9.7833 7.9129 6.3528 3.6400 20 29.0636 26.8551 30.8402 27.8881 31.7725 27.9750 24.5227 21.3843 18.5312 15.9374 13.5795 11.4359 9.4872 7.7156 6.2278 4.7793 2.2000 20.8109 21.7967 22.8406 23.9460 25.1169 26.3572 27.6712 28.2129 25.6725 29.3609 26.0192 22.9534 20.1407 17.5603 15.1929 13.0210 11.0285 9.2004 7.5233 6.1051 4.7097 3.3744 1.0000 19.6147 20.4894 21.4123 22.3863 23.4144 24.4997 25.6454 26.9964 24.6411 27.1521 24.2149 21.4953 18.9771 16.6455 14.4866 12.4876 10.6366 8.9228 7.3359 5.9847 4.6410 3.3421 2.1200 1.0000 20.0% 19 25.8404 23.6575 25.1290 22.5505 20.1406 17.8885 15.7836 13.8164 11.9780 10.2598 8.6540 7.1533 5.8666 4.5731 3.3100 2.1100 1.0000 12.0% 18 24.7417 22.7193 23.2760 21.0151 18.8821 16.8699 14.9716 13.1808 11.4913 9.8975 8.3938 6.9753 5.7507 4.5061 3.2781 2.1000 1.0000 11.0% 18.4304 19.2014 20.0121 20.8647 21.7616 22.7050 23.6975 22.4087 20.2926 18.2868 16.3856 14.5835 12.8754 11.2563 9.7216 8.2669 6.8881 5.6371 4.4399 3.2464 2.0900 1.0000 10.0% 17.2579 17.9324 18.6393 19.3802 20.1569 20.9710 21.8245 21.5786 19.5986 17.7130 15.9171 14.2068 12.5779 11.0266 9.5491 8.1420 6.8019 5.5811 4.3746 3.2149 2.0800 1.0000 9.0% 17 20.7841 18.9321 17.1599 15.4640 13.8412 12.2882 10.8021 9.3800 8.0192 6.7169 5.5256 4.3423 3.1836 2.0700 1.0000 8.0% 16 9.9545 10.1591 10.3685 10.5828 8.7361 7.7794 6.5502 5.4707 4.3101 3.1680 2.0600 1.0000 7.0% 16.0969 16.6821 17.2934 17.9319 18.5989 19.2957 20.0236 9.7546 8.5830 7.6625 6.4684 5.4163 4.2782 3.1525 2.0550 1.0000 6.0% 15 9.5593 8.4328 7.5474 6.3877 5.3625 4.2465 3.1370 2.0500 1.0000 5.5% 14.9474 15.4504 15.9739 16.5190 17.0863 17.6770 18.2919 9.3685 7.4343 6.3081 5.3091 4.2149 3.1216 2.0450 1.0000 5.0% 14 8.2857 7.3230 6.2296 5.2563 4.1836 3.1062 2.0400 1.0000 4.5% 13.8093 14.2368 14.6803 15.1404 15.6178 16.1130 16.6268 7.2135 5.2040 4.1525 3.0909 2.0350 1.0000 4.0% 13 6.1520 5.1523 4.1216 3.0756 2.0300 1.0000 3.5% 12.6825 13.0412 13.4121 13.7956 14.1920 14.6020 15.0258 5.1010 4.0909 3.0604 2.0250 1.0000 3.0% 11.5668 11.8633 12.1687 12.4835 12.8078 13.1420 13.4864 4.0604 3.0452 2.0200 1.0000 2.5% 12 3.0301 2.0150 1.0000 n 11 2.0100 2.0% i (1 + i ) −1 10.4622 10.7027 10.9497 11.2034 11.4639 11.7314 12.0061 1.0000 1.5% FVA = Future Value of an Ordinary Annuity of $1 10 1.0% n/i TABLE Confirming Pages This table shows the future value of an ordinary annuity of $1 at various interest rates (i) and time periods (n) It is used to calculate the future value of any series of equal payments made at the end of each compounding period P–3 8/19/10 6:20 PM spi10823_PVtable_P1-P6.indd P–4 3.90197 4.85343 5.79548 6.72819 7.65168 8.56602 9.47130 10 8.36052 7.48593 6.59821 5.69719 4.78264 3.85438 2.91220 1.95588 8.16224 7.32548 6.47199 5.60143 4.71346 3.80773 2.88388 1.94156 6.0% 10.0% 11.0% 12.0% 20.0% 9.12855 8.51356 7.96333 7.46944 4.86958 9.29224 8.64869 8.07507 7.56200 4.89132 9.82258 9.07704 