前言
序言
第1章 财务报表..............................................1 第2章 交易分析.............................................53
第3章 使用权责发生制计量收入..............................125
第4章 内部控制和现金管理..................................213
第5章 短期投资和应收账款..................................261
第6章 商品存货和销货成本..................................309
第7章 固定资产与无形资产..................................367
第8章 负债................................................417
第9章 股东权益............................................477
第10章 长期投资与跨国经营.................................537
第11章 损益表与股东权益表.................................583
第12章 现金流量表.........................................619
第13章 财务报表分析.......................................685
附录A 百胜公司2006年年度报告............................. .745
附录B 第一码头进口公司2006年年度报告.................... ..763
附录C 货币的时间价值：终值与现值......................... ..777
附录D 不同类型企业的典型会计图表......................... ..787
附录E 公认会计准则(GAAP)摘要............................. ..789
附录F 答案..................................... ...........791
公司索引....................................................799
主题索引....................................................803
Preface
Proloaue
.ne
Chapter 1 The Financial Statements 1
Chapter 2 TransaCtion Analysis 53
Chapter 3 Acornal Accounting & Income 125
Chapter 4 Internal Control & Cash 213
Chapter 5 Short-Term investments & Receivables 261
Chapter 6 Inventory & Cost of Goods Sold 309
Chapter 7 Plant Assets & Intangibles 367
Chapter & Liabilities 417
Chapter 9 Stockholders' Equity 477
Chapter 1 O Long-Term investments & International
Operations 537
Chapter 1 1 The income Statement & the Statement of
Stockholders' Equity 583
Chapter 1 2 The Statement of Cash Flows 619
Chapter 1 3 Financial Statement Analysis 685
APpendtaAf YUM! Brands Annual Report 2006 745
APpendix Ba Pier 1 Imports Annual Report 2006 763
Appendix Cd Time Value of Money: Future Value and Present
Value 777
Appendix Da Typical Charts of Accounts for Different Types of
Businesses 787
APpendix Ed Summary of Generally Accepted Accounting
Principles (GAAP) 789
Appendix Fi Check Figures for Assignment Materials 791
Company index 799
pany index 799
Glindex 803
Increases and Decreases in the Accountsi The Rules of Debit
Chapter 1,",;:a:esraencttt,,,,eoa:,, in the,,,,"",,f The Anies of Debit
pier 1 andcredit 67
The Financial Statements 1 Additional Stockholders' Equity Accountst Revenues and
EXPenses 69
.
SPOtlighl: YUMI Braal I Recording Transactions 70
Business Decisions 3 Copying information (Posting) from thejoumal to
Accounting is the LangUage of Business 3 the Ledger 71
Who Uses Accounting information? 4 The Flow of Accounting Data 72
TWo Kinds of Accounting f Financial Accounting and Accounts After Posting to the Ledger 77
~, ~. 1 yi, ac
Management Accounting 4 The Trial Balance 77
Ethics in Accounting f Standards of Professional Conduct 5 Analyzing Accounts 78
We Need an Audit to Validate the Financial Statements 5 Correcting Accounting Errors 79
Organizing a Business 6 Chart of Accounts 80
Accounting Principles and Concepts 7 The Normal Balance of an Account sl
The EntitV ConceDt & Account Formats sl
, pt & Account Formats sl
The Reliability Principle & Analyzing Transactions Using Only T-Accounts 82
j pie & Analyzing Transactions Using Only T-Accounts 82
The Cost Principle 9 End-of-Chaoter Summary Problem 84
pier Summary Problem 84
The Going~Concem Concept 9
The Stable-Monetary-Unit ConceDt 9
; pt 9
The AccountingEquation ic ChaDter 3
pier 3
Assets and Liabilities 10
Owners' Equity 11 Acornal Accountal ac Income 125
The Financial Statements 13
The income Statement Measures Operating if',ligh,:5,",b,,k, Coloration 125
Performance 13 Acornal Accounting Versus Cash-Basis Accounting 127
The Statement of abstained Earnings Shows wheat a Company:,7?1 'F:::":i?$and Cash r,loW, 128
Did with its Net income 15 Th,:",-,,?i?, "n,,p, 1 .l,,
The Balance Sheet Measures Financial Position 16 TI,:e:?nu, Principle 128
[he Matching Principle 129
The Statement of Cash Flows Measures Cash Receipts and The ?,at,hi"g Pn",ipl,, h 129. 1 on
Padments 19 '.=its'eei:=::=..{::... 130
Relationships Among the Financial Statements 21 pdating the Accounts: The Adjusting Pmcess 130
Which Accounts Need to Be Updated (Adjusted)? 130
End-of-Chapter Summary Problem 24 Categories of Adiusting Entries 131
a Justing Entries 131
Prepaid Expenses 132
Depreciation of Plant Assets 135
Chapter 2 =E:eo:s:fa",t 135
penses 138
Transaction AnalysiS 53 Accrued Revenues 139
ysls 53 ==, '1;'
Unearned Revenues 141
SPotlight: APPle Computer inc. 53 Summary of the Adjusting Process 143
Transactions 54 The Adjusted Trial Balance 145
The Account 55 Preparing the Financial Statements 146
Assets 55 Mid-Chaoter Summary Problem 148
pier Summary Problem 148
Liabilities 56 enrich Accounts Need to Be Closed? 152
which Accounts Need to Be Closed? 152
Stockholders' (Owners') Equity 56 Classifldna Assets and Liabilities Based on Their
Accounting for Business i;i.:a.,i.ns 57 CI,,,,ryt?F Assets and Liabilities Based on Their
g for Business Transactions 57 .:A,,,,,::: Liabilities Based on Their
.uldity 154
Example f Genie Car Wash, Inc. 57 n Liquidity 154
Reporting Assets and Liabilitiest Starbucks
Transactions and Financial Statements 62 porting Assets and Liabilitiest Starbucks
Corporation 154
Mid-Chapter Summary Problem 65 Formats for the Financial Statements 155
Double-Entry Accounting 67 Balance Sheet Formats 155
y Accounting 67 Balance Sheet Formats 155
The T-Account 67 Income Statement Formats 156
X. Contents
Using Accounting Ratios 157 Short-Term investments 262
s Accounting Ratios 157 Short-Term investments 262
Current Ratio 157 Trading investments 263
s Investments 263
Debt Ratio 157 ReDOrtinq on the Balance Sheet and the income
porting on the Balance Sheet and the income
How Do Transactions Affect the Ratios? 158 statement 264
statement 264
End-of-Chapter Summary Problem 162 Lending Agreements and the Current ratio 266
Mid-Chapter Summary Problem 267
Chapter 4,,cC:sts:=,,,,:,, 268
ypes of Receivables 268
Internal Coneal & Cask 213 Internal Controls over Cash Collections on Account 269
How Do We Manage the bask of Not Collecting? 269
b 5'
Spotlight: AMEX Products Tabes a Hit 2I3 Accounting for Uncollectible Receivables 271
Internal Control 215 all Method 271
Allowance Method 271
The Sarbanes-Oxlev Act (SOX) 215 ac
j Direct Write-Off Method 277
The Components of internal Control 216
ComDUtinq Cash Collections from Customers 277
Internal Control Procedures 217 N.~: C,lie;ti,", from Customers 277
Notes Receivable 278
Competent, Reliable, and Ethical Personnel 217
Assignment of Responsibilities 218 Accounting for Notes Receivable 279
How to Speed UD Caac allow 281
Separation of Duties 218,,.H,yC,ieeevct:ant.
Audits 218 Using TWo Key Ratios to Make Decisions 282
Documents 219 Acid~Test (or Quick) Ratio 283
n.
Electronic Devices 219 Days' Sales in Receivables 283
n
Other Controls 220 Reporting on the Statement of Cash Flows 284
Internal Controls for E-Commerce 220 End-of-Chapter Summary Problem 285
PitfallS 220
SecuritV Measures 221
7.
