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Accounting Principles, 12th Edition

Accounting Principles, 12th Edition

Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

ISBN: 978-1-118-87505-6

Jan 2015

1288 pages

In Stock



WileyPLUS sold separately from text.

Accounting Principles 12th Edition
 by Weygandt, Kimmel, and Kieso provides students with a clear introduction to fundamental accounting concepts. The Twelfth Edition helps student get the most out of their accounting course by making practice simple. This text allows for new opportunities for self-guided practice allow students to check their knowledge of accounting concepts, skills, and problem-solving techniques and receive personalized feedback at the question, learning objective, and course level. Newly streamlined learning objectives help students use their study time efficiently by creating a clear connections between the reading and video content, and the practice, homework, and assessments  questions. Weygandt, Accounting Principles is a best-selling  program ideal for a two-semester Principles of Accounting sequence  where students spend the majority of the time learning financial  accounting concepts, and are introduced to the basic concepts of  managerial accounting at the end of the sequence  With  Accounting Principles students learn the accounting cycle from a  sole proprietor perspective.

Related Resources

1 Accounting in Action 2

Knowing the Numbers: Clif Bar 2

LO 1: Identify the activities and users associated with accounting 4

Three Activities 4

Who Uses Accounting Data 5

LO 2: Explain the building blocks of accounting: ethics, principles, and assumptions 7

Ethics in Financial Reporting 7

Generally Accepted Accounting Principles 8

Measurement Principles 9

Assumptions 9

LO 3: State the accounting equation, and define its components 12

Assets 12

Liabilities 12

Owner’s Equity 13

LO 4: Analyze the effects of business transactions on the accounting equation 14

Transaction Analysis 15

Summary of Transactions 19

LO 5: Describe the four financial statements and how they are prepared 21

Income Statement 21

Owner’s Equity Statement 21

Balance Sheet 23

Statement of Cash Flows 23

LO *6: APPENDIX 1A: Explain the career opportunities in accounting 25

Public Accounting 25

Private Accounting 26

Governmental Accounting 26

Forensic Accounting 26

“Show Me the Money” 26

A Look at IFRS 46

2 The Recording Process 48

Accidents Happen: MF Global Holdings 48

LO 1: Describe how accounts, debits, and credits are used to record business transactions 50

The Account 50

Debits and Credits 50

Summary of Debit/Credit Rules 53

LO 2: Indicate how a journal is used in the recording process 54

Steps in the Recording Process 54

The Journal 55

LO 3: Explain how a ledger and posting help in the recording process 57

The Ledger 57

Posting 59

The Recording Process Illustrated 60

Summary Illustration of Journalizing and

Posting 66

LO 4: Prepare a trial balance 68

Limitations of a Trial Balance 68

Locating Errors 69

Dollar Signs and Underlining 69

A Look at IFRS 90

3 Adjusting the Accounts 92

Keeping Track of Groupons: Groupon 92

LO 1: Explain the accrual basis of accounting and the reasons for adjusting entries 94

Fiscal and Calendar Years 94

Accrual-versus Cash-Basis Accounting 94

Recognizing Revenues and Expenses 95

The Need for Adjusting Entries 96

Types of Adjusting Entries 96

LO 2: Prepare adjusting entries for deferrals 97

Prepaid Expenses 98

Unearned Revenues 101

LO 3: Prepare adjusting entries for accruals 104

Accrued Revenues 104

Accrued Expenses 106

Summary of Basic Relationships 109

LO 4: Describe the nature and purpose of an adjusted trial balance 111

Preparing the Adjusted Trial Balance 111

Preparing Financial Statements 112

LO *5: APPENDIX 3A: Prepare adjusting entries for the alternative treatment of deferrals 115