8.42174 7.84314 4.94759 9.12164 9.37189 9.60360 9.81815 9.44665 9.76322 17 15.56225 14.90765 14.29187 13.71220 13.16612 12.65132 12.16567 11.70719 11.27407 10.86461 10.47726 18 16.39827 15.67256 14.99203 14.35336 13.75351 13.18968 12.65930 12.15999 11.68959 11.24607 10.82760 10.05909 19 17.22601 16.42617 15.67846 14.97889 14.32380 13.70984 13.13394 12.59329 12.08532 11.60765 11.15812 10.33560 20 18.04555 17.16864 16.35143 15.58916 14.87747 14.21240 13.59033 13.00794 12.46221 11.95038 11.46992 10.59401 21 18.85698 17.90014 17.01121 16.18455 15.41502 14.69797 14.02916 13.40472 12.82115 12.27524 11.76408 10.83553 10.01680 25 22.02316 20.71961 19.52346 18.42438 17.41315 16.48151 15.62208 14.82821 14.09394 13.41393 12.78336 11.65358 10.67478 8.95011 8.36492 7.83929 7.36578 4.84350 8.75563 8.20141 7.70162 7.24967 4.81219 8.54363 8.02155 7.54879 7.11963 4.77463 8.31256 7.82371 7.37916 6.97399 4.72956 40 32.83469 29.91585 27.35548 25.10278 23.11477 21.35507 19.79277 18.40158 17.15909 16.04612 15.04630 13.33171 11.92461 10.75736 9.77905 8.95105 8.24378 4.99660 30 25.80771 24.01584 22.39646 20.93029 19.60044 18.39205 17.29203 16.28889 15.37245 14.53375 13.76483 12.40904 11.25778 10.27365 9.42691 8.69379 8.05518 4.97894 8.85137 8.06069 7.60608 7.19087 6.81086 4.67547 16 14.71787 14.13126 13.57771 13.05500 12.56110 12.09412 11.65230 11.23402 10.83777 10.46216 10.10590 8.55948 7.78615 7.36669 6.98187 6.62817 4.61057 7.48690 7.10336 6.74987 6.42355 4.53268 7.16073 6.81369 6.49236 6.19437 4.43922 6.80519 6.49506 6.20652 5.93770 4.32706 6.41766 6.14457 5.88923 5.65022 4.19247 5.99525 5.75902 5.53705 5.32825 4.03097 5.53482 5.33493 5.14612 4.96764 3.83716 5.03295 4.86842 4.71220 4.56376 3.60459 4.48592 4.35526 4.23054 4.11141 3.32551 3.88965 3.79079 3.69590 3.60478 2.99061 3.23972 3.16987 3.10245 3.03735 2.58873 2.53129 2.48685 2.44371 2.40183 2.10648 1.75911 1.73554 1.71252 1.69005 1.52778 0.91743 0.90909 0.90090 0.89286 0.83333 9.0% 9.10791 8.24424 7.90378 7.53608 7.13896 6.71008 6.24689 5.74664 5.20637 4.62288 3.99271 3.31213 2.57710 1.78326 0.92593 8.0% 15 13.86505 13.34323 12.84926 12.38138 11.93794 11.51741 11.11839 10.73955 10.37966 10.03758 9.71225 8.35765 7.94269 7.49867 7.02358 6.51523 5.97130 5.38929 4.76654 4.10020 3.38721 2.62432 1.80802 0.93458 7.0% 8.74547 9.11708 8.85268 8.61852 8.38384 8.09254 7.88687 7.53763 7.36009 6.95220 6.80169 6.33457 6.20979 5.68297 5.58238 4.99553 4.91732 4.27028 4.21236 3.50515 3.46511 2.69793 2.67301 1.84632 1.83339 0.94787 0.94340 5.5% 9.58965 9.29498 9.89864 14 13.00370 12.54338 12.10625 11.69091 11.29607 10.92052 10.56312 10.22283 8.86325 8.30641 7.72173 7.10782 6.46321 5.78637 5.07569 4.32948 3.54595 2.72325 1.85941 0.95238 5.0% 9.39357 9.11858 8.52892 7.91272 7.26879 6.59589 5.89270 5.15787 4.38998 3.58753 2.74896 1.87267 0.95694 4.5% 9.68285 9.98565 8.76048 13 12.13374 11.73153 11.34837 10.98319 