About the Book
The Horngren System of instruction replicates the classroom experience by providing more “I get it” moments outside of class.
We’ve talked to tons of POA instructors and our editors have even taken the accounting course (numerous times!) to figure out the following issue in this course that is consistent: Students understand (or “get it”) right after you do a problem in class, but as soon as they leave class, with each passing hour, their ability to do the problems again and complete their homework diminishes to the point of them either having to come to office hours to get help, or they just quit and get behind in the course. On top of this, you can end up getting behind in the course as well, in order to keep everyone on track. The Horngren system helps to recreate the “I get it” moments outside of class–keeping both you and the students on track.
Table of Contents:
12
Partnerships
Vignette:
Characteristics of a Partnership
The Written Agreement
Limited Life
Mutual Agency
Unlimited Liability
Co-Ownership of Property
No Partnership Income Tax
Partners’ Capital Accounts
Types of Partnerships
General Partnership
Limited Partnership
Limited Liability Company (LLC)
S Corporation
The Start-Up of a Partnership
Sharing Profits and Losses, and Partner Drawings
Sharing Based on a Stated Fraction
Sharing Based on Capital Balances and on Service
Partner Drawings of Cash and Other Assets
Admission of a Partner
Admission by Purchasing a Partner’s Interest
Admission by Investing in the Partnership
Withdrawal of a Partner
Withdrawal at Book Value
Withdrawal at Less Than Book Value
Withdrawal at More Than Book Value
Death of a Partner
Liquidation of a Partnership
Sale of Assets at a Gain
Sale of Assets at a Loss
Partnership Financial Statements
j Decision Guidelines
c Summary Problem
Review: Partnerships, Quick Check/Accounting Vocabulary | Assess Your Progress, Short
Exercises/Exercises/Problems (Group A)/Problems (Group B) | Apply Your Knowledge,
Decision Cases/Ethical Issue/Team Project
13
Corporations: Paid-In Capital and the Balance Sheet
Vignette: IHOP
Corporations: An Overview
Characteristics of a Corporation
Organizing a Corporation
Capital Stock
Stockholders’ Equity Basics
Paid-In Capital Comes from the Stockholders
Retained Earnings Come from Profitable Operations
A Corporation May Pay Dividends to the Stockholders
Stockholders’ Rights
Classes of Stock
Issuing Stock
Issuing Common Stock
Issuing Preferred Stock
Ethical Considerations
Review of Accounting for Paid-In Capital
Decision Guidelines
Summary Problem 1
Accounting for Cash Dividends
Dividend Dates
Declaring and Paying Dividends
Dividing Dividends Between Preferred and Common
Dividends on Cumulative and Noncumulative Preferred
Different Values of Stock
Market Value
Book Value
Evaluating Operations
Rate of Return on Total Assets
Rate of Return on Common Stockholders’ Equity
Accounting for Income Taxes by Corporations
j Decision Guidelines
c Summary Problem 2
Review: Corporations: Paid-In Capital and the Balance Sheet, Quick Check/Accounting
Vocabulary | Assess Your Progress, Short Exercises/Exercises/Problems (Group A)/Problems
(Group B) | Apply Your Knowledge, Decision Cases/Ethical Issue/Financial Statement
Case/Team Project
14
Corporations: Retained Earnings and the Income Statement
Vignette: IHOP
Retained Earnings, Stock Dividends, and Stock Splits
Retained Earnings
Stock Dividends
Stock Splits
Stock Dividends and Stock Splits Compared
Treasury Stock
Purchase of Treasury Stock
Sale of Treasury Stock
Other Stockholders’ Equity Issues
Retirement of Stock
Restrictions on Retained Earnings
Variations in Reporting Stockholders’ Equity
Decision Guidelines
Summary Problem 1
The Corporate Income Statement
Continuing Operations
Special Items
Earnings per Share
Combined Statement of Income and Retained Earnings
Statement of Retained Earnings
Reporting Comprehensive Income
Prior-Period Adjustments
j Decision Guidelines
c Summary Problem 2
Review: Retained Earnings, Treasury Stock, and the Income Statement, Quick
Check/Accounting Vocabulary | Assess Your Progress, Short Exercises/Exercises/Problems
(Group A)/Problems (Group B) | Apply Your Knowledge, Decision Cases/Ethical
Issue/Financial Statement Case/Team Project
15
Long-Term Liabilities
Vignette: Amazon.com
Bonds: An Introduction
Types of Bonds
Bond Prices
Present Value
Bond Interest Rates
Issuing Bonds Payable to Borrow Money