Prepaid Expenses 116

Unearned Revenues 117

Summary of Additional Adjustment Relationships 118

LO *6: APPENDIX 3B: Discuss financial reporting concepts 119

Qualities of Useful Information 119

Assumptions in Financial Reporting 119

Principles in Financial Reporting 120

Cost Constraint 121

A Look at IFRS 146

4 Completing the Accounting Cycle

Everyone Likes to Win: Rhino Foods 148

LO 1: Prepare a worksheet 150

Steps in Preparing a Worksheet 150

Preparing Financial Statements from a Worksheet 157

Preparing Adjusting Entries from a Worksheet 158

LO 2: Prepare closing entries and a post-closing trial balance 158

Preparing Closing Entries 159

Posting Closing Entries 161

Preparing a Post-Closing Trial Balance 163

LO 3: Explain the steps in the accounting cycle and how to prepare correcting entries 166

Summary of the Accounting Cycle 166

Reversing Entries—An Optional Step 166

Correcting Entries—An Avoidable Step 167

LO 4: Identify the sections of a classified balance sheet 169

Current Assets 170

Long-Term Investments 171

Property, Plant, and Equipment 171

Intangible Assets 171

Current Liabilities 172

Long-Term Liabilities 173

Owner’s Equity 174

LO *5: APPENDIX 4A: Prepare reversing entries 175

Reversing Entries Example 175

A Look at IFRS 202

5 Accounting for Merchandising Operations

Buy Now, Vote Later: REI 206

LO 1: Describe merchandising operations and inventory systems 208

Operating Cycles 208

Flow of Costs 209

LO 2: Record purchases under a perpetual inventory system 211

Freight Costs 213

Purchase Returns and Allowances 214

Purchase Discounts 214

Summary of Purchasing Transactions 215

LO 3: Record sales under a perpetual inventory system 216

Sales Returns and Allowances 217

Sales Discounts 218

LO 4: Apply the steps in the accounting cycle to a merchandising company 220

Adjusting Entries 220

Closing Entries 220

Summary of Merchandising Entries 221

LO 5: Compare a multiple-step with a single-step income statement 222

Multiple-Step Income Statement 222

Single-Step Income Statement 226

Classified Balance Sheet 226

LO *6: APPENDIX 5A: Prepare a worksheet for a merchandising company 228

Using a Worksheet 228

LO *7: APPENDIX 5B: Record purchases and sales under a periodic inventory system 229

Determining Cost of Goods Sold Under a Periodic System 230

Recording Merchandise Transactions 230

Recording Purchases of Merchandise 231

Recording Sales of Merchandise 232

Journalizing and Posting Closing Entries 233

Using a Worksheet 234

A Look at IFRS 259

6 Inventories 262

“Where Is That Spare Bulldozer Blade?”: Caterpillar 262

LO 1: Discuss how to classify and determine inventory 264

Classifying Inventory 264

Determining Inventory Quantities 265

LO 2: Apply inventory cost flow methods and discuss their financial effects 268

Specific Identification 269

Cost Flow Assumptions 269

Financial Statement and Tax Effects of Cost Flow Methods 274

Using Inventory Cost Flow Methods Consistently 275

LO 3: Indicate the effects of inventory errors on the financial statements 277

Income Statement Effects 277

Balance Sheet Effects 278

LO 4: Explain the statement presentation and analysis of inventory 279

Presentation 279

Lower-of-Cost-or-Net Realizable Value 279

Analysis 280

LO *5: APPENDIX 6A: Apply the inventory cost flow methods to perpetual inventory records 282

