Accounting Text Cases

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Text and Cases

Thirteenth Edition

Robert N. Anthony
Ross G. Walker Professor Emeritus Graduate School of Business Administration Harvard University

David F. Hawkins
Lovett-Learned Professor of Business Administration Graduate School of Business Administration Harvard University

Kenneth A. Merchant
Deloitte & Touche LLP Chair of Accountancy Leventhal School of Accounting University of Southern California

McGraw-Hill Irwin

Contents
PARTI
FINANCIAL ACCOUNTING 1 Chapter 1 The Nature and Purpose of Accounting 2 The Need for Information 2 Operating Information 3 Financial Accounting Information 4 Management Accounting Information 4 Tax Accounting Information 5 Definition of Accounting 6 The Profession of Accounting 6 Our Approach to Accounting 7 Preconceptions about Accounting 7 Plan of the Book 8 The Financial Accounting Framework' Accounting as a Language 9 Different Formats 9 Nature of Principles 9 Criteria 10 Source of Accounting Principles 11 Principles Vs. Rules 12 Financial Statements 13 The Balance Sheet 14 The Income Statement 16 "Package " of Financial Reports 17 Financial Statement Objectives 17 Sarbanes-Oxley Act 19 Income Tax Reporting 19 Summary 19 Problems 20 Cases 22 Case 1—1: Ribbons an'Bows, Inc. 22 Case 1-2: Kim Fuller 23 Case 1-3: Baron Coburg 24 The Balance Sheet 33 An Overall View 34 Account Categories 35 Assets 36 Liabilities 38 Owners 'Equity 39 Ratios 42 Current Ratio 42 Balance Sheet Changes 42 Original Capital Contribution 42 Bank Loan 43 Purchase of Merchandise 43 Sale of Merchandise 43 Concluding Comment 44 Summary 44 Problems 44 Cases 47 Case 2-1: Maynard Company (A) 47 Case 2-2: Music Mart, Inc. 48 Case 2-3: Lone Pine Cafe (A) 48

8

Chapter 3 Basic Accounting Concepts: The Income Statement 50 The Nature of Income 50 Basic Concepts 51 The Accounting Period Concept 51 The Conservatism Concept 54 The Realization Concept 56 The Matching Concept 57 Recognition of Expenses 58 Terminology 58 Criteria for Expense Recognition 58 Expenses and Expenditures 59 Dividends 61 Summary of Expense Measurement 62 Gains and Losses 63 The Consistency Concept 63 The Materiality Concept 63 The Income Statement 64 Revenues 66 Cost of Sales 66 Gross Margin 67 Expenses 67 Net Income 67

Chapter 2 Basic Accounting Concepts: The Balance Sheet 26
Basic Concepts 26 The Money Measurement Concept 27 The Entity Concept 28 The Going-Concern Concept 28 The Cost Concept 29 The Dual-Aspect Concept 32

Contents

xiii

Statement of Retained Earnings 67 Relation between Balance Sheet and Income Statement 68 Income Statement Percentages 68 Other Concepts of Income 68" - Accrual versus Cash-Basis Accounting 68 Income Tax Accounting 69 Economic Income 70 Pro Forma Earnings 70 Summary 70 Problems 71 Cases 73 Case 3-1: Maynard Company (B) 73 Case 3-2: Lone Pine Cafe (B) 74 Case 3-3: Dispensers of California, Inc. 74 Case 3-4: Pinetree Motel 75 Case 3-5: National Association ofAccountants 77

Chapter 5 Revenue and Monetary Assets

108

Chapter 4
Accounting Records and Systems 80
Recordkeeping Fundamentals 80 The Account 81 Permanent Accounts and Temporary Accounts 81 The Ledger 82 The Chart of Accounts 82 Debit and Credit 82 The Accounting Process 84 Transaction Analysis 85 Example: Campus Pizzeria, Inc. 85 Balancing Accounts 88 The Trial Balance 89 The Adjusting and Closing Process 90 Adjusting Entries 90 Closing Entries 93 Statement Preparation 95 The Journal 96 Accounting Systems 97 Internal Accounting Controls 97 Computer-Based Accounting Systems 98 What a Computer-Based System Does 98 Modules 99 Problems with Computer Systems 99 Summary 100 Problems 100 Cases 102 Case 4-1: PC Depot 102 Case 4-2: Save-Mart 104 Case 4-3: Copies Express 104 Case 4-4: Waltham Oil and Lube Center, Inc. 106

Timing of Revenue Recognition 108 Basic Recognition Criteria 108 SEC Response 110 Delivery Method 112 Percentage-of-Completion Method 113 Production Method 114 Installment Method 114 Amount of Revenue...
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