Issuing Bonds Payable at Maturity (Par) Value
Issuing Bonds Payable at a Discount
Issuing Bonds Payable at a Premium
The Carrying Amount of Bonds Payable
Decision Guidelines
Summary Problem 1
Additional Bond Topics
Adjusting Entries for Bonds Payable
Issuing Bonds Payable Between Interest Dates
Retirement of Bonds Payable
Convertible Bonds Payable
Reporting Liabilities on the Balance Sheet
Advantages and Disadvantages: Bonds versus Stock
j Decision Guidelines
c Summary Problem 2
Review: Long-Term Liabilities, Quick Check/Accounting Vocabulary | Assess Your Progress,
Short Exercises/Exercises/Problems (Group A)/Problems (Group B) | Apply Your Knowledge,
Decision Cases/Ethical Issue/Financial Statement Case/Team Project
APPENDIX TO CHAPTER 15: The Time Value of Money: Present Value of a Bond
Comprehensive Problem for Chapters 13—15
16
The Statement of Cash Flows
Vignette: eBay
Introduction: The Statement of Cash Flows
Cash Equivalents
Operating, Investing, and Financing Activities
Two Formats for Operating Activities
Preparing the Statement of Cash Flows by the Indirect Method
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Noncash Investing and Financing Activities
Measuring Cash Adequacy: Free Cash Flow
Summary Problem
j Decision Guidelines
Review: The Statement of Cash Flows, Quick Check/Accounting Vocabulary | Assess Your
Progress, Short Exercises/Exercises/Problems (Group A)
Apply Your Knowledge, Decision Cases/Ethical Issue/Financial Statement Case/Team Projects
APPENDIX A: Preparing the Statement of Cash Flows by the Direct Method
j Decision Guidelines
APPENDIX B: Preparing the Statement of Cash Flows Using a Spreadsheet
17
Financial Statement Analysis
Vignette: Google Inc.
Horizontal Analysis
Illustration: Google Inc.
Horizontal Analysis of the Income Statement
Horizontal Analysis of the Balance Sheet
Trend Percentages
Vertical Analysis
Illustration: Google Inc.
How Do We Compare One Company with Another?
Benchmarking
Benchmarking Against a Key Competitor
Benchmarking Against the Industry Average
Summary Problem 1
Using Ratios to Make Decisions
Measuring Ability to Pay Current Liabilities
Measuring Ability to Sell Inventory and Collect Receivables
Measuring Ability to Pay Long-Term Debt
Measuring Profitability
Analyzing Stock Investments
Red Flags in Financial Statement Analysis
j Decision Guidelines
c Summary Problem 2
Review: Financial Statement Analysis, Quick Check/Accounting Vocabulary | Assess Your
Progress, Short Exercises/Exercises/Problems (Group A)/Problems (Group B) | Apply Your
Knowledge, Decision Cases/Ethical Issue/Financial Statement Case/Team Projects
Comprehensive Problem for Chapters 16 and 17
18
Introduction to Management Accounting
Vignette: Joe’s Delivery Service, Maria’s Birthday Cakes, Roberto’s Bakery
Management Accountability
Service Companies, Merchandising Companies, and Manufacturing Companies
Today’s Business Environment
Merchandising Companies
c Summary Problem 1
Manufacturing Companies
Ethical Standards
j Decision Guidelines
c Summary Problem 2
Review: Introduction to Management Accounting, Quick Check/Accounting Vocabulary |
Assess Your Progress, Short Exercises/Exercises/Problems (Group A)/Problems (Group B) |
Apply Your Knowledge, Decision Cases/Ethical Issue/Financial Statement Case/Team Project
19
Job Order Costing
Vignette: Seasons Greetings
How Much Does It Cost to Make a Product? Two Approaches
Job Order Costing for Manufacturing Products
Job Order Costing: Accounting for Material and Labor
Decision Guidelines
Summary Problem 1
Job Order Costing: Allocating Manufacturing Overhead
Allocating Manufacturing Overhead to Jobs
Accounting for Completion and Sale of Finished Goods and Adjusting Manufacturing
Overhead
Accounting for the Competition and Sale of Finished Goods
Adjusting Underallocated or Overallocated Manufacturing Overhead at the End of the
Period
Overview of Job Order Costing in a Manufacturing Company
Job Order Costing in a Service Company
j Decision Guidelines
c Summary Problem 2
Review: Job Order Costing, Quick Check/Accounting Vocabulary | Assess Your Progress,
Short Exercises/Exercises/Problems (Group A)/Problems (Group B) | Apply Your Knowledge,
Decision Cases/Ethical Issue/Team Project
20
Process Costing
Vignette: Puzzle Me
Process Costing: An Overview
Two Basic Costing Systems: Job Order Costing and Process Costing
How Does the Flow of Costs Differ Between Job and Process Costing?