First-In, First-Out (FIFO) 282

Last-In, First-Out (LIFO) 283

Average-Cost 283

LO *6: APPENDIX 6B: Describe the two methods of estimating inventories 284

Gross Profit Method 284

Retail Inventory Method 285

A Look at IFRS 308

7 Accounting Information Systems

QuickBooks® Helps This Retailer Sell Guitars 310

LO 1: Explain the basic concepts of an accounting information system 312

Computerized Accounting Systems 312

Manual Accounting Systems 314

LO 2: Describe the nature and purpose of a subsidiary ledger 315

Subsidiary Ledger Example 315

Advantages of Subsidiary Ledgers 316

LO 3: Record transactions in special journals 317

Sales Journal 318

Cash Receipts Journal 320

Purchases Journal 324

Cash Payments Journal 326

Effects of Special Journals on the General Journal 329

Cyber Security: A Final Comment 330

A Look at IFRS 353

8 Fraud, Internal Control, and Cash 354

Minding the Money in Madison: Barriques 354

LO 1: Discuss fraud and the principles of internal control 356

Fraud 356

The Sarbanes-Oxley Act 356 Internal Control 357

Principles of Internal Control Activities 358

Limitations of Internal Control 365

LO 2: Apply internal control principles to cash 366

Cash Receipts Controls 366

Cash Disbursements Controls 369

Petty Cash Fund 370

LO 3: Identify the control features of a bank account 373

Making Bank Deposits 373

Writing Checks 374

Bank Statements 375

Reconciling the Bank Account 376

Electronic Funds Transfer (EFT) System 380

LO 4: Explain the reporting of cash 381

Cash Equivalents 381

Restricted Cash 382

A Look at IFRS 402

9 Accounting for Receivables 404

A Dose of Careful Management Keeps Receivables Healthy: Whitehall-Robins 404

LO 1: Explain how companies recognize accounts receivable 406

Types of Receivables 406

Recognizing Accounts Receivable 406

LO 2: Describe how companies value accounts receivable and record their disposition 408

Valuing Accounts Receivable 408

Disposing of Accounts Receivable 414

LO 3: Explain how companies recognize notes receivable 417

Determining the Maturity Date 417

Computing Interest 418

Recognizing Notes Receivable 419

LO 4: Describe how companies value notes receivable, record their disposition, and present and analyze receivables 420

Valuing Notes Receivable 420

Disposing of Notes Receivable 420

Statement Presentation and Analysis 422

A Look at IFRS 440

10 Plant Assets, Natural Resources, and Intangible Assets 442

How Much for a Ride to the Beach?:

Rent-A-Wreck 442

LO 1: Explain the accounting for plant asset expenditures 444

Determining the Cost of Plant Assets 444

Expenditures During Useful Life 446

LO 2: Apply depreciation methods to plant assets 448

Factors in Computing Depreciation 449

Depreciation Methods 449

Depreciation and Income Taxes 454

Revising Periodic Depreciation 454

LO 3: Explain how to account for the disposal of plant assets 455

Retirement of Plant Assets 456

Sale of Plant Assets 456

LO 4: Describe how to account for natural resources and intangible assets 458

Natural Resources 458

Depletion 458

Intangible Assets 460

Accounting for Intangible Assets 460

Research and Development Costs 462

LO 5: Discuss how plant assets, natural resources, and intangible assets are reported and analyzed 463

Presentation 463

Analysis 464

LO *6: APPENDIX 10A: Explain how to account for the exchange of plant assets 465

Loss Treatment 465

Gain Treatment 466

A Look at IFRS 487

11 Current Liabilities and Payroll Accounting

Financing His Dreams: Wilbert Murdock 490

LO 1: Explain how to account for current liabilities 492

What Is a Current Liability? 492

Notes Payable 492

Sales Taxes Payable 493

Unearned Revenues 494

Current Maturities of Long-Term Debt 494

LO 2: Discuss how current liabilities are reported and analyzed 495

Reporting Uncertainty 495

Reporting of Current Liabilities 497

Analysis of Current Liabilities 497

LO 3: Explain how to account for payroll 499

Determining the Payroll 499

Recording the Payroll 503

Employer Payroll Taxes 506

Filing and Remitting Payroll Taxes 508

Internal Control for Payroll 508

LO *4: APPENDIX 11A: Discuss additional fringe benefits associated with employee compensation  510