The Limitations of internal control--costs. Chapter 6
I
and Benefits 222
Inventory & cost of Goods sold 309
The Bank Account as a Control Device 222 I~Ory & COst of Goods SOld 309
Signature Card 222 SDotliqht: Pier I Imports 309
spotlight: Pier I Imports 309
Deposit Ticket 222:'tlight: Pier I Imports 309
Accounting for inventory 311
Check 222 8 for inventory 311
Sale Price vs. Cost of inventorer 312
.ale Price vs. Cost of inventory 312
Bank Statement 222 j
Bank Reconciliation 223,yi.A,,,""ti"g for inventory in the Perpetual System 314
Inventory Costing 317
Preparingthe Bankffeconciliation 224 '=:s::1:Inv..tory..,,, 317
Online Banking 227 What Goes into inventory Cost? 317
s 227 Nhat Goes into inventory Cost? 317
The Various inventory Costing Methods 317
Mid-Chapter Summary Problem 230 .. Various InVentory Costing Methods 317
foe Effects of FIFO, LIFO and AVerage Cost on Cost of Goods
Internal Control over Cash Receipts 232 Sold. Gross p,.fi,, and Ending I;:;.,..' 320
' cold, Gross Profit, and Ending inventory 320
Cash ffeceiDts over the Counter "s,, 232 al S:::?ciTos=t?:nd= on cso:t,,,,,,,
pts over the Counter 232 The ..'.,...,... .,1::E",,"gl:,",," 320
Cash Receipts by Mail 232 rhe Tax Advantage of LIFO 322
pts by Mail 232 ComDarison of,i: Inventor7 Methods 322
Internal Control over Cash Pa~ents 233 Comparison of the inventory Methods 322
, ments 233 panson of the inventory Methods 322
. .. I afl
Controls ...,,.~..,,.',:m,",s,, 233 .,,-C:.ero:utiel.=",,,ds,, 322
j y
Using a Budget to Manage Cash 235 Accounting Principles Related to inventory 325
Reporting Cash on the Balance Sheet 236 Consistency Principle 325
Compensating Balance Agreements 237 Disclosure Principle 325
pie 325
Ethics and Accounting 237 Accounting Conservatism 325
a 237 Accounting Conservatism 325
g Conservatism 325
Corporate and Professional Codes of Ethics 237 Lower-of-Cost-or-Market Rule 326
Ethical Issues in Accounting 237 Iap' 1 fi Fivi., q.rt.
s 237 InventorV and the Financial Statements 327
y and the Financial Statements 327
End-of-Chapter Summary Problem 240 Detailed income Statement 327
Analyzing Financial Statements 327
j b tlnanclal Statements 327
A editional inventorer IRR,,PC 17o
Additional inventory Issues 329
Chapter 5 usingthe ..,,-.,=So,,.osctze? 329
S~Tcrm InvCSbocntS & RctcivablCS 261 Estimating inventory by the Gross Profit Method 330
Effects of inventory Errors 331
y errors 331
Spotlight: Receivables Are Pepsicok La'rgest Current Asset 261 End-of-Chapter Summary Problem 334
Contents. Xi
T.'
Ice,,ivia Bonds Palletal Papa
Chapter 7 ?::i:ttai:::=::i=.,iAs:u,.,..,.,
ght-Line Amortization Method f A Quick and Dirty
Plallt Assets & Intandelcs 367 Way to Measure interest Expense 439
gihlcs 367 Way to Measure interest Expense 439
Should We Retire Bonds Payable Before Their
should We Retire Bonds Payable Before Their
j
spotlight: FedEx Corporation 367 Maturity? 440
Types of Assets 368 Convertible Bonds and Notes 441
Measuring the Cost of a Plant Asset 369 Financing Operations with Bonds or Stock? 442
s the Cost of a Plant Asset 369 Financing Operations with Bonds or Stock? 442
Land 369 The Times-Interest-Earned Ratio 444
Buildings, Machinery, and Equipment 370 Long-Term Liabilities: Leases and Pensions 445
Land Improvements and Leasehold Improvements 371 Types of Leases 446
Lump-Sum (or Basket) Purchases of Assets 371 Do Lessees Prefer Operating Leases or Capital Leases? 447
Capital Expenditure vs. Immediate Expense 372 Pensions and Postretirement Liabilities 447
Measuring Depreciation on Plant Assets 373 Reporting Liabilities 448
s Depreciation on Plant Assets 373 Reporting Liabilities 448
How to Measure Depreciation 374 Reporting on the Balance Sheet 448
Depreciation Methods 375 Reporting the Fair Market Value of Long-Term Debt 449
Comparing Depreciation Methods 378 Reporting Financing Activities on the Statement of Cash
FI 14Q
Mid-Chapter Summary Problem 380 blows 449
- I r
Other Issues in Accounting for Plant Assets 381 End-of-Chapter Summary Problem 450
g for Plant Assets 381 End-of-Chapter Summary Problem 450
Depreciation for Tax Purposes 381
Depreciation for Partial Years 383
changing the useful Life of a Depreciable Asset 383 Chapter 9
Fully Depreciated Assets 384 C',''' v.
y DepreciatedAssets 38. Stockholders' EquitV 477
3tockholdcrs' EquitV 477
Accounting for .,,=.f,l=,,.,, 385 Stockholders' Equity 477
b ior Disposal of plant Assets 385 lul, 477
T-Accounts for Analyzing Plant Asset Transactions 387 G 1. L
yiing Plant Asset Transactions 387 Spotlight: IHOP: The Best Pancakes in TOwn 477
Potlight: IHOP: The Best Pancakes in TOwn 477
Accounting for ...::i=ctsss,, "asni:,,,", 387 f!,,,,g,,: IHOP: The Best Pancakes in aden 477
gfor Natural Resources 388::fsn=2:V:;'::ea=...,+" 479
..
XII. COntents
Reporting Stockholders' Equity Transactions 504 Discontinued Operations 588
Statement of Cash Flows 504 Extraordinary Gains and Losses (Extraordinary items) 588
Reporting Stockholders' Equity on the Balance Sheet 504 Cumulative Effect of a Change in Accounting Method 589
\arc 1
End-of-Chapter Summary Problem 507 Which Out for Voluntary Accounting Changes That increase
Reported income 589
Earnings Der Share of Common Stock 590
co per Share of Common Stock 590
Chapter 1 0 Rep.,ti.g comprehensive income 591
What Should You AnalVze to Gain an Overall Picture of a
Lone-Term investments & International wit:t Sh,"lf,to" Analyze to Gain an Overall Picture of a
g- ferm investments & International Company? 591,,, to Gain an Overall Picture of a
Operations 537 Accounting for Corporate income Taxes 592
Analyzing Retained Earnings 594
7 zing Retained Earnings 594
spotlight: Intel Holds Several Different Types Of Analyzing the Statement of Stockholders' Equity 594
Investments 537 Responsibility for the Financial Statements 597
ponsibility for the Financial Statements 597
Stock investments: An overview 539 ....'...:,sr;:=:?vc,,, s::;e",",, 597
b ponslbility 597
Stock Prices 539 Auditor ReD
Auditor Report 597
Reporting investments on the Balance Sheet 539 --ac I '-Churn'er Summan Prrtki ac
and-of-Chaoter Summary Problem 599
Available-for-Sale investments 540 pier Summary Problem 599
Accounting for AVailable-for-Sale investments 541
S ior AVailable-for-Sale investments 541
What Value of an investment is Most Relevant? 542 ark o n+or, O
~haDter 12
selling an Available-for-sale investment 543 Chapter 1 2
b an Available-for-sale investment 543 pier 1 2
When Should We Sell an investment? 544 The Statement of Cash Flows 619
Equity-Method investments 544
Buying a Large Stake in Another Company 544 SPotlight: Google: The Ultimate Answer Machine 6I9
n.