Building Blocks of Process Costing
Conversion Costs
Equivalent Units of Production
Process Costing in First Department with No Beginning Inventory
Step 1: Summarize the Flow of Physical Units
Step 2: Compute Output in Terms of Equivalent Units
Step 3: Compute the Cost per Equivalent Unit
Step 4: Assign Costs to Units Completed and to Units in Ending Work in Process
Inventory
j Decision Guidelines
c Summary Problem 1
Process Costing in a Second Department
The Weighted-Average Process Costing Method
Steps 1 and 2: Summarize the Flow of Physical Units and Compute Output in Terms
of Equivalent Units
Step 3: Summarize Total Costs to Account For and Compute the Cost per Equivalent
Unit
Step 4: Assign Total Costs to Units Completed and to Units in Ending Work in
Process Inventory
How Managers Use a Production Cost Report
j Decision Guidelines
c Summary Problem 2
Review: Process Costing, Quick Check/Accounting Vocabulary | Assess Your Progress, Short
Exercises/Exercises/Problems (Group A)/Problems (Group B) | Apply Your Knowledge,
Decision Case/Ethical Issue/Team Project
APPENDIX TO CHAPTER 20: The FIFO Process Costing Method
21
Cost-Volume-Profit Analysis
Vignette: Mi Tierra Driving School
Cost Behavior
Variable Costs
Fixed Costs
Mixed Costs
High-Low Method to Separate Fixed Cost from Variable Cost
Relevant Range
Basic CVP Analysis: What Must We Sell to Break Even?
Assumptions
How Much Must Chan Sell to Break Even? Three Approaches
Using CVP to Plan Profits
How Much Must Chan Sell to Earn a Profit?
Graphing Cost-Volume-Profit Relations
Summary Problem 1
Using CVP for Sensitivity Analysis
Changing the Selling Price
Changing Variable Costs
Changing Fixed Costs
Margin of Safety
Information Technology and Sensitivity Analysis
Effect of Sales Mix on CVP Analysis
j Decision Guidelines
c Summary Problem 2
Review: CVP Analysis, Quick Check/Accounting Vocabulary | Assess Your Progress, Short
Exercises/Exercises/Problems (Group A)/Problems (Group B) | Apply Your Knowledge,
Decision Cases/Ethical Issue/Financial Statement Case |
APPENDIX TO CHAPTER 21: Variable Costing and Absorption Costing
Team Project
22
The Master Budget and Responsibility Accounting
Vignette: Pete’s Pet Shop
Why Managers Use Budgets
Using Budgets to Plan and Control
The Benefits of Budgeting
Preparing the Master Budget
Components of the Master Budget
Preparing the Operating Budget
The Sales Budget
The Inventory, Purchases, and Cost of Goods Sold Budget
The Operating Expenses Budget
The Budgeted Income Statement
Summary Problem 1
Preparing the Financial Budget
Preparing the Cash Budget
The Budgeted Balance Sheet
Getting Employees to Accept the Budget
Using Information Technology for Sensitivity Analysis and Rolling Up Unit Budgets
Sensitivity Analysis
Rolling Up Individual Unit Budgets into the Companywide Budget
Responsibility Accounting
Four Types of Responsibility Centers
Responsibility Accounting Performance Reports
j Decision Guidelines
c Summary Problem 2
Assess Your Progress, Short Exercises/Exercises/Problems (Group A)/Problems (Group B) |
Apply Your Knowledge, Decision Cases/Ethical Issue/Team Project
APPENDIX TO CHAPTER 22: Departmental Accounting
23
Flexible Budgets and Standard Costs
Vignette:
How Managers Use Flexible Budgets
What is a Flexible Budget?
