Part One Fundamental AccountingChapter 1 An Introduction to Accounting 31.1 The Nature of Accounting 31.2 The History and Development of Accounting 51.3 Users of Accounting Information 61.4 Accounting Profession 71.5 Managerial Accounting and Financial Accounting 71.5.1 Managerial Accounting 71.5.2 Financial Accounting 81.5.3 Managerial Accounting versus Financial Accounting 81.6 Ethics and Accounting 91.6.1 Ethics in Business 91.6.2 Ethics in Your Future Career 10Summary of Learning Objectives 11Accounting Vocabulary 12Notes to the Text 13Reading Material 14Assignment 15Chapter 2 The Accounting Equation and the Account 172.1 Types of Business Organizations 172.2 The Accounting Equation 182.3 The Effects of Business Transactions on the Accounting Equation 192.4 The Account 232.4.1 The T Account 242.4.2 Management’s Use of Accounts 242.4.3 The Ledger 242.4.4 Types of Commonly Used Accounts 252.4.5 Titles of Accounts 27Summary of Learning Objectives 28Accounting Vocabulary 29Notes to the Text 30Reading Material 31Assignment 32Chapter 3 Recording Business Transactions 353.1 Double-Entry Bookkeeping 353.2 Ways of Recording Business Transactions 383.2.1 Recording Transactions in Journals 383.2.2 Posting from the Journal to the Ledger 403.3 Illustrative Problem 403.4 The Trial Balance 43Summary of Learning Objectives 44Accounting Vocabulary 44Notes to the Text 45Reading Material 46Assignment 47Chapter 4 Basic Financial Statements 524.1 Financial Statements 524.1.1 The Balance Sheet 524.1.2 The Income Statement 534.1.3 The Statement of Owner’s Equity 544.1.4 The Statement of Changes in Financial Position 554.1.5 Relationship of the Financial Statements 564.2 The Balance Sheet 574.2.1 Classification of Assets and Liabilities 574.2.2 Formats of Balance Sheet 584.2.3 Current Ratio and Debt Ratio 614.3 The Income Statement 624.3.1 Formats of Income Statement 624.3.2 Gross Margin Percentage and Inventory Turnover 64Summary of Learning Objectives 66Accounting Vocabulary 67Notes to the Text 68Reading Material 70Assignment 71 Chapter 5 The Measurement of Business Income 745.1 Business Income 745.2 Some Generally Accepted Accounting Principles 765.2.1 Accrual-Basis Accounting 765.2.2 The Accounting Period 775.2.3 Revenue Principle 775.2.4 Matching Principle 785.2.5 Time-Period Concept 795.3 Adjustments to the Accounts 795.4 Adjusted Trial Balance 885.5 Preparing the Financial Statements from the Adjusted Trial Balance 89Summary of Learning Objectives 92Accounting Vocabulary 93Notes to the Text 94Reading Material 95Assignment 96Chapter 6 Completing the Accounting Cycle (I) 1006.1 The Accounting Cycle 1006.2 Preparation of the Work Sheet 1016.2.1 The Accountant’s Work Sheet 1016.2.2 Steps in Preparing the Work Sheet 1016.3 Uses of the Work Sheet 1086.3.1 Preparing the Financial Statements 1086.3.2 Recording the Adjusting Entries 1106.4 Closing the Accounts 111Summary of Learning Objectives 114Accounting Vocabulary 115Notes to the Text 116Reading Material 117Assignment 118Chapter 7 Completing the Accounting Cycle (II) 1217.1 The Operating Cycle for a Merchandising Business 1217.2 Accounting Record of the Operating Cycle 1227.2.1 Purchase of Inventory 1227.2.2 Purchase Discounts 1237.2.3 Purchase Returns and Allowances 1247.2.4 Transportation Costs 1257.2.5 Sale of Inventory 1267.2.6 Sales Discounts, Sales Returns and Allowances 1267.2.7 Cost of Goods Sold 1277.3 The Accounting Cycle for a Merchandising Business 1307.3.1 The Adjusting and Closing Process for a Merchandising Business 1307.3.2 Work Sheet of a Merchandising Business 1307.3.3 Financial Statements of a Merchandising Business 1337.3.4 Adjusting and Closing the Accounts of a Merchandising Business 135Summary of Learning Objectives 137Accounting Vocabulary 138Notes to the Text 139Reading Material 140Assignment 141Chapter 8 Ledgers and Journals 1478.1 Ledgers 1478.2 Journals 1488.3 Special Journals 1498.3.1 Sales Journal 1498.3.2 Cash Receipts Journal 1528.3.3 Purchase Journal 1558.3.4 Cash Disbursements Journal 157Summary of Learning Objectives 159Accounting Vocabulary 161Notes to the Text 161Reading Material 162Assignment 164Part Two Financial AccountingChapter 9 Cash and Internal Control 1699.1 Definition of Internal Control 1699.2 Basic Principle and Policies 1709.3 