......,,.,.,...,.-..,,.,,nv.,,= s::s =U=:::: =entn:=::7. ';oz'
b ior Equity-Method investments 545 Basic Concepts: The Statement of Cash Flows 621
T T
Consolidated Subsidiaries 547 How's Your Cash Flow? Telltale Signs of Financial
ac. or. 1
WhV BuvAnother ComDanv? 547 Difficulty 622
' y Another Company? 547 Difficulty 622
Consolidation Accounting 547 Operating, Investing, and Financing Activities 623
~,
The Consolidated Balance Sheet and the Related fWo Formats for Operating Activities 624
n,., m r
Work Sheet 548 Preparing the Statement of Cash Flows:
-,.,
Goodwill and Minority interest 550 Indirect Method 624
y interest 550 Indirect Method 624
Income of a Consolidated Entity 550 Cash Flows from Operating Activities 628
Long-Term investments in Bonds 551 Cash Flows from investing Activities 630
Cash Flows from Financing Activities 633
Mid-Chapter Summary Problems 553: SActlvitles 633
Noncash investing and Financing Activities 635
Accounting for international O:..,,sss 554 Noncash investing and,,i::lecst,.,,.s3' 635
s for international Operations 554 hi' 1,,,h investing and Financing Activities 635
Mid-Chaoter Summary Problem 636
Foreign Currencies and Exchange Rates 555 Mid-Chapter Summary Problem 636
n.. 1 m r
Do We Collect Cash in Dollars or in Foreign Currency? Do We Preparing the Statement of Cash Flows: Direct
all Currency? Do We Preparing the Statement of Cash Flows: Direct
Pay in Dollars or in Foreign Currency? 556 Method 638
Reporting Gains and Losses on the income Statement 557 Cash Flows from investing Activities 642
Should We Hedge Our Foreign-Currency-Transaction Cash Flows from Financing Activities 643
'.
bask? 558 Noncash investing and Financing Activities 643
Consolidation of Foreign Subsidiaries 558 Computing Operating Cash Flows by the Direct
1
International Accounting Standards 560 Method 644
Investing Activities on the Statement of Cash Computing investing and Financing Cash Flows 648
Flows 561 Measuring Cash Adequacy: Free Cash Flow 649
End-of-Chapter Summary Problem 562 End-of-Chapter Summary Problem 651
Chapter 11 Chapter 13
The income Statement & the Statement of Financial Statement Analysis 685
y,is 685
Stockholders' Equity 583
snotlioht: How Well is YUMI Brands Doinq7 685
spotlight: How Well is YUMI Brands Doing? 685
Potlight: How Well is YUMI Bands Doing? 685
spotlight: Pier 1 Imports Had a Tough Year 583 How Does an investor Evaluate a Company? 687
Evaluating the Quality of Earnings 585 Horizontal Analysis 687
Continuing ODerations 585 Illustration: YUMI Brands 688
g Operations 585 Illustration; YUMI Brands 688
Which income Number Predicts Future Profits? 586 Trend Percentages 690
ges 690
Contents. Xiii
Vertical Analysis 690 h 1. p
ysls 690 A ry m i; v R'
Appen d ix B=
Illustration: WMI Brands 691 .'p Pe n d ix B=
Pier I Imports Annual Report 2006 763
How Do We Compare One Company to Another? 692 ports Annual Report 2006 763
Benchmarkina 693
g 693 A 1. f'
Benchmarking Against a Key Competitor 694 t P AS n d ix. C=
',,,.a:?rkb6:Co::etitor,+ 694;:en:a?:ofZ;..&,...,.,..,
Using the Statement of Cash Flows 694 Time Value of Money.. Future Value and
Present Value 777
Mid-Chapter Summary Problem 696
Using Ratios to Make Business Decisions 697 A m m l:, rs.
g Ratios to Make Business Decisions 697 AP o e n d ix D=
p po n d ix D=
Measuring Anilitv to Pay Current Liabilities 698 t:Pe:vf ix D=
b ability to Pay Current Liabilities 698 Ty:fa7:ntr: Re,...,, [or Different Types of
The imitations of ratio Analysis 700;;:1;:is::,,,, ie,,,,,,fo, Different Types of
Businesses 787
Measuring Ability to Sell inventory and Collect
Receivables 701 A I. C
MeasuringAnilityto PayDebts 703 Zla:of:,Ei,,,' A 1 4
rummage o{ Generally Accented Accounting
...,...,,,.,,abti:i:va,'e:;s+ 703 ?marytj:eEillxAcc.tedAccounti.
g Profitability 704 cry ?{Generally Accepted Accounting
Analyzing Stock investments 706 r nnciples (GAAP) 789
Other Measures 707
rEconomic Value Added (EVA@) 707 AP p e n d ix F=
Check Figures for Assignment Materials 791
Red Flags in Financial Statement Analysis 708 Check Figuresfor Assignment Materiats 791
ac in Financial Statement Analysis 708 alecs Figuresfor Assignment Materiats 791
Efficient Markets 709
Comoanv index 799
End-of-chapter summary Problem 711 pany index 799
Glindex 803
AP po n d ix A=
YUM! Brands Annual Report 2006 745
L
The Accounting Cycle: Key to Success
a ycle: Key to Success
Note to the Instmotor: This financial accounting course builds on the first 3
chaD6
Piers, Which focus on accounting fundamentals and the accounting cycle. You've told
us that mastering these chaDters will guarantee Vour students' success as they move
g these chapters will guarantee your students' success as they move
through the course. For this reason. Financial AccountinZ 7ti edition is focused on
sin.il the course. For this reason, financial Accounting, 7ti edition is focused on
students' success in learning accounting basics. Our coal is for students to be motivated
b accounting basics. Our goal is for students to be motivated
to excel throughout the course.
.ilout the course.
Review the inside front cover to see exactly what we
y what we
r'. 1.
offer your students.
your students.
Streamlined Design for the 7th Edition
ale for the 7th Edition
The 7th edition has a streamlined design to aid student learning.
an to aid student learning.
. Shorter chapter openers capture student interest.
. More diagrams and fewer words make the book easV to read.
&lains and fewer words make the book easy to read.
. Shorter sections keep students from getting bogged down in unnecessary detail.
. 7E has no "boxes" because students skiD them.
p them.
. All assignment materials list DaRe references that helD students use their
home&Llment materials list page references that help students use their
homework time efficiently
y.
. Simpler figures in the assignment material enable students to focus on the
learn., 1
lug, not on the numbers.
Learning ADDroach: Focus on Performance
a Approach: Focus on Performance
Student success and performance go hand in hand. That's why we
..
Increased opportunities for you and your students to practice
accountinq throuqhout the course.
d throughout the course.
In-Text PraCtice Material
. StoD and Think: At critical iunctures in each chaDter we ask students to "StoD
p and Think: At critical junctures in each chapter we ask students to "Stop
and Think" about What they've lust learned.
y ye Just learned.
. Decision Guidelines: This feature summarizes each chapter in terms of the
deci. 1 1 1.
slons people make as they use accounting information.
I
. SummarV Problems: Most chanters have 2 Droblems--at the mid-Doint and at
y Problems: Most chapters have 2 problems--at the mid-point and at
the end--with worked-out solutions.
. Chapter Review Quiz: At the end of chapter, these multiple-choice questions
pier Review Quiz: At the end of chapter, these multiple-choice questions
include answers for quick self-assessment.
. Practice Quiz: Multiple-choice questions in the end-of-chapter assignments
see.,
non have answers in the Check Figures appendix at the end of the book.
cures appendix at the end of the book.
.
xvi. Preface
Online Practice and Homework Material
n
. Practice Material: An omen-access online practice environment enables students
pen-access online practice environment enables students
1
to master chapter material. Selected end-of-chapter problems are available for all
learning obiectives in ChaDters 1--3. The Droblems (a) are algorithmic. Riving
S,ectives in Chapters 1--3. The problems (a) are algorithmic, giving
1 1
students a chance to Dractice until the\r have masterlr' (b) provide immediate
>indents a chance to practice until they have mastery; (b) provide immediate
practice until they have mastery; (b) provide immediate
feedback, giving students a chance to see how well they are doing right away; (c)
. 1. 1 1 1
mirror those in the book, giving students a chance to practice before doing "the
1 1.,,
real thing."