Paid Absences 510

Postretirement Benefits 511

A Look at IFRS 530

12 Accounting for Partnerships 532

From Trials to the Top Ten: Razor & Tie 532

LO 1: Discuss and account for the formation of a partnership 534

Characteristics of Partnerships 534

Organizations with Partnership

Characteristics 535

Advantages and Disadvantages of

Partnerships 537

The Partnership Agreement 537

Accounting for a Partnership Formation 538

LO 2: Explain how to account for net income or net loss of a partnership. 539

Dividing Net Income or Net Loss 539

Partnership Financial Statements 542

LO 3: Explain how to account for the liquidation of a partnership. 543

No Capital Deficiency 544

Capital Deficiency 546

LO *4: APPENDIX 12A: Prepare journal entries when a partner is either admitted or withdraws. 549

Admission of a Partner 549

Withdrawal of a Partner 552

13 Corporations: Organization and Capital Stock Transactions

What’s Cooking?: Nike 570

LO 1: Discuss the major characteristics of a corporation. 572

Characteristics of a Corporation 572

Forming a Corporation 574

Stockholder Rights 576

Stock Issue Considerations 576

Corporate Capital 579

LO 2: Explain how to account for the issuance of common and preferred stock 581

Issuing Par Value Common Stock for Cash 581

Issuing No-Par Common Stock for Cash 582

Issuing Common Stock for Services or Noncash

Assets 582

Accounting for Preferred Stock 583

LO 3: Explain how to account for treasury stock 584

Purchase of Treasury Stock 584

Disposal of Treasury Stock 585

LO 4: Prepare a stockholders’ equity section 587

A Look at IFRS 605

14 Corporations: Dividends, Retained Earnings, and Income Reporting 608

Owning a Piece of the Action: Van Meter Inc 608

LO 1: Explain how to account for cash dividends 610

Cash Dividends 610

Dividend Preferences 612

LO 2: Explain how to account for stock dividends and splits 615

Stock Dividends 615

Stock Splits 617

LO 3: Prepare and analyze a comprehensive stockholders’ equity section 619

Retained Earnings 619

Statement Presentation and Analysis 622

LO 4: Describe the form and content of corporation income statements 623

Income Statement Presentation 623

Income Statement Analysis 624

A Look at IFRS 642

15 Long-Term Liabilities 644

And Then There Were Two 644

LO 1: Describe the major characteristics of bonds 646

Types of Bonds 646

Issuing Procedures 646

Determining the Market Price of a Bond 647

LO 2: Explain how to account for bond transactions 649

Issuing Bonds at Face Value 649

Discount or Premium on Bonds 650

Issuing Bonds at a Discount 651

Issuing Bonds at a Premium 652

Redeeming and Converting Bonds 654

LO 3: Explain how to account for long-term notes payable 656

Long-Term Notes Payable 656

LO 4: Discuss how long-term liabilities are reported and analyzed 657

Presentation 657

Use of Ratios 658

Debt and Equity Financing 658

Lease Liabilities and Off-Balance-Sheet Financing 659

LO *5: APPENDIX 15A: Apply the straight-line method of amortizing bond discount and bond premium 662

Amortizing Bond Discount 662

Amortizing Bond Premium 663

LO *6: APPENDIX 15B: Apply the effective-interest method of amortizing bond discount and bond premium 664

Amortizing Bond Discount 665

Amortizing Bond Premium 666

A Look at IFRS 686

16 Investments 690

“Is There Anything Else We Can Buy?”:

Time Warner 690

LO 1: Explain how to account for debt investments 692

Why Corporations Invest 692

Accounting for Debt Investments 693

LO 2: Explain how to account for stock investments 695

Holdings of Less than 20% 696

Holdings Between 20% and 50% 696

Holdings of More than 50% 698

LO 3: Discuss how debt and stock investments are reported in financial statements 700