10.63496 10.30274 9.00155 8.11090 7.43533 6.73274 6.00205 5.24214 4.45182 3.62990 2.77509 1.88609 0.96154 4.0% 9.38507 9.95400 8.31661 7.60769 6.87396 6.11454 5.32855 4.51505 3.67308 2.80164 1.89969 0.96618 3.5% 9.66333 9.25262 8.53020 7.78611 7.01969 6.23028 5.41719 4.57971 3.71710 2.82861 1.91347 0.97087 3.0% 9.51421 8.75206 7.97087 7.17014 6.34939 5.50813 4.64583 3.76197 2.85602 1.92742 0.97561 2.5% 12 11.25508 10.90751 10.57534 10.25776 9.78685 2.94099 0.98039 2.0% 11 10.36763 10.07112 1.97040 0.98522 1.5% 8.98259 0.99010 PVA = 1 − _n (1 + i) _ i Present Value of an Ordinary Annuity of $1 9.22218 1.0% n/i TABLE Confirming Pages This table shows the present value of an ordinary annuity of $1 at various interest rates (i) and time periods (n) It is used to calculate the present value of any series of equal payments made at the end of each compounding period P–4 8/19/10 6:20 PM spi10823_PVtable_P1-P6.indd P–5 21.7193 23.7417 25.8551 28.0636 30.3714 32.7831 35.3034 46.5706 63.7524 16 17.4304 18.2014 19.0121 19.8647 20.7616 21.7050 22.6975 17 18.6147 19.4894 20.4123 21.3863 22.4144 23.4997 24.6454 18 19.8109 20.7967 21.8406 22.9460 24.1169 25.3572 26.6712 19 21.0190 22.1237 23.2974 24.5447 25.8704 27.2797 28.7781 20 22.2392 23.4705 24.7833 26.1833 27.6765 29.2695 30.9692 21 23.4716 24.8376 26.2990 27.8629 29.5368 31.3289 33.2480 25 28.5256 30.5140 32.6709 35.0117 37.5530 40.3131 43.3117 30 35.1327 38.1018 41.3794 45.0003 49.0027 53.4295 58.3283 9.2598 7.6540 6.1533 4.7507 3.4399 2.2149 1.0700 7.0% 70.4027 63.0025 56.2750 50.1591 44.5992 39.5447 34.9497 30.7725 26.9750 23.5227 20.3843 17.5312 14.9374 12.5795 10.4359 8.4872 6.7156 5.1051 3.6410 2.3100 1.1000 10.0% 80.2143 71.2651 63.2028 55.9395 49.3959 43.5008 38.1899 33.4054 29.0949 25.2116 21.7132 18.5614 15.7220 13.1640 10.8594 8.7833 6.9129 5.2278 3.7097 2.3421 1.1100 11.0% 91.5026 80.6987 71.0524 62.4397 54.7497 47.8837 41.7533 36.2797 31.3926 27.0291 23.1331 19.6546 16.5487 13.7757 11.2997 9.0890 7.1152 5.3528 3.7793 2.3744 1.1200 12.0% 92.3240 108.1818 126.9988 149.3339 61.8733 55.7645 50.1601 45.0185 40.3013 35.9737 32.0034 28.3609 25.0192 21.9534 19.1407 16.5603 14.1929 12.0210 10.0285 8.2004 6.5233 4.9847 3.5731 2.2781 1.0900 9.0% 566.3773 270.0307 224.0256 185.6880 153.7400 127.1167 104.9306 86.4421 71.0351 58.1959 47.4966 38.5805 31.1504 24.9587 19.7989 15.4991 11.9159 8.9299 6.4416 4.3680 2.6400 1.2000 20.0% 279.7810 368.2919 486.8518 645.8269 859.1424 8812.6294 78.9544 54.4568 49.4229 44.7620 40.4463 36.4502 32.7502 29.3243 26.1521 23.2149 20.4953 17.9771 15.6455 13.4866 11.4876 9.6366 7.9228 6.3359 4.8666 3.5061 2.2464 1.0800 8.0% 40 49.3752 55.0819 61.6100 69.0876 77.6633 87.5095 98.8265 111.8467 126.8398 144.1189 164.0477 213.6096 58.1564 67.6765 42.3923 48.0057 38.9927 43.8652 35.7856 39.9955 32.7600 36.3790 29.9057 32.9990 27.2129 29.8402 24.6725 26.8881 22.2760 