5.
- -, 1
. Homework and Ouiz Material: MV Accounting Lab (MAL)
MAL is an online homework and quizzing environment that allows
..
InStructors to customize homework and quiz options for their classes.
Selected end-of-chanter (even-numbered) exercises and (A) problems from the
.elected end-of-chapter (even-numbered) exercises and (A) problems from the
.,, 1
text are available. Instructors can cost assignments and receiVe grades. All questions
post assignments and receiVe grades. All questions
1. 1. 11 1 1 1. rs 1. rs 1 1 1
rtvo olaorithmicalllT a 1 c k ball i
are alRorithmically generated so each student session offers different Droblems and
o y generated so each student session offers different problems and
1. 1. 1 ..1 .rl 111.r.11.
rtvi qT"TOVq IT' h 1 1. 1 Iap
answers while providing immediate feedback and scoring for instructors and their
1
students.
.indents.
SDecial Section for Current Users
pedal section for Current Users
Thank von for your continued use of Harrison'S FinanCial Accountina in
you for your continued use of Harrison'S FinanCial Accounting in
your classroom. TO ease your transition, here are highlights of chapter
. r. -. I ..
chanqes for the 7th edition.
bes for the 7th edition.
Preface. xvii
Chapter 1. The Financial Statements
Updated feature company for the book, YUM! Brands
New feature company, Genie Car Wash, for the running example through the
. 1
accounting cycle
6 j
New coverage of the FASB Statement that Dermits fainvalue accounting
o permits fainvalue accounting
New section on limited-liability comDanies
y companies
Accounting Cycle Tutorial
Chapter 2. Transaction Analysis
Updated chapter opener about Apple Computer
New section on Analyzing Accounts
y zing Accounts
New transaction explanations
New feature company for the accounting cycle
Accounting Cycle Tutorial
& ycle Tutorial
Chapter 3. Acornal Accounting and income
New chapter opener on Starbucks Corporation
New eXhibit on How Transactions Affect the Ratios
Accounting Cycle Tutorial
o j
Chapter 4. Internal Control & Cash
New company for the chapter opener, Amex Products
Coverage of the Sarbanes-Oxlev Act
ge of the Sarbanes-Oxley Act
New framework for internal control
New material on online banking
5
New material on ethics
Chapter 5. Short-Term investments & ReceiVables
New chapter opener on PepsiCo
New section on Lending Agreements and the Current Ratio
a Agreements and the Current Ratio
New section on Writing Off Uncollectible Receivables
b
Chapter 6. Inventory & Cost of Goods Sold
Updated chapter opener on Pier I Imports
New visuals
Streamlined eXhibits
New comparison of FIFO and LIFO
parison of FIFO and LIFO
New eXhibit comparing Pier 1 Imports, Federated Department Stores, and
Home Depot
New section on T-Accounts for Analyzing Plant Asset Transactions
y'ing Plant Asset Transactions
Chapter 7. Plant Assets & Intangibles
New chapter opener on FedEx Corporation
New coverage of Dlant-asset accounting errors
a plant-asset accounting errors
New Summary of the Current Liabilities
j
Chapter 8. Liabilities
New chapter opener on SouthWest Airlines
New section on Partial-Period interest Amounts
...
XVlll. Preface
Chapter 9. Stockholders' Equity
Updated chapter opener on IHOP
New section on Authorized, Issued, and Outstanding Stock
New Summary of Treasury Stock Transactions
,, .lock Transactions
Expanded eXhibits
New coverage of dividends
6
New section on AnalVzinR The Stockholders' Eouitv Accounts
y-lug rhe Stockholders' Equity Accounts
Chapter 10. Long-Term investments & International Operations
pier 10. Long-Term investments & International Operations
New chapter opener on intel Corporation
Intel Corporation integrated throughout the chapter
New section: When Should We Sell an investment?
Chapter 11. The income Statement & The Statement of Stockholders' Equity
New chapter opener on Pier 1 Imports
Chapter 12. The Statement of Cash Flows
New chanter omener on GooRle. Inc.
pier opener on Google, Inc.
New feature coml 1 i 1 1 al n 1 v
New feature company throughout the chapter, The Roadster Factory
Enhanced visuals
Chapter 13. Financial Statement Analysis
Return to feature company, YUMI Brands, for evaluation and analysis
Teaching And Learning SuDDort
g And Learning Support
FOr Instructors
At a Glance Supplements Grid
Instructor'S Resource Center (www.prenhall.com,harrison) This
password1
protected site is accessible from the catalog page for Financial Accountic, 7ti edition
1 1 1 r 11.
rtvi ] h h r 11.
and hosts the following resources:
g resources;
v n
. Instructor Powerpoints, by Courtney Baillief These are 508-comDliant Powerpoints
,, y Baillief These are 508-compliant Powerpoints
. 1
with some worked out, end of chapter exercises and problems.
Preface. xix
. Test item File
. TestGen
. Image Library f Access to most of the images and illustrations featured in the text.
o y: Access to most of the images and illustrations featured in the text.
. Excel APplication Problems f These problems show When, why, and how people
pplication Problems f These problems show When, why, and how people
use the accounting guidelines in order to make business decisions. Students can
& guidelines in order to make business decisions. Students can
apply the Decision Guidelines to a realistic situation and use the power of Excel
to determine a solution.
. Solutions Manual by Walter T. Harrisont This manual contains the fullV
workedj y
workedout and accuracy-checked solutions for every auestion. exercise. and Droblem in
; y question, exercise, and problem in
the text.
InStmctor's Edition by Helen Bmbeck. San Jose State University Each chapter of
this comprehensiVe resource acts as a roadmap to all of the tools available for use by
the instructor, including a list of the student learning objectiVes, a narratiVe overgrew
of main topics, an outline with teaching tips, a suggested assignment grid for all
endof-chapter questions, problems, 10 minute quizzes, and exercises, and an integration
grid that contains the list of exercises and problems available in MyAccountingLab
(online homework and assessment tool), Microsoft Excel, and General Ledger.
Test item File by Calvin Fink This resource features over 1,600 multiple choice and
true/false questions whiten specifically for the 7th edition. All questions are
organ.11llrl. r r .11.1111 .1.1..1
lied by level of difficultV and include the corresDondinR learning obiective number.
j level of difficulty and include the corresponding learning objective number.
Additional computational problems are available to instructors on both the instructor
resource CD as well as on prenhall.com.
Instructor's Resource CD This CD-ROM contains all the supplements that are
pplements that are
hosted on our online instructor's Resource Center, including the image library
SolutionsTransparencies Every page of the solutions manual has been reproduced
. ac ac.
In acetate form for use on an overhead projector.
MyAccountingLab (www.myaccountinglab.com) MyAccountingLab is Prentice
Hall's online homework and assessment manager to helD students "bet" accounting
ger to help students "get" accounting
through the Dower of Dractice. MVAccountinRLab features a full e-book. Flash Demo
.if the power of practice. MyAccountingLab features a full e-book, Flash Demo
Docs, instructor videos, and additional resources at the student'S fingertips to aid
learning With MvAccountinRLab. instructors cant
&. Nith MyAccountingLab, instructors can f
. DeliVer all or a portion of the course online, Whether the students are in a lab
set. 1
ting or working from home.
. Create and assign online homework and tests that are automaticallv graded and
gn online homework and tests that are automatically graded and
tightly correlated to the textbook.
. Manage students' results in a Dowerful online grade book designed sDecifically
o powerful online grade book designed specifically
for mathematics and statistics.
. Customize the course, depending on the syllabus and the students' needs.
CourseCompass. WebCT. and BlackBoard for Financial Accounting Prentice
Hall's course management site is all that instructors and students need for anytime
acment site is all that instructors and students need for anytime
online access to interactive materials that enhance this text.
