|Introduction||The Time Value of Money|
|1. Instructions||18. Compound Interest|
|2. Basic Accounting Terms||19. Effective Interest Rate|
|3. Forms of Business||20. Annuities|
|4. Financial Statements||21. Bonds|
|5. The Accounting Equation||Liabilities and Equities|
|6. Debits and Credits||22. An Overview of Liabilities|
|7. The Accounting Process||23. Accounting for Interest|
|8. The Role of Accounting||24. Accounting for Bonds|
|9. An Overview of Assets||26. Deferred Taxes|
|10. The Recognition Concept||27. An Overview of Equities|
|11. The Matching Concept||28. Dividends and Buybacks|
|12. Long-Term Contracts||Financial Assets|
|13. Period Costs||29. Debt Investments|
|14. Inventoriable Costs||30. Equity Investments|
|16. Long-term Assets||31. The Cash-Flow Statement|
|17. Amortization and Disposal||32. Financial Statement Analysis|
- Instructions: Detailed instructions on how to use the software.
- Basic Accounting Terms: The entity concept, the monetary-unit concept, assets, liabilities, owners' equity, and the accounting equation.
- Forms of Business: Proprietorships, partnerships, and corporations.
- Financial Statements: The four principal financial statements, the periodicity concept, and the accrual method.
- The Accounting Equation: The accounting process without debits and credits. The dual-aspect concept and its link to double entry bookkeeping.
- Debits and Credits: An interactive journal entry format that speeds up learning by showing the debits and credits in relation to the accounting equation.
- The Accounting Process: The basic steps involved in the accounting process using debits and credits. Adjusting entries are covered in depth later.
- The Role of Accounting: How accounting numbers are used and an economic foundation for the rest of the course.
- An Overview of Assets: The differences in accounting for assets that are shown at market value, lower of cost or market value, and cost less amortization.
- The Recognition Concept: The difference between revenues and cash receipts, the allowance method, and perverse incentives such as trade loading.
- The Matching Concept: The difference between cash flows, costs, and expenses and the meaning of the term capitalization.
- Long-term Contracts: Accounting for long-term contracts in the context of the recognition and matching concepts.
- Period Costs: Costs that are expensed when incurred.
- Inventoriable Costs: Costs that are inventoried when incurred.
- Inventories: Cost-flow methods such as FIFO and LIFO.
- Long-term Assets: Purchase and use of property, plant, and equipment for manufacturing and non-manufacturing activities.
- Amortization and Disposal: Allocation of costs over an asset's useful life.
These chapters provide the financial background necessary to understand accounting for interest and bonds.
- Compound Interest: The concepts underlying simple and compound interest and present and future values.
- Effective Interest Rate: Annual percentage rate (APR), compounding frequency, annualized yield, effective interest rate, and converting interest rates quoted in one compounding frequency to another.
- Annuities: Annuities and perpetuities and formulae for their present values.
- Bonds: Bond terminology, bonds issued at a premium and at a discount, and the difference between the coupon rate and the discount rate.
- An Overview of Liabilities: Importance of liabilities, their classification, and the three conditions that a liability must satisfy. Postretirement benefits, frequent flier programs, contingencies, the estimates required for recording long-term liabilities, the effect of discount rates, pension plans, commitments, and executory contracts.
- Accounting for Interest: The amortization table and its relation to journal entries and the difference between cash paid and interest costs.
- Accounting for Bonds: Amortization table, journal entries, the relationship among book value, interest expense, and cash flow, the difference between a bond’s book value and its market value, and gains or losses on bond buybacks.
- Leases: Operating and capital leases, why managers avoid capital leases, off-balance-sheet liabilities.
- Deferred Taxes: The logic underlying deferred tax liabilities and a comparison of deferred tax liabilities and taxes payable.
- An Overview of Owners' Equity and 28. Dividends and Buybacks: Common and preferred stocks, issuance and retirement, dividends, retained earnings, restrictions on distributions, and the difference between book and market values.
- Debt Investments: How the liquidity of an asset and the purpose for which it is held determine its accounting, the different types of financial assets, securities, what makes them more liquid than other assets, why firms make financial investments, the attributes and classification of debt securities, and accounting for held-to-maturity debt securities, available-for-sale debt securities, and debt securities used for trading.
- Equity Investments: Why firms hold equity securities and their classification, including eliminating related-party transactions, restating the book values of investee’s identifiable assets and liabilities to their market values, as well as goodwill.
- The Cash-Flow Statement: Cash and cash equivalents, the need for a cash-flow statement, the direct and indirect formats of the cash-flow statement, the effect of contributions, receivables and payables, advances paid by customers, inventory, and depreciation on the cash-flow statement, operating, investing, and financing cash flows. Includes practice problems for cash flow statements for many settings covered in the previous chapters.
- Financial Statement Analysis: An analysis of profitability, return on investment, return on assets, and return on equity, earnings per share and the price-earnings ratio, and the analysis of short-term risk and long-term risk.