Categories of Securities 700 Balance Sheet Presentation 703

Presentation of Realized and Unrealized Gain or Loss 704

Classified Balance Sheet 705

A Look at IFRS 723

17 Statement of Cash Flows 726

Got Cash?: Microsoft 726

LO 1: Discuss the usefulness and format of the statement of cash flows 728

Usefulness of the Statement of Cash Flows 728

Classification of Cash Flows 728

Significant Noncash Activities 729

Format of the Statement of Cash Flows 730

LO 2: Prepare a statement of cash flows using the indirect method 731

Indirect and Direct Methods 732

Indirect Method—Computer Services Company 732

Step 1: Operating Activities 734

Summary of Conversion to Net Cash Provided by Operating Activities—Indirect Method 737

Step 2: Investing and Financing Activities 738

Step 3: Net Change in Cash 739

LO 3: Analyze the statement of cash flows 742

Free Cash Flow 742

LO *4: APPENDIX 17A: Prepare a statement of cash flows using the direct method 743

Step 1: Operating Activities 745

Step 2: Investing and Financing Activities 749

Step 3: Net Change in Cash 751

LO *5: APPENDIX 17B: Use a worksheet to prepare the statement of cash flows using the indirect method 751

Preparing the Worksheet 752

LO *6: APPENDIX 17C: Use the T-account approach to prepare a statement of cash flows 755

A Look at IFRS 782

18 Financial Statement Analysis

It Pays to Be Patient: Warren Buffett 784

LO 1: Apply horizontal and vertical analysis to financial statements 786

Need for Comparative Analysis 786

Tools of Analysis 786

Horizontal Analysis 787

Vertical Analysis 790

LO 2: Analyze a company’s performance using ratio analysis 792

Liquidity Ratios 793

Profitability Ratios 796

Solvency Ratios 800

Summary of Ratios 802

LO 3: Apply the concept of sustainable income 804

Discontinued Operations 805

Other Comprehensive Income 805

A Look at IFRS 832

19 Managerial Accounting 834

Just Add Water  and Paddle: Current Designs 834

LO 1: Identify the features of managerial accounting and the functions of management 836

Comparing Managerial and Financial Accounting 836

Management Functions 836

Organizational Structure 838

LO 2: Describe the classes of manufacturing costs and the differences between product and period costs 840

Manufacturing Costs 840

Product versus Period Costs 842

Illustration of Cost Concepts 842

LO 3: Demonstrate how to compute cost of goods manufactured and prepare financial statements for a manufacturer 844

Income Statement 844

Cost of Goods Manufactured 845

Cost of Goods Manufactured Schedule 846

Balance Sheet 846

LO 4: Discuss trends in managerial accounting 848

Service Industries 848

Focus on the Value Chain 849

Balanced Scorecard 850

Business Ethics 851

Corporate Social Responsibility 852

20 Job Order Costing 876

Profiting from the Silver Screen: Disney 876

LO 1: Describe cost systems and the flow of costs in a job order system 878

Process Cost System 878

Job Order Cost System 878

Job Order Cost Flow 879

Accumulating Manufacturing Costs 880

LO 2: Use a job cost sheet to assign costs to work in process 882

Raw Materials Costs 883

Factory Labor Costs 885

LO 3: Demonstrate how to determine and use the predetermined overhead rate 887

LO 4: Prepare entries for manufacturing and service jobs completed and sold 890

Assigning Costs to Finished Goods 890

Assigning Costs to Cost of Goods Sold 891

Summary of Job Order Cost Flows 891

Job Order Costing for Service Companies 893

Advantages and Disadvantages of Job Order Costing 894

LO 5: Distinguish between under- and overapplied manufacturing overhead 895

Under- or Overapplied Manufacturing Overhead 896

21 Process Costing 916

The Little Guy Who Could: Jones Soda Co 916

LO 1: Discuss the uses of a process cost system and how it compares to a job order system 918