WebCT. Financial Accounting byWalterT Hanison @ 2008 Prentice Hall's course
..' 1
management site is all instructors and students need for anVtime online access to
scment site is all instructors and students need for anytime online access to
..., 1, 1
Interactwe materials that enhance this text.
u. Preface
BlackBoard. Financial Accounting by WalterT Harrison @ 2008 Electronic Books
Prentice Hall'S course management site is all instructors and students need for anytime
& ytlme
1.... 1 1 1 1.
online access to interactiVe materials that enhance this text.
For Students
Mastering the Accounting Cycle (www.prenhall.com,harrison)
Open Access (no registration or password needed) Companion Website that
pro. 1. 1
vides you with f
you with f
. Accounting CVcle Tutorial f For practice on material from ChaDters 1--3
a ycle Tutorial f For practice on material from Chapters 1--3
. Online Practice Environment with algorithmic auestions for ChaDters 1--3
o [uestlons for Chapters 1--3
. Accounting Cycle Pocket Guided Reference tool that walks you through each steD
o j you through each step
r 1. 1
of the accounting cVcle
ac ycle
. Self-study quizzest An interactive study guide for each chaDter
y quizzes; An interactive study guide for each chapter
- t - - 1
. E-Working DaDers that students can use to comDlete homework assignments for
& papers that students can use to complete homework assignments for
1 1
each chapter
. Student Powerpoints: For use as a studV aid or note-taking guide
j g guide
CourseCompass, Student Access Kit, Financial Accounting
WebCT, Student Access Kit, Financial Accounting
BlackBoard, Student Access Kit, Financial Accounting
MAL-Student Access Card
Note: All Masterinq the Accountinq CVcle material can be found within
. the Accounting Cycle material can be found within
OneKeV courses DreviousIV listed.
y courses previously listed.
Vanao Notes (www.vangonotes.com) Students can study on the go with
go Notes (www.vangonotes.com) Students can study on the go with
VanRoNotes--chaDter reviews from this text in downloadable MP3 format. Students
b pier reviews from this text in downloadable MP3 format. Students
, t r Notes for the entire textbook or for individual cha - 1
can purchase VangoNotes for the entire textbook or for individual chapters. For each
, t T Notes containsi
chapter, VangoNotes contains f
yi
. Big ldeasi The "need to know" for each chaDter.
ac Ldeasf The "need to know" for each chapter.
-.
. Key Terms: Audio "llashcards" to helD students review key conceDts and terms.
y lerms; Audio "llashcards" to help students review key concepts and terms.
ac
. Rapid Reviews A Quick drill session--to use right before taking a test.
old Review f A quick drill session--to use right before taking a test.
Print Study Aids
Accounting Tie Reference Card (A-up)
u rip Reference Card (A-up)
ml.. 1 .11 1 1. 1. 1
fbis guide illustrates the key steDs in the accounting cycle.
s; steps in the accounting cycle.
ctudll Guide Includina nomo Docs and E-Workina par
study Guide Including Demo Docs and E-Working PaDers with Flash CD bV Helen
l Guide Including Demo Docs and E-Working Papers with Flash CD by Helen
Brubeck, San Jose State University
m 1 .1111.. 1 1llC. ..1.11
fbis chaptenby-chapter learning aid helps you learn financial accounting and get the
. 1 r. r 1. ~ 1 1.
maximum benefit from studV time. Each chanter contains a ChaDter Ovetwew and
y time. Each chapter contains a Chapter Ovetwew and
RevieW, a Featured Exercise that covers all of the most important chapter material, and
Preface. m
Review Questions and Exercises with Solutions that test your understanding of the
material. Demo Docs are available in the study guide--in Drint and on CD in Flash so
y guide--in print and on CD in Flash so
students can easily refer to them When they need them. Electronic working DaDers are
j lefer to them When they need them. Electronic working papers are
included on the accompanying CD.
L Ying CD.
Acknowledgments
gments
In revising the Drevious edition of Rnancial AccountinZ we had the helD of instructors
o previous edition of Rnancial Accountic, we had the help of instructors
from across the countrV Who have DarticiDated in online surveys, chapter reviews.
y who have participated in online surveys, chapter reviews,
and focus groups. Their comments and suggestions for both the text and the
supplements have been a great helD in DlanninR and carbine out revisions. and we thank
great help in planning and carding out revisions, and we thank
them for their contributions.
Online Reviewers
Lucille Berry, Webster University, MO
y, ffebster University, MO
Patrick Bouker, North Seattle Community College
y College
Michael Broihahn, Barry UniVersity, FL
7 y, AL
Kam Chan, Pace UniVersity
y
HouR Chen. Northeastern illinois UniversitV
6 ) L y
Charles Coate, St. Bonaventure University, NY
Bryan Church, Georgia Tech at Atlanta
Terne Gehman, Elizabethtown College, PA
Brian Green, UniVersity of Michigan at Dearborn
y of Michigan at Dearborn
Chao-Shin Liu, Noire Dame
Herb Martin, Hope College, MI
Bruce Maule, College of San Mateo
Michelle McEacharn, UniVersity of Louisiana at Monroe
Bettve Robers-Desselle. Prairie View A&M University, TX
ye Rogers-Desselle, Prairie View A&M University, TX
Norlin Rueschhoff, Noire Dame
William Schmul, Noire Dame
Arnie Schnieder, Georgia Tech at Atlanta
J. B. Stroud, Nicholls State UniVesity, LA
Bruce Wampler, Louisiana State University, Shreveport
l ) LOuisiana State University, Shreveport
MyUng Yoon, Northeastern illinois University
Lin ZenR Northeastern illinois UniversitV
o, 1 y
Focus Group Participants
Ellen D. Cook, UniVersity of Louisiana at Lafayette
y of Louisiana at Lafayette
Theodore D. Morrison ill, Wingate University, NC
Alvin Gerald Smith, UniVersity of Northern iowa
y of Northern iowa
CarolVn R. Stokes, Frances Marion University, SC
y LI R. Stokes, Frances Marion University, SC
Suzanne Ward, UniVersity of Louisiana at Lafayette
y of Louisiana at Lafayette
Chapter Reviewers
Kim Anderson, Indiana University of Pennsylvania
Peg Beresewski, Robert Moms College, IL
Helen Brubeck, San Jose State University, CA
..