24.1290 20.0151 21.5505 17.8821 19.1406 15.8699 16.8885 13.9716 14.7836 12.1808 12.8164 10.4913 10.9780 8.8975 7.3938 5.9753 4.6371 3.3746 2.1836 1.0600 6.0% 122.3459 148.5752 180.9434 220.9132 270.2926 1418.2579 76.4194 53.9660 39.8643 36.7861 33.8683 31.1027 28.4812 25.9964 23.6411 21.4087 19.2926 17.2868 15.3856 13.5835 11.8754 10.2563 8.7216 7.2669 5.8881 4.5811 3.3423 2.1680 1.0550 5.5% 83.8017 101.0730 69.7608 50.1135 37.5052 34.7193 32.0660 29.5390 27.1324 24.8404 22.6575 20.5786 18.5986 16.7130 14.9171 13.2068 15 16.2579 16.9324 17.6393 18.3802 19.1569 19.9710 20.8245 8.5491 7.1420 19.7841 9.5828 8.3800 7.0192 14 15.0969 15.6821 16.2934 16.9319 17.5989 18.2957 19.0236 9.3685 8.2142 6.8983 5.8019 17.9321 9.1591 8.0517 6.7794 5.7169 4.5256 13 13.9474 14.4504 14.9739 15.5190 16.0863 16.6770 17.2919 8.9545 7.8923 6.6625 5.6330 4.4707 3.3101 16.1599 9.7027 8.7546 7.7361 6.5474 5.5502 4.4163 3.2782 2.1525 1.0500 14.4640 9.4622 8.5593 7.5830 6.4343 5.4684 4.3625 3.2465 2.1370 1.0450 12 12.8093 13.2368 13.6803 14.1404 14.6178 15.1130 15.6268 8.3685 7.4328 6.3230 5.3877 4.3091 3.2149 2.1216 1.0400 5.0% 11 11.6825 12.0412 12.4121 12.7956 13.1920 13.6020 14.0258 7.2857 5.3081 4.2563 3.1836 2.1062 1.0350 4.5% 11.5779 6.2135 5.2296 4.2040 3.1525 2.0909 1.0300 4.0% 12.8412 5.1520 4.1523 3.1216 2.0756 1.0250 3.5% 11.2882 4.1010 3.0909 2.0604 1.0200 3.0% 9.9497 10.2034 10.4639 10.7314 11.0061 3.0604 2.0452 1.0150 2.5% n 10 10.5668 10.8633 11.1687 11.4835 11.8078 12.1420 12.4864 2.0301 2.0% i (1 + i ) − × (1 + i ) _ 10.0266 1.0100 1.5% FVAD = Future Value of an Annuity Due of $1 9.8021 1.0% n/i TABLE Confirming Pages This table shows the future value of an annuity due of $1 at various interest rates (i) and time periods (n) It is used to calculate the future value of any series of equal payments made at the beginning of each compounding period P–5 8/19/10 6:20 PM spi10823_PVtable_P1-P6.indd P–6 3.94099 4.90197 5.85343 6.79548 7.72819 8.65168 9.56602 10 8.48593 7.59821 6.69719 5.78264 4.85438 3.91220 2.95588 8.32548 7.47199 6.60143 5.71346 4.80773 3.88388 2.94156 1.98039 1.00000 8.43533 7.73274 7.00205 6.24214 5.45182 4.62990 3.77509 2.88609 1.96154 1.00000 4.0% 11.0% 12.0% 20.0% 9.36492 8.83929 8.36578 5.84350 9.51356 8.96333 8.46944 5.86958 9.98474 9.34814 8.78432 5.93710 9.31256 9.54363 9.75563 9.95011 9.24424 9.55948 9.85137 16 14.86505 14.34323 13.84926 13.38138 12.93794 12.51741 12.11839 11.73955 11.37966 11.03758 10.71225 10.10791 17 15.71787 15.13126 14.57771 14.05500 13.56110 13.09412 12.65230 12.23402 11.83777 11.46216 11.10590 10.44665 18 16.56225 15.90765 15.29187 14.71220 14.16612 13.65132 13.16567 12.70719 12.27407 11.86461 11.47726 10.76322 10.12164 19 17.39827 16.67256 15.99203 15.35336 14.75351 14.18968 13.65930 13.15999 12.68959 12.24607 11.82760 11.05909 10.37189 20 18.22601 17.42617 16.67846 15.97889 15.32380 14.70984 