Toc: Cover Title Page Copyright Page Brief Contents From the Authors Author Commitment Table of Contents Acknowledgments 1 Introduction to Financial Statements Knowing the Numbers LO 1: Study the forms of business organization and the uses of accounting information. Forms of Business Organization Users and Uses of Financial Information Ethics in Financial Reporting LO 2: Explain the three principal types of business activity. Financing Activities Investing Activities Operating Activities LO 3: Describe the four financial statements and how they are prepared. Income Statement Retained Earnings Statement Balance Sheet Statement of Cash Flows Interrelationships of Statements Other Elements of an Annual Report A Look at IFRS 2 A Further Look at Financial Statements Just Fooling Around? LO 1: Identity the sections of a classified balance sheet. Current Assets Long-Term Investments Property, Plant, and Equipment Intangible Assets Current Liabilities Long-Term Liabilities Stockholders’ Equity LO 2: Use ratios to evaluate a company’s profitability, liquidity, and solvency. Ratio Analysis Using the Income Statement Using a Classified Balance Sheet Using the Statement of Cash Flows LO 3: Discuss financial reporting concepts. The Standard-Setting Environment Qualities of Useful Information Assumptions in Financial Reporting Principles in Financial Reporting Cost Constraint A Look at IFRS 3 The Accounting Information System Accidents Happen LO 1: Analyze the effect of business transactions on the basic accounting equation. Accounting Transactions Analyzing Transactions Summary of Transactions LO 2: Explain how accounts, debits, and credits are used to record business transactions. Debits and Credits Debit and Credit Procedures Stockholders’ Equity Relationships Summary of Debit/Credit Rules LO 3: Indicate how a journal is used in the recording process. The Recording Process The Journal LO 4: Explain how a ledger and posting help in the recording process. The Ledger Chart of Accounts Posting The Recording Process Illustrated Summary Illustration of Journalizing and Posting LO 5: Prepare a trial balance. Limitations of a Trial Balance A Look at IFRS 4 Accrual Accounting Concepts Keeping Track of Groupons LO 1: Explain the accrual basis of accounting and the reasons for adjusting entries. The Revenue Recognition Principle The Expense Recognition Principle Accrual versus Cash Basis of Accounting The Need for Adjusting Entries Types of Adjusting Entries LO 2: Prepare adjusting entries for deferrals. Prepaid Expenses Unearned Revenues LO 3: Prepare adjusting entries for accruals. Accrued Revenues Accrued Expenses Summary of Basic Relations