all. Preface
Mark Camma, Atlantic Cape Community College, NJ
Freddy Choo. San Francisco State UniVersity, CA
j ) ban Francisco State UniVersity, CA
Laurie Dahlin, Worcester State College, MA
ROnald Guided, UniVersity of Louisiana at Monroe
j, UniVersity of Louisiana at Monroe
Ellen Landgraf, Loyola University, Chicago
Nick McGaughey, San Jose State University, CA
Mark Miller, UniVersity of San Francisco, CA
CraiR Reeder. Florida A&M UniversitV
s Reeder, Florida A&M University
Brian Stanko, Loyola University, Chicago
Marcia Veit, University of Central Florida
7
Ronald Woan, Indiana UniVersity of PennsylVania
Online Supplement Reviewers
pplement Reviewers
Shawn Abbott, College of the Siskiyous, CA
Sol Ahiarah. PUNY College at Buffalo (Buffalo State)
sol Ahiarah, SUNY College at Buffalo (Buffalo State)
M. J. Albin, UniVersity of Southern Mississippi
- y of Southern Mississippi
Gary Ames, BriRham YOung University, Idaho
y Ames, Brigham YOung University, Idaho
Walter Austin, Mercer UniVersity, Macon GA
y, Macon GA
Brad Badertscher, University of iowa
Sandra Bailelr Oregon institute of Technolomr
.andra Bailey, Oregon institute of Technology
y, 6 gy
Barbara A. Beltrand, Metropolitan State University, MN
Jerry Bennett, University of South Carolina-Spartanburg
John Bildersee, New YOrk University, Stern School
Candace Blankenship, Belmont UniVersity, TN
Charlie Bokemeier, Michigan State University
Scott Bol!lan, Washington and Lee University, VA
scott Boylan, Washington and Lee University, VA
yian, washington and Lee University, VA
Robert Braun, Southeastern Louisiana University
Linda Bressler, University of Houston Downtown
Carol Brown, Oregon State University
Marcus Butler, University of Rochester, NY
Kav Cames. GonzaRa University, WA
y Cames, Gonzaga University, WA
Brian Carpenter, University of Scranton, PA
L ) y of Scranton, PA
sandra Cereola. lames Madison Universit\r \/A
.andra Cereola, James Madison University, VA
HouR Chen. Northeastern illinois UniversitV
6 ) 1 y
Rhifei Chung Rowan University7 NI
.hifei ChunR, Rowan University, NJ
s, Rowan University, NJ
Brvan Church. Georgia Tech
yan Church, Georgia Tech
Charles Christy, Delaware Tech and Community CoheRe, Stanton CamDUS
y, Delaware Tech and Community College, Stanton Campus
CarolVn Clark, Saint Joseph'S University, PA
, 11 Clark, Saint Joseph'S University, PA
Dianne Conal, University of California State CoheRe Extension--CuDertino
j, y of California State College Extension--Cupertino
John Coulter, Western New England College
Donald Curfman, McHenry County College, IL
, y college, IL
Alan Czvzewski. Indiana State University
, zewski, Indiana State University
Bonita Daly, University of Southern Maine
y, University of Southern Maine
Patricia Derrick, George Washington UniVersity
Charles Dick, Miami University
7
Barbara Doughty, New Hampshire Community Technical CoheRe
.ifly, New Hampshire Community Technical College
Carol Dutton, South Florida Community College
7 b
James Emig, Villanova UniVersity, PA
Ellen EnRel, UniVersitV of Chicago
o ) y of Chicago
Preface. "iii
Alan Falcon, Loyola Marymount University, CA
Janet Faner, Pima Community College, AZ
Andrew Felo, Penn State Great Valley
Ken Ferns, Thunderbird College, AZ
Lou Fowler, Missouri Western State College
Lucille Genduso, Nova Southeastern University, FL
Frank Gersich, Monmouth College, IL
Bradley Gillespie. Saddleback CoheRe. CA
y uillespie, Saddleback College, CA
Brian Green, University of Michigan--Dearborn
Konrad Gunderson, Missouri Western State College
William Hahn, Southeastern College, FL
Jack Hall, Western Kentucky University
Gloria Halpern, Montgomery College, MD
Kenneth Hart, Brigham Young University, Idaho
Al HartRraves. Emory University
graves, Emory University
Thomas Hayes, University of North Texas
y cD, University of North Texas
Larry HeRstad. Pacific Lutheran University, WA
y Hegstad, Pacific Lutheran University, WA
Candy Heino. Anoka-RamseV Community College, MN
, Heino, Anoka-Ramsey Community College, MN
Anti Hope, Tarrant County College, TX
Thomas Huse, Boston College
Fred R. Jex, Macomb Community College, MI
Beth Kern, Indiana University, South Bend
Hans E. Klein, Babson College, MA
Willem Koole, North Carolina State University
Emil Koren, Hillsborough Community College, FL
Dennis Kovach, Community College of Allegheny County--North Campus
Ellen Landgraf, Loyola UniVersity Chicago
Howard Lawrence, Christian Brothers UniVersity, TN
Barry LeffuoV, Regis College, MA
y LeffuoV, Regis College, MA
Chao Liu, Noire Dame UniVersity
Barbara Lougee, UniVersity of California, Irvine
Heidemarie Lundblad, California State University, Northridge
Anna Lusher, West Liberty State College, ac
Harriet Maccracken, Arizona State University
Carol Mannino, MilWaukee School of Engineering
Aziz Martinez, Harvard University, Harvard Business School
Cathleen Miller, University of Michigan--Flint
Frank Mioni, Madonna University, MI
Bruce L. Oliver, Rochester institute of Technology
Charles Pedersen, Quinsigamond Community College, MA
George Plesko, Massachusetts institute of Technology
David Plumlee, UniVersity of Utah
Gregory Prescott, UniVersity of South Alabama
Craig Reeder, Florida A&M University
Darren Roulstone, UniVersity of Chicago
Angela Sandberg, Jacksonville State UniVersity, AL
George Sanders, Western Washington UniVersity, WA
Betty Saunders. UniVersitV of North Florida
j launders, UniVersity of North Florida
Arnie Schneider, Georgia Tech
.
ulv. Preface
Gim SeoW, University of Connecticut
7
Itzhak SharaV, CUNY--Lehman Graduate School of Business
Gerald Smith, University of Northern iowa
James Smith, Community College of Philadelphia
Beverly'Soriano, FraminZham State CoheRe, MA
y'>oriano, Framingham State College, MA
J. B. Stroud, Nicholls State University, LA
Al Taccone, Cuyamaca College, CA
yamaca College, CA
Diane Tanner, University of North Florida
Howard Toole, San Diego State University
Bruce Wampler, Louisiana State University, Shreveport
I
Frederick Weis, Claremont McKenna College, CA
Frederick Weiss, Virginia Wesleyan College
Alien Wright, HillsborouZh CommunitV College, FL
ant, Hillsborough Community College, FL
m
fonV Zordan, University of St. Francis, IL
y Zordan, University of St. Francis, IL
suorilement Authors and Prert=ror'
supplement Authors and Preparers
Excel temDlates: Al Fisher, Community College of Southern Nevada
plates: Al Fisher, Community College of Southern Nevada
General Ledder temDlates: Lannv Nelms, The Landor GrouD
a plates: Lanny Nelms, The Landor Group
Instructor's Edition: Helen Brubeck, San Jose State University
InteractiVe Powerpoints: Courtney Baillie
solutions Manual DreDorer: Diane Colwim
solutions Manual preparer: Diane Colas
I
study Guide: Helen Brubeck, qori Tose Stete Universit1T
atudV Guide: Helen Brubeck, San lose Stete University
y Guide: Helen Brubeck, San Jose Stete University
~ -,
fest item File: Calvin Fink
Working PaDers, Essentials of Excel: Dr. L. MurDhV Smith Texas A&M
a Papers, Essentials of Excel: Dr. L. Murphy Smith, Texas A&M
University; Dr. Katherine T. Smith
y; Dr. Katherine T. Smith
Videos: BeverlV Amer, Northern Arizona UniVersitys Lannv Nelms, The Landor Group
y Amer, Northern Arizona UniVersity; Lanny Nelms, The Landor Group
Accountina Careers: Much More Than Countina Thinqs
9 Careers: Much More Than Counting Things
What kind of career can von have in accountinQ? Almost any kind Von
you have in accounting? Almost any kind you
want. A career in accountinq letS you use your analytical skills in a
vans lets you use your analytical skills in a
variety of ways, and it brings both monetary and personal rewards'
Accordinq to the Jobs Rated Almanac, "accountsnt" was the fifth best
H to the Jobs Rated Almanac, "accountsnt" was the fifth best
job in terms of low stress, high compensation, lots of autonomy, and
tremendous airing demand. 1
=
Look at what these accountants dot
. Jeffrey S. Sallet is a CPA at the FBI. Sallet investigates the financial side of
criminal activities. He conducts surveillance, investigates crime scenes, reviews
financial documents, and testifies in court. "My efforts have resulted in the conviction
7
of members and associates of Organized Crime and Union Officials."2
. After doing auditing work at KPMG and serving as a controller for a
venture& auditing work at KPMG and serving as a controller for a
venturecapital-backed firm, David Kupferman started his own CPA practice. He
special..1..1.11.1 ..1111.v.
lies in advising high-net-worth individuals and businesses. KuDferman has a
& illgh-net-worth individuals and businesses. Kupferman has a
particular interest in bringing foreign technology companies to the United States
and works with clients from Australia, Spain, Hungary, England, France, Belarus,
Singapore, and Japan.'