Uses of Process Cost Systems 918

Process Costing for Service Companies 919

Similarities and Differences Between Job Order

Cost and Process Cost Systems 919

LO 2: Explain the flow of costs in a process cost system and the journal entries to assign manufacturing costs 921

Process Cost Flow 921

Assigning Manufacturing Costs—Journal Entries 921

LO 3: Compute equivalent units 924

Weighted-Average Method 924

Refinements on the Weighted-Average Method 925

LO 4: Complete the four steps to prepare a production cost report 927

Compute the Physical Unit Flow (Step 1) 928

Compute the Equivalent Units of Production (Step 2) 928

Compute Unit Production Costs (Step 3) 929

Prepare a Cost Reconciliation Schedule (Step 4) 930

Preparing the Production Cost Report 930 Costing Systems—Final Comments 931

LO 5: Explain just-in-time (JIT) processing and activity-based costing (ABC) 932

Just-in-Time Processing 932

Activity-Based Costing 934

LO *6: APPENDIX 21A: Apply activity-based costing to a manufacturer 936

Identify and Classify Activities and Assign Overhead to Cost Pools (Step 1) 936

Identify Cost Drivers (Step 2) 937

Compute Activity-Based Overhead Rates (Step 3) 937

Allocate Overhead Costs to Products (Step 4) 938

Comparing Unit Costs 939

Benefits of ABC 939

Limitations of ABC 939

22 Cost-Volume-Profit 960

Don’t Worry—Just Get Big: Amazoncom 960

LO 1: Explain variable, fixed, and mixed costs and the relevant range 962

Variable Costs 962

Fixed Costs 963

Relevant Range 964

Mixed Costs 965

LO 2: Apply the high-low method to determine the components of mixed costs 966

High-Low Method 967

Importance of Identifying Variable and Fixed Costs 969

LO 3: Prepare a CVP income statement to determine contribution margin 970

Basic Components 970

CVP Income Statement 970

LO 4: Compute the break-even point using three approaches 974

Mathematical Equation 974

Contribution Margin Technique 975

Graphic Presentation 976

LO 5: Determine the sales required to earn target net income and determine margin of safety 977

Target Net Income 977

Margin of Safety 979

LO 6: Use CVP analysis to respond to changes in the business environment 980

Case I: Offering a Discount 980

Case II: Investing in New Equipment 981

Case III: Determining Required Sales 981

CVP Income Statement Revisited 982

LO *7: APPENDIX 22A: Explain the differences between absorption costing and variable costing 983

Example Comparing Absorption Costing with Variable Costing 984

Rationale for Variable Costing 986

23 Budgetary Planning 1004

What’s in Your Cupcake?: BabyCakes NYC 1004

LO 1: State the essentials of effective budgeting and the components of the master budget 1006

Budgeting and Accounting 1006

The Benefits of Budgeting 1006

Essentials of Effective Budgeting 1006

The Master Budget 1009

LO 2: Prepare budgets for sales, production, and direct materials 1011

Sales Budget 1011

Production Budget 1012

Direct Materials Budget 1013

LO 3: Prepare budgets for direct labor, manufacturing overhead, and selling and administrative expenses, and a budgeted income statement 1016