Using the Flexible Budget: Why Do Actual Results Differ from the Static Budget?
Decision Guidelines
Summary Problem 1
Standard Costing
Price Standards
Quantity Standards
Why Do Companies Use Standard Costs?
Variance Analysis
Analyzing the Flexible Budget Variance: How Pluto Uses Standard Costing:
Direct Material Variances
Direct Labor Variances
Manufacturing Overhead Variances
Allocating Overhead in a Standard Cost System
Overhead Flexible Budget Variance
Production Volume Variance
Summary of Overhead Variances
Standard Cost Accounting Systems
Journal Entries
Standard Cost Income Statement for Management
j Decision Guidelines
c Summary Problem 2
Assess Your Progress, Short Exercises/Exercises/Problems (Group A)/Problems (Group B) |
Apply Your Knowledge, Decision Cases/Ethical Issues/Team Project
24
Activity-Based Costing and Other Cost Management Tools
Vignette:
Refining Cost Systems
Sharpening the Focus: Assigning Costs Based on the Activities That Caused the Costs
Activity-Based Costing
Developing an Activity-Based Costing System
Traditional versus Activity-Based Costing Systems: Fischer Chemical Company
Activity-Based Management: Using ABC for Decision Making
Pricing and Product Mix Decisions
Cutting Costs
Decision Guidelines
Summary Problem 1
Just-in-Time (JIT) Systems
Just-in-Time Costing
Continuous Improvement and the Management of Quality
The Four Types of Quality Costs
Deciding Whether to Adopt a New Quality Program
j Decision Guidelines
c Summary Problem 2
Assess Your Progress, Short Exercises/Exercises/Problems (Group A) | Apply Your Knowledge,
Decision Cases/Ethical Issue/Team Project
25
Special Decisions and Capital Budgeting
Vignette:
Relevant Information
How Managers Make Decisions
What Information Is Relevant to a Special Business Decision?
How to Make Short-Term Special Decisions
Special Sales Order Decision
Dropping a Business Segment (a Product, a Department, a Territory)
Product Mix: Which Product to Emphasize
Outsourcing (Make or Buy) Decisions
Sell As Is or Process Further?
How Do Short-Term and Long-Term Special Decisions Differ?
Decision Guidelines 1
Summary Problem 1
Using Payback and Accounting Rate of Return to Make Capital Budgeting Decisions
Payback Period
Accounting Rate of Return
Using Discounted Cash-Flow Models to Make Capital Budgeting Decisions
Net Present Value
Internal Rate of Return
Comparing Capital Budgeting Methods
j Decision Guidelines
c Summary Problem 2
Review: Special Business Decisions and Capital Budgeting, Quick Check/Accounting
Vocabulary | Assess Your Progress, Short Exercises/Exercises/Problems (Group A)
Apply Your Knowledge, Decision Cases/Team Project
APPENDIX D: Investments and International Operations
Stock Investments
Some Basics
Trading Investments
Long-Term Available-for-Sale Investments
Equity-Method Investments
Consolidated Subsidiaries
Bond Investments
Decision Guidelines
Summary Problem 1
Accounting for International Operations
Foreign Currencies and Foreign-Currency Exchange Rates
Foreign-Currency Transactions
International Accounting Standards
Decision Guidelines
c Summary Problem 2
Exercises
Problems