. Alan Friedman loves music. He plays guitar in a band and knows the music
industry inside and out. As a CPA. he helDs retailers. musicians. and
indeDendj Inside and out. As a CPA, he helps retailers, musicians, and
independ1. 1, 1
ent recording labels with accounting and tax services. "My clients appreciate
b labels with accounting and tax services. "My clients appreciate
the fact that we are intimately familiar with the... music retailing
markety familiar with the... music retailing
marketplace," Friedman says. Friedman found his niche by combining his hobby with
his work.3
. Jane Cozzarelli, CPA, is vice president of internal audit at Batelle Memorial
Institute, a $1 billion research and development enterprise. Cozzarelli helps
Battelle evaluate the risks of multimillion-dollar deals such as ioint ventures and
J
... ac
acquisitions. By measuring your risks, you can direct capital to them more
effi. 1, 1 1 1 1 1 1 1 1
dently You also are better able to understand the UDside and downside of
undery. iou also are better able to understand the upside and downside of
undertaking a risk." lane says.4
ac a risk," Jane says.4
. Refine Metellus, CPA, is the CFO for the Germantown Settlement, a charity that
glue Metellus, CPA, is the CFO for the Germantown Settlement, a charity that
1
empowers over 195,000 elderly and low-to-moderate income residents in
Philadelphia. "By making the charity'S financial operations more efficient,
Metellus helps Germantown Settlement put more money back into the
commu. 1 1 ". 1 1. aam
nlty and truly "make a difference."5
And then there is the opportunity for fleXible work arrangements f
"I'm probably one of the first people Who stayed in public accounting because of
I
quality-of-life adVantages," says Eileen Garvey, an audit partner at Ernst & Young in
New York. Garvev works a 3-day-a-week schedule. The mother of 2, she made
part, works a 3-day-a-week schedule. The mother of 2, she made
part. al
ner as a part-timer. FleXibility works for men, too f Carl Moilienkamp, a manager with
part-timer. FleXibility works for men, too f Carl Moilienkamp, a manager with
a firm in Chicago, took a summer leave to pursue his other career as a chef.
o ) [cob a summer leave to pursue his other career as a chef.
.
xxVI. Proloaue
due
Where Accountants WOrk
Where can you work as an accountant? There are 4 kinds of emDloyers.
you work as an accountant? There are 4 kinds of employers.
Public Practice
You can work for a Dublic accounting firm. Which could be a large international firm
public accounting firm, Which could be a large international firm
1 r 1 n.. ~ 1 ~. 1
such as one of the Big Four Where Eileen Garvev works. or a small CPA firm such as
>uch as one of the Bib Four Where Eileen Garvev works. or a small CPA firm such as
b tour where Eileen Garvey works, or a small CPA firm such as
Alan Friedman's. Within the CPA firm, you can specialize in areas such as audit, tax,
j peclalize in areas such as audit, tax,
1. t 1..,11 1
or consulting In this capacity, you'll be seaing as an external accountant to many
o. In this capacity, you'll be seaing as an external accountant to many
different clients. Most CPAs start their career at a large CPA firm. From there, they can
find themselves in a variety of situationst
y of situations f
. [ennifer Tufer is a Deloitte & Touche senior manaZer on assiZnment in Moscow
Jennlfer Tufer is a Deloitte & Touche senior manager on assignment in Moscow
As she looks through her incoming mail, she finds a request from a U.S.
manufacturer interested in eXPanding into Russia. "The company wants to know how
panding into Russia. "The company wants to know how
1 1 1 1,,, 1
they would be taxed." she says.
y would be taxed," she says.
- 1, 1, ac. 1. aam 1. 1. r 1
. Iosh Young's first consulting encasement found him on the site of the Northridge
Josh Young's first consulting engagement found him on the site of the Northridge
earthquake outside Los Angeles. One of his clients was a supermarket chain with
150 damaged stores. Young needed to visit the actual site to determine how
1 1 1 1 1 1 1 1. 1.
much damage had occurred to helD DreDare the insurance claims.
o p prepare the insurance claims.
al 1. 1 1 1.
foe highest career level in a CPA firm is Danner--becoming a Dart owner of the firm.
suest career level in a CPA firm is partner--becoming a part owner of the firm.
Only 2% to 3% of accountants in a Bib Four firm make Danner.7 Here are the Bib Fours
y 2% to 3% of accountants in a Big Four firm make partner.' Here are the Big Four f
Deloitte & Touche Employees f 99,900
Ernst & Young EmDloveest 114,300
s employeest 114,300
KPMG Employees f 113,000
PricewaterhouseCoopers Employees f 140,000
Manaaerial Accountina
uerlal Accounting
Instead of working for a wide varietV of clients. von can work within I coloration or
& ior a wide variety of clients, you can work within I corporation or
r.. \ 1 1 1 1 r.. 1. r. 1
nonprofit enterprise. Your role may be to analyZe financial information and
commuI
I
. 1. ac. 1
nlcate that information to managers, Who use
gers, who use
to plot strategy and make decisions. You
may be called upon to help allocate corporate
resources or improve financial performance.
For example, you might do a cost-benefit
analysis to help decide whether to acquire a
company or build a factory Or you might
describe the financial implications of choosing
l strategy over another. You might work in areas such as internal auditing, financial
management, financial reporting, treasury management, and tax planning. The
high... I
est position in management accounting is the CFO position, with some CFOs rising
L O O La the CFO position, with some CFOs rising
1
to become CEOs.
Prologue .xxvii
Government
ton can also work as an I Dia you know mat 15% of FBI new mres in 1
accountant for the gov- 1 2004 were CPAs?8 In fact, 1,400 of the FBI'S 1
l I
ernment--federal, state, I sDecial aoents are,,,,,;:::Z" 1
l coedal agents are accountants, and the 1
or local eke your coun- I n,D',\a,,,,,,
your coun- l,,;::f::::;cal::::::,,, 1
i number 3 man at the FBI at the time, Assistant 1
: i i I number 3 man at the FBI at the time, Assistant I
terparts in public l,,.,:rs:
l .'rso:
,, Public I numb:rs
accounting and business, (Director Tnomas Pickard, is a b:S',,,,, j
o and business, Mi,,,t,, Tnomas Pickard, is a CFA.9 )
your role as a government
. 1 1. 1. 1
accountant Includes responsibilities in the areas of auditing, financial reporting, and
. - -,11 1 1
management accounting You'll evaluate how government agencies are being
mangement accounting. You'll evaluate how government agencies are being
managed. You may advise decision makers on how to allocate resources to promote
effi.1 1.lr .11. n.r1T n ale
ciencv You might find yourself working for the IRS, the Securities and Exchange
j. ton might find yourself working for the IRS, the Securities and Exchange
Commission, the Department of Treasury, or even the White House.
Government Accountability Office (GAO)--formerly called the General
y Office (GAO)--formerly called the General
Accounting Office--is an aRencv that works for Congress and the American DeoDle.
o &, &Less and the American people.
Congress asks GAO to studV federal government DroRrams and exDenditures. GAO
dress asks GAO to study federal government programs and expenditures. GAO
studies how the federal government SDends taxpayer dollars and advises Congress
o ponds taXPayer dollars and advises Congress
and the heads of executiVe agencies (such as the Environmental Protection Agency,
.cncies (such as the Environmental Protection Agency,
Department of Defense, and Health and Human Seduces) about ways to make
govrtrt
ernment more effectiVe and responsiVe.
Education
Finally, you can work at a college or university, advancing the thought and theory of
y, you can work at a college or university, advancing the thought and theory of
. 1 1
accounting and teaching future Reneratlons of new accountants. On the research side
& and teaching future generations of new accountants. On the research side
of education, you might study how companies use accounting information. You
'
might develop new ways of categorizing financial data, or study accounting practices
.1. c r', till .1.1..11 111
In different countries. YOu then publish your ideas in journals and books and present
publish your ideas in journals and books and present
them to colleagues at meetings around the world. On the education side. Von can
gues at meetings around the world. On the education side, you can
help others learn about accounting and give them the tools they need to be their best.