14.13394 13.59329 13.08532 12.60765 12.15812 11.33560 10.60360 21 19.04555 18.16864 17.35143 16.58916 15.87747 15.21240 14.59033 14.00794 13.46221 12.95038 12.46992 11.59401 10.81815 10.12855 25 22.24339 21.03041 19.91393 18.88499 17.93554 17.05837 16.24696 15.49548 14.79864 14.15170 13.55036 12.46933 11.52876 10.70661 9.20141 8.70162 8.24967 5.81219 9.02155 8.54879 8.11963 5.77463 8.82371 8.37916 7.97399 5.72956 8.60608 8.19087 7.81086 5.67547 8.36669 7.98187 7.62817 5.61057 40 33.16303 30.36458 27.90259 25.73034 23.80822 22.10250 20.58448 19.22966 18.01704 16.92866 15.94907 14.26493 12.87858 11.72552 10.75696 9.93567 9.23303 5.99592 30 26.06579 24.37608 22.84438 21.45355 20.18845 19.03577 17.98371 17.02189 16.14107 15.33310 14.59072 13.27767 12.15841 11.19828 10.36961 9.65011 9.02181 5.97472 9.06069 8.78615 8.10336 7.74987 7.42355 5.53268 9.74547 8.48690 7.81369 7.49236 7.19437 5.43922 7.49506 7.20652 6.93770 5.32706 7.14457 6.88923 6.65022 5.19247 6.75902 6.53705 6.32825 5.03097 6.33493 6.14612 5.96764 4.83716 5.86842 5.71220 5.56376 4.60459 5.35526 5.23054 5.11141 4.32551 4.79079 4.69590 4.60478 3.99061 4.16987 4.10245 4.03735 3.58873 3.48685 3.44371 3.40183 3.10648 2.73554 2.71252 2.69005 2.52778 1.90909 1.90090 1.89286 1.83333 1.00000 1.00000 1.00000 1.00000 10.0% 15 14.00370 13.54338 13.10625 12.69091 12.29607 11.92052 11.56312 11.22283 10.89864 10.58965 10.29498 8.90378 8.16073 7.80519 7.41766 6.99525 6.53482 6.03295 5.48592 4.88965 4.23972 3.53129 2.75911 1.91743 1.00000 9.0% 9.35765 8.53608 8.13896 7.71008 7.24689 6.74664 6.20637 5.62288 4.99271 4.31213 3.57710 2.78326 1.92593 1.00000 8.0% 9.85268 8.94269 8.49867 8.02358 7.51523 6.97130 6.38929 5.76654 5.10020 4.38721 3.62432 2.80802 1.93458 1.00000 7.0% 14 13.13374 12.73153 12.34837 11.98318 11.63496 11.30274 10.98565 10.68285 10.39357 10.11708 8.88687 8.36009 7.80169 7.20979 6.58238 5.91732 5.21236 4.46511 3.67301 2.83339 1.94340 1.00000 6.0% 9.38384 9.09254 8.53763 7.95220 7.33457 6.68297 5.99553 5.27028 4.50515 3.69793 2.84632 1.94787 1.00000 5.5% 9.61852 9.86325 13 12.25508 11.90751 11.57534 11.25776 10.95400 10.66333 10.38507 10.11858 8.72173 8.10782 7.46321 6.78637 6.07569 5.32948 4.54595 3.72325 2.85941 1.95238 1.00000 5.0% 9.30641 8.91272 8.26879 7.59589 6.89270 6.15787 5.38998 4.58753 3.74896 2.87267 1.95694 1.00000 4.5% 9.52892 9.76048 8.60769 7.87396 7.11454 6.32855 5.51505 4.67308 3.80164 2.89969 1.96618 1.00000 3.5% 9.11090 9.53020 8.78611 8.01969 7.23028 6.41719 5.57971 4.71710 3.82861 2.91347 1.97087 1.00000 3.0% 9.31661 9.75206 8.97087 8.17014 7.34939 6.50813 5.64583 4.76197 3.85602 2.92742 1.97561 1.00000 2.5% 12 11.36763 11.07112 10.78685 10.51421 10.25262 10.00155 9.98259 2.97040 1.98522 1.00000 11 10.47130 10.22218 1.99010 2.0% i 9.16224 1.00000 1.5% PVAD = 1 − _n (1 + i ) × (1 + i ) _ Present Value of an Annuity Due of $1 9.36052 1.0% n/i TABLE Confirming