Internal Cash Control 1719.3.1 Individual Cash Accountability 1719.3.2 Cash Recording 1719.3.3 Cash Depositing 1729.3.4 Reconciliation 1729.3.5 Refunds and Voids 1729.3.6 Safeguarding Cash 1739.4 Internal Control over Merchandise Transactions 1739.4.1 Control of Sales and Cash Receipts 1749.4.2 Control of Purchases and Cash Disbursements 1769.4.3 Control of Purchases Discounts 1769.5 The Bank Account: a Control Device 1779.5.1 Bank Statement 1779.5.2 Bank Reconciliation 1779.5.3 Preparation of Bank Reconciliation 1809.5.4 Recording Entries from the Reconciliation 182Summary of Learning Objectives 183Accounting Vocabulary 185Notes to the Text 186Reading Material 187Assignment 188Chapter 10 Accounts Receivable and Notes Receivable 19110.1 The Different Types of Receivable 19110.2 Accounting for Notes Receivable 19310.3 Uncollectible Accounts Expenses 19410.4 The Two Methods of Accounting for Bad Debts 19610.4.1 Allowance Method 19610.4.2 Direct Write-off Method of Accounting for Uncollectibles 199Summary of Learning Objectives 200Accounting Vocabulary 200Notes to the Text 201Reading Material 202Assignment 203Chapter 11 Accounting for Inventory 20611.1 The Basic Concept of Inventory Accounting 20611.2 Inventory Accounting System 20711.3 Calculating the Cost of Inventory 20911.3.1 Inventory Costing Methods 20911.3.2 Comparing Inventory Costing Methods 21111.4 Valuation of Inventory at Other than Cost 21211.4.1 Valuation at Lower-of-Cost-or-Market 21211.4.2 Valuation at Net Realizable Value 21311.5 Estimating Inventory Cost 21311.5.1 Retail Method of Inventory Costing 21311.5.2 Gross Profit Method of Estimating Inventories 215Summary of Learning Objectives 215Accounting Vocabulary 217Notes to the Text 218Reading Material 219Assignment 220Chapter 12 Non-current Assets and Intangible Assets 22412.1 Non-current Assets 22412.2 Depreciation Methods 22612.3 Disposal of Fixed Assets 23112.4 Intangible Assets 23212.5 Amortization of Intangible Assets 234Summary of Learning Objectives 235Accounting Vocabulary 236Notes to the Text 236Reading Material 238Assignment 239Chapter 13 Current Liabilities and Payroll Accounting 24113.1 Current Liabilities 24113.2 Accounts Payable 24213.3 Notes Payable 24313.4 Payroll Accounting 24513.5 Internal Control Over Payroll 247Summary of Learning Objectives 248Accounting Vocabulary 249Notes to the Text 249Reading Material 251Assignment 251Chapter 14 Non-current Liabilities 25414.1 Types of Non-current Liabilities 25414.2 Types of Bonds 25514.3 Accounting for Issuing Bonds 25614.4 Adjusting Entries for Interesting Expenses 25914.5 Accouting for Redeeming Bonds 26214.6 Convertible Bonds 262Summary of Learning Objectives 263Accounting Vocabulary 264Notes to the Text 264Reading Material 266Assignment 266Chapter 15 Shareholder’s Equity 26915.1 The Characteristics of a Corporation 26915.2 Share Capital 27015.3 Shareholder’s Equity 27115.4 Issuing Stock 27115.4.1 Issuing Stock for Cash 27115.4.2 Issuing Common Stock for Services or Non-cash Asset 27315.4.3 Issuing Preferred Stock 27415.5 Accounting for Dividends 27415.6 Accounting for Income Taxes 27615.7 Retained Earnings 277Summary of Learning Objectives 279Accounting Vocabulary 280Notes to the Text 281Reading Material 282Assignment 283Chapter 16 Preparing and Using the Financial Statements 28616.1 Introduction to Financial Statements 28616.1.1 Classified Financial Statements 28716.1.2 Relationships among the Financial Statements 28816.2 The Balance Sheet 28916.2.1 Formats of the Balance Sheet 29016.2.2 Elements of the Balance Sheet 29216.2.3 Preparation of the Balance Sheet 29416.3 The Income Statement 29416.3.1 Formats of the Income Statement 29516.3.2 Elements of the Income Statement 29616.3.3 Preparation of the Income Statement 29716.4 The Cash Flow Statement 29716.4.1 Elements of the Cash Flow Statement 29816.4.2 Formats of the Cash Flow Statement 29916.4.3 Preparation of the Cash Flow Statement 300Summary of Learning Objectives 301Accounting Vocabulary 302Notes to the Text 303Reading Material 304Assignment 305Appendix 308Appendix I How to Read Original English Textbook of Accounting 308Appendix II Reference Versions for Reading Material 311Appendix III Answers to Assignment 322Appendix IV Recommended Websites of Accounting 352References 353