Direct Labor Budget 1016

Manufacturing Overhead Budget 1017

Selling and Administrative Expense Budget 1018

Budgeted Income Statement 1018

LO 4: Prepare a cash budget and a budgeted balance sheet 1020

Cash Budget 1020

Budgeted Balance Sheet 1023

LO 5: Apply budgeting principles to nonmanufacturing companies 1025

Merchandisers 1025

Service Companies 1026

Not-for-Profit Organizations 1027

24 Budgetary Control and Responsibility Accounting 1052

Pumpkin Madeleines and a Movie: Tribeca Grand Hotel  1052

LO 1: Describe budgetary control and static budget reports 1054

Budgetary Control 1054

Static Budget Reports 1055

LO 2: Prepare flexible budget reports 1057

Why Flexible Budgets? 1057

Developing the Flexible Budget 1060

Flexible Budget—A Case Study 1060

Flexible Budget Reports 1062

LO 3: Apply responsibility accounting to cost and profit centers  1064

Controllable versus Noncontrollable Revenues and Costs 1066

Principles of Performance Evaluation 1066

Responsibility Reporting System 1068

Types of Responsibility Centers 1070

LO 4: Evaluate performance in investment centers 1073

Return on Investment (ROI) 1073

Responsibility Report 1074

Judgmental Factors in ROI 1075

Improving ROI 1075

25 Standard Costs and Balanced Scorecard 1100

80,000 Different Caffeinated Combinations: Starbucks 1100

LO 1: Describe standard costs 1102

Distinguishing Between Standards and Budgets 1103

Setting Standard Costs 1103

LO 2: Determine direct materials variances 1107

Analyzing and Reporting Variances 1107

Direct Materials Variances 1108

LO 3: Determine direct labor and total manufacturing overhead variances 1111

Direct Labor Variances 1111

Manufacturing Overhead Variances 1113

LO 4: Prepare variance reports and balanced scorecards 1115

Reporting Variances 1115

Income Statement Presentation of Variances 1116

Balanced Scorecard 1117

LO *5: APPENDIX 25A: Identify the features of a standard cost accounting system 1120

Journal Entries 1120

Ledger Accounts 1122

LO *6: APPENDIX 25B: Compute overhead controllable and volume variances 1123

Overhead Controllable Variance 1123

Overhead Volume Variance 1124

26 Incremental Analysis and Capital Budgeting 1146

Keeping It Clean: Method Products 1146

LO 1: Describe management’s decision-making process and incremental analysis 1148

Incremental Analysis Approach 1148

How Incremental Analysis Works 1149

Types of Incremental Analysis 1150

LO 2: Analyze the relevant costs in various decisions involving incremental analysis 1151

Special Price Order 1151

Make or Buy 1152

Sell or Process Further 1155

Repair, Retain, or Replace Equipment 1156

Eliminate an Unprofitable Segment or Product 1157

LO 3: Contrast annual rate of return and cash payback in capital budgeting 1159

Capital Budgeting 1159

Evaluation Process of Capital Budgeting 1159

Annual Rate of Return 1160

Cash Payback 1162

LO 4: Distinguish between the net present value and internal rate of return methods 1164

Net Present Value Method 1164

Internal Rate of Return Method 1166

Comparing Discounted Cash Flow Methods 1168

A Specimen Financial Statements: Apple Inc A-1

B Specimen Financial Statements: PepsiCo, Inc B-1

C Specimen Financial Statements: The Coca-Cola Company C-1

D Specimen Financial Statements:, Inc D-1

E Specimen Financial Statements: Wal-Mart Stores, Inc E-1

F Specimen Financial Statements: Louis Vuitton F-1

G Time Value of Money G-1

LO 1: Compute interest and future values G-1

Nature of Interest G-1

Future Value of a Single Amount G-3

Future Value of an Annuity G-4

LO 2: Compute present values G-7

Present Value Variables G-7

Present Value of a Single Amount G-7

Present Value of an Annuity G-9

Time Periods and Discounting G-11

Present Value of a Long-Term Note or Bond G-11

LO 3: Compute the present value in capital budgeting situations G-14

LO 4: Use a financial calculator to solve time value of money problems G-15

Present Value of a Single Sum G-16

Present Value of an Annuity G-17

Useful Applications of the Financial Calculator G-17

H Standards of Ethical Conduct for Management Accountants H-1

IMA Statement of Ethical Professional

Practice H-1

Principles H-1

Standards H-1

Resolution of Ethical Conflict H-2

Cases for Managerial


Company Index I-1

Subject Index I-3