Pages This table shows the present value of an annuity due of $1 at various interest rates (i) and time periods (n) It is used to calculate the present value of any series of equal payments made at the beginning of each compounding period P–6 8/19/10 6:20 PM Summary of Ratios Used in This Book Chapter Calculations RISK RATIOS Liquidity Receivables turnover ratio Net credit sales Average accounts receivables Average collection period 365 days Receivables turnover ratio Inventory turnover ratio Cost of goods sold Average inventory Average days in inventory 365 days Inventory turnover ratio Current ratio Current assets Current liabilities Acid-test ratio Cash + Current investments + Accounts receivable Current liabilities Debt to equity ratio Total liabilities Stockholders’ equity Times interest earned ratio Net income + Interest expense + Tax expense Interest expense Gross profit ratio Gross profit Net sales Return on assets Net income Average total assets Profit margin Net income Net sales Asset turnover Net sales Average total assets Return on equity 10 Net income Average stockholders’ equity Return on the market value of equity 10 Earnings per share 10 Net income − Preferred stock dividends Average shares of common stock outstanding Price-earnings ratio 10 Stock price Earnings per share Solvency PROFITABILITY RATIOS MHID: 0078110823 Author: J David Spiceland Title: Financial Accounting, 2e Back endsheets Color: 4/c Pages: 0, Net income Stock price × Number of shares outstanding Framework for Financial Accounting Representative Chart of Accounts* Two primary functions of financial accounting are to measure activities of a company and communicate those measurements to investors and other people for making decisions The measurement process involves recording transactions into accounts The balances of these accounts are used to communicate information in the four primary financial statements, which are linked For more detailed illustrations of financial statements, see the corresponding page in parentheses A comprehensive list of accounts used to measure activities in this textbook is provided on the next page Make Decisions About Companies Financial Accountants Income Statement (p 11) Accounts Used to Measure Activities Revenues − Expenses = Net income Statement of Stockholders’ Equity (p 13) Cash Accounts Payable Service Revenue Petty Cash Notes Payable Sales Revenue Accounts Receivable Unearned Revenue Statement of Cash Flows (p 16) Liabilities Stockholders’ Equity Revenues Debit = Debit = Credit = Credit = Recording Business Transactions Account Title Account Title (Description of transaction) Debit Credit Less: Sales Returns Less: Sales Allowances Interest Payable Interest Receivable Utilities Payable Supplies Dividends Payable Inventory Income Tax Payable Prepaid Advertising FICA Tax Payable Prepaid Insurance Unemployment