When employers see the CPA designation, they know what to expect about your
L yers see the CPA designation, they know what to expect about your
education, knowledge, abilities, and personal attributes. They value your analytic
skills and extensive training Your CPA credential Rives you a distinct advantage in
o. xour CPA credential gives you a distinct advantage in
the lob market and instant credibility and reSDect in the workDlace. It's a Dins
,oh market and instant credibility and respect in the workplace. It's a plus
when dealing with other Drofessionals such as bankers. attorneys, auditors, and
s Mth other professionals such as bankers, attorneys, auditors, and
federal regulators. In addition, your colleagues in private industry tend to defer to
you when dealing with complex business matters, particularly those involving
financial management. ic
...
XXVlll. Proloque
.ne
I
~, T T
foe Hottest Growth Areas in Accounting
8
Recent legislation. such as the Sarbanes-OXlev Act of 2002. has brought rising
.lslation, such as the Sarbanes-OXley Act of 2002, has brought rising
demand for accountants of all kinds. In addition to strong overall demand, certain
r.. 11 1 1 1
ac aam q .f ac rirrrnl 1 yi aide
areas of accounting are esDeciallv hot. 11
o are especially hot. 11
sustainabilitv Reoortina
austainabilitv Reoortina
y Reporting
Sustainabilitl! reDortinR involves reDorting on an organization's Derformance with
.ustalnabilitV reDortinR involves reDortinR on an organization's Derformance with
y reporting Involves reporting on an organization's performance with
1 1 1 aam
respect to health, safety, and environmental (HSE) issues. As businesses take a greater
... 1
Interest in environmental issues, CPAs are getting involved in reporting on such
mat1 1 1 1,. 1
ters as employee health, on-the-job accident rates, emissions of certain pollutants,
. 11 1 r 1 1.... 1 1... 1..
sDills, volumes of waste generated, and initiatives to reduce and minimize such
inciDpllls, volumes of waste generated, and initiatives to reduce and minimize such
incidents and releases. Utilities, manufacturers, and chemical companies are particularly
'fi 1 h.' aam'. 1 idyll co.
affected by environmental issues. As a result, they turn to CPAs to set uk a Dreventive
y environmental issues. As a result, they turn to CPAs to set up a preventive
,
sxrstem to ensure comDliance and avoid future claims or disDUtes or to Drovide
assis.Vstem to ensure comDliance and avoid future claims or disDUtes or to Drovide
assisybtem to ensure compliance and avoid future claims or disputes or to provide
assis1 1
tance once ledal imDlications have arisen.
.al implications have arisen.
Corporate social responsibility reporting is similar to HSE reporting but with a
broadened emphasis on social matters such as ethical labor practices, training,
educa. 1 1.. ac.
tlon, and diVersity of workforce and corporate philanthropic initiatives. Here's a
sam1. r
piing of companies across industries that provide corporate social responsibility
reports:
t
Coevally Primary industry
AnheusenBusch Beverages. theme Darks
&oh, theme parks
AT&T Telecommunications
Bristol-Myers Sauibb Pharmaceuticals
airs Squibb Pharmaceuticals
Chiquita Brands Agribusiness
Conoco Energy
ac
Dow Chemical Chemicals
General Motors Vehicle manufacture
Intel Microprocessors
Johnson &Johnson Health-care products and seduces
McDonald's Restaurants
Mead Forest products
products
Nike Apparel
PeDsiCo Consumer products
pslCo Consumer products
Procter & Gamble Consumer products
UniversitV of Florida Academic institution
j
source: AICPA
Assurance Services
Assurance seduces are services provided by a CPA that improve the quality of
infor.. aam
mation, or its context, for decision makers. Such information can be financial or
nonfinancial; it can be about past events or about ongoing processes or systems. This
broad concept includes audit and attestation seduces and is distinct from consulting
because it focuses primarily on improving information rather than on providing
1..
ac 4xti. 11i' a c1Tqf V
advice or installing systems. You can use your analytical and information~DrocessinR
o systems. You can use your analytical and information~processing
.,
expertise by providing assurance services in areas ranging from electronic commerce
Prologue. fix
to elder care, comprehensive risk assessment, business valuations, entity
perform1. r. 1.
ance measurement, and information systems quality assessment.
ystems quality assessment.
Information Technoloqy Services
.y Services
Companies can't compete effectively if their information technology systems don't
have the power or fleXibility to perform essential functions. Companies need
.
., 1. 11 1 1. 1. 1, 1
accountants with strong computer skills Who can design and implement adVanced
b puter skills Who can design and implement adVanced
systems to fit a company'S specific needs and to find ways to protect and insulate
data. CPAs skilled in softWare research and development (including multimedia
technology) are also highly valued.
gy) are also highly valued.
International Accountinq
9
Globalization means that cross-border transactions are becoming commonplace.
Countries in Eastern Europe and Latin America, Which previously had closed
.. 1 1. 1.. 1 1. al
economies, are opening up and doing business with new trading partners. The
passage of the North American Free Trade Agreement (NAFTA) and the General
Agreement on TariffS and Trade (GATT) facilitates trade, and the economic growth in
areas such as the Pacific Rim further brings creater volumes of trade and financial
gs greater volumes of trade and financial
flows. Organizations need accountants Who understand international trade rules.
sanlzatlons need accountants Who understand international trade rules,
accords, and laws; cross-border merger and acquisition issues; and foreign business
customs, languages, cultures, and procedures.
Forensic Accountinq
9
Forensic accounting is in RrowtnR demand after scandals such as the collaDse of
a 1. In growing demand after scandals such as the collapse of
Enron. Forensic accountants look at a company's financial records for evidence of
..1..m 1.1 111.r..rll.
criminal activity This could be anything from securities fraud to overvaluation
y. ibis could be anything from securities fraud to overvaluation
of inventorV to moneV laundering and imDroDer caDitalization of exDenses. Their
y to money laundering and improper capitalization of expenses. Their
work is becoming so well known that forensic accountants are appearing in
mania ho well known that forensic accountants are appearing in
mainstream novels. In The Devil'S Banker by best-selling author ChristoDher Retch. a say
j best-selling author Christopher Retch, a spy
teams up with a forensic accountant to chase down a terrorist ring.
p with a forensic accountant to chase down a terrorist ring.
So, Whether you seek
. a steady career or a life of international adventure
j
. a home in a single organization or exDosure to the needs of an evenchanRinR mix
ale organization or exposure to the needs of an evenchanging mix
of clients
. the personal satisfaction of work for a nonprofit or the financial success in a hot
new company
Accounting has a career for von. Every organization. from the smallest mom-
andg has a career for you. Every organization, from the smallest mom-
and.. 1 1 1.. 1 1 1 1 1 1
pop music retailer to the biggest government in the world, needs accountants to help
. ~1 1 1 1 1 1,. 1
manage its resources. Global trade demands accountability, and evermore complex
s y, and evermore complex
tax laws mean an evenincreasinR need for the skills and seduces of accountants.
& fleed for the skills and seduces of accountants.
Endnotes
'Alba, Jason, and Manisha Bathja. Vault Career Guide to Accountics. (New York f
Vault, 2002).
zCPA Track. Sponsored by Massachusetts Society of Certified Public Accountants,
Inc. httpt//rwcpatrack.condool--cpaS/
p;//rwcpatrack.condool--cpaS/.
xxx m Prologue
3http ://www. startheregoplaces, com.
4Banham, Russ. "Enterprising Views of Risk Management," Journal of Accountancy,
197, no. 6 (June 2004): 65-72.
5http ://www. startheregoplaces, com.
6Kahan, Stuart. "Capitalizing on CFO Experiences," The Practical Accountant, 37,
no. 2 (February 2004): 42-44.
7www. careers-in-accounting, com, http ://www. deloitte, com, http ://www. ey. com,
http ://www. kpmg. com; http ://www. pwc. com.
8CPA Letter, January 2004.
9Alba, Jason, and Manisha Bathija. Vault Career Guide to Accounting (New York: Vault,
2002).
~ Oh t tp ://www. s tarthe re go p la c es. c o m/news/news_hal f5. asp.
~AICPA, the American Institute of Certified Public Accountants,
http ://www. aicpa, org.
