TITLE : FINANCIAL ACCOUNTING.

Preface

Financial Accounting is designed for the student's first exposure to financial accounting in a traditional one-quarter or one-semester course, but may be used equally well in a two-quarter sequence in financial accounting. It is intended for use at the undergraduate or graduate level by both majors and nonmajors who have had no previous training in accounting or business.

The textbook is part of a well-integrated package. Materials designed for the instructor's use are the Instructor's Handbook, an Instructor's Solutions Manual, Transparencies (approximately 650), a large Test Bank, a Computer-Assisted Test Bank, Achievement Tests, and Check Lists of Key Figures. Included for the student are a Study Guide with Selected Readings, Working Papers (sets A and B), a Practice Set, and two Computer-Assisted Practice Sets.

An important requirement of financial accounting courses is that they meet the needs of both business and management majors, who will read, analyze, and interpret financial statements throughout their careers, and accounting majors, who must have a solid foundation for their intermediate accounting and other advanced accounting courses. Financial Accounting should serve both of these groups of students equally well. The learning method used in this book emphasizes the interrelationship of concepts and applications and of information and decision-making. Concepts take on meaning when applied, and practices are most easily understood if clearly related to a conceptual foundation. The need for aecounting and accounting information is more easily understood when presented in a real-world decision context.

These beliefs are reflected in the principal objectives and fea

tures of the package: (1) its design for the student's first exposure to accounting; (2) its authoritative and practical basis; (3) its decision-making approach; (4) its contemporary emphasis; (5) its class-tested and accurate learning materials; and (6) its completeness as a flexible learning system.

Design for the Student's First Exposure to Accounting

The text's intended audience has influenced the organization of the book in several ways. First, the timing of new concepts and techniques has been carefully planned to facilitate learning. This is especially important in a financial accounting course because the material must usually be covered rapidly. Students must grasp and retain fundamental concepts quickly so that enough time can be spent on the topics to be covered later in the course. For example, Chapters I through 6 take the student with no prior knowledge of accounting through the basic accounting model in a very systematic way. The student is then ready to tackle the more difficult topics in Parts two and three of the book. Second, accounting is introduced-in a simple but realistic context in the early chapters of the book. For example, the students first learn about the corporate form of business through simple financial statements. By the time they reach Chapter 7, which deals with classified financial statements, they will be prepared to handle the basic methods of financial statement analysis and will have a clear understanding of the annotated financial statements of General Mills Corporation as presented in its annual report. Third, the book presents accounting as one of the most important and fascinating professions in our society, one in which men and women can participate either as producers or users of accounting information. Fourth, the focus throughout is on understanding rather than on memorization and on interpretation and decision making rather than on mere mechanics.

Authoritative and Practical Basis

This book presents accounting as it is practiced, but at the same time the concepts underlying each accounting practice are carefully explained. Throughout, accounting terms and concepts are defined according to current pronouncements of the AICPA, APB, and FASB. As the basis for discussion, relevant APB Opinions, FASB Statements, SEC pronouncements, and other authoritative sources are often cited. Statements of Financial Accounting Standards Numbers 33 and 52 receive extensive treatment. In addition, the Statements of Financial Accounting Concepts Numbers 1, 25 and 3 of the FASB's Conceptual Framework Study form the theoretical underpinning of the book and are used to assess various interpretations of accounting situations and controversies. Decision-Making Emphasis

Another objective has been to present the contemporary business world and the real-life complexities of accounting in a clear, concise, easy to-understand manner. Accounting is treated as an information system that helps management, investors, and creditors make economic decisions. Chapter 1 emphasizes this role of accounting. It describes the use of accounting by all segments of society and discusses the impact of the AICPA, APB, FASB, SEC, and IRS on generally accepted accounting principles. Each chapter, in addition to the other questions, exercises, and problems, provides an exercise on "Interpreting Published Financial Information" and a Financial Decision Case. In each situation, the student is required to extract quantitative information from the exercise or case and make an interpretation or a decision.

Contemporary Emphasis

The topical coverage is up-to-date and responsive to current trends in business and accounting. Taxation, inflation accounting, and international accounting are just three examples of contemporary topics emphasized in the book. Taxation is not an isolated subject but is an important and integral part of the study of financial accounting. For this reason, rather than devoting just one chapter to the subject of taxation, