Intermediate Accounting - Chap001
57p 31 6
Relevant financial information is provided primarily through financial statements and related disclosure notes.
Statement of Cash Flows.
Statement of Shareholders’ Equity.
Intermediate Accounting - Chap002
89p 32 4
The first objective of any accounting system is to identify the economic events that can be expressed in financial terms by the system. Economic events cause changes in the financial position of a company.
Intermediate Accounting - Chap003
38p 43 5
The purpose of the balance sheet is to report a company’s financial position on a particular date. It is a freeze frame or snapshot of financial position at the end of a particular day marking the end of an accounting period.
Intermediate Accounting - Chap004
57p 30 4
Companies must report both net income and comprehensive income and reconcile the difference between the two. The following items are part of comprehensive income:
Changes in the market value of securities available for sale (described in Chapter 12).
Intermediate Accounting - Chap006
57p 29 3
The time value of money means that money can be invested today to earn interest and grow to a larger dollar amount in the future. Time value of money concepts are useful in valuing several assets and liabilities. Interest is the amount of money paid or received in excess of the amount borrowed or lent.
Intermediate Accounting - Chap007
90p 29 4
Restricted cash is cash that has been set aside for a particular use and is not available for paying current liabilities. Restricted cash is not a current asset, rather it is classified as an investment on the balance sheet.
A compensating balance is some specified minimum amount that must be maintained on deposit with a bank that has made a loan to the company.
Intermediate Accounting - Chap008
88p 32 4
We will look at inventory for two classes of businesses. For merchandising companies like Wal-Mart, goods are acquired from a supplier for resale to the final consumer. In a manufacturing operation, the company normally has three inventories.
Intermediate Accounting - Chap009
57p 24 3
Generally accepted accounting principles, known as GAAP, require that inventories be carried on the balance sheet at lower-of-cost-or-market. Lower-of-cost-or-market represents a departure from the historical cost concept, but is considered a conservative accounting measure.
Intermediate Accounting - Chap010
78p 29 4
Operational assets are assets that are used actively in the operations of the business, and that are expected to benefit the operations into the future.
There are two major categories of operational assets. Tangible operational assets have physical substance.
Intermediate Accounting - Chap011
88p 38 4
Depreciation, depletion, and amortization are cost allocation processes. We allocate the cost of the asset to expense over its useful life in some rational and systematic manner. The unused portion of the asset’s cost appears on the balance sheet. We allocate a portion of the cost to expense on the income statement each accounting period.
Intermediate Accounting - Chap012
52p 34 3
Investments can be accounted for in a variety of ways depending upon the nature of the investment instrument. We will begin this chapter by looking at the accounting for bonds, or debt securities. Once we’ve completed our discussion of debt securities we will move on to the accounting for equity securities.