Tax Payable Prepaid Rent Sales Tax Payable Investments Contingent Liability EXPENSES Land Warranty Liability Advertising Expense Land Improvements Bonds Payable Amortization Expense Less: Accumulated Depreciation STOCKHOLDERS’ EQUITY Common Stock Preferred Stock Patents Additional Paid-in Capital Copyrights Retained Earnings Trademarks Interest Revenue Dividend Revenue Equity Income Gain Unrealized Holding Gain— Net Income Bad Debt Expense Natural Resources Goodwill Assets Dividends Expenses Date Salaries Payable Less: Sales Discounts Notes Receivable Equipment Effect of Debit and Credit on Account Balances Assets = Liabilities + Stockholders’ Equity (including Cash) Back endsheets Color: 4/c Pages: 2, REVENUES Franchises Balance Sheet (p 14) Cash flows from operating activities + Cash flows from investing activities + Cash flows from financing activities = Change in cash LIABILITIES Buildings Assets – Resources owned Liabilities – Amounts owed Stockholders’ Equity – Owners’ claims Dividends – Distributions to owners Revenues – Sales of products or services Expenses – Costs of earning revenues Common stock + Retained earnings (= Beg + Net income − Divs.) = Stockholders’ equity MHID: 0078110823 Author: J David Spiceland Title: Financial Accounting, 2e Activities Measured by INCOME STATEMENT ASSETS Less: Allow for Uncollectible Accts Investors Information Communicated to BALANCE SHEET Less: Treasury Stock Cost of Goods Sold Delivery Expense Depreciation Expense Entertainment Expense Income Tax Expense Insurance Expense Interest Expense Unrealized Holding Gain— Other Comprehensive Income Legal Fees Expense Unrealized Holding Loss— Other Comprehensive Income Postage Expense Payroll Tax Expense Property Tax Expense Rent Expense Repairs and Maintenance Expense *You will see these account titles used in this book and in your homework In practice, companies often use variations of these account titles, many of which are specific to particular industries or businesses Research and Development Expense DIVIDENDS** Salaries Expense Dividends (Cash) Service Fee Expense Stock Dividends Supplies Expense **Reported in the statement of stockholders’ equity Utilities Expense Warranty Expense Loss Amount Amount Unrealized Holding Loss— Net Income ... Library of Congress Cataloging-in-Publication Data Spiceland, J David, 1949– Financial accounting/ J David Spiceland, Wayne Thomas, Don Herrmann. 2nd ed p cm Includes index ISBN-13: 978-0-07-811082-5... end of each chapter DON HERRMANN Don Herrmann is the Chair of the Accounting Department at Oklahoma State University, where he teaches financial accounting, intermediate accounting, and a doctoral-level... experience using Financial Accounting Sincerely, David Spiceland Wayne Thomas Don Herrmann xxviii spi10823_fm_i-xxxv.indd xxviii 8/4/10 6:41 PM Rev Confirming Pages Contents in Brief 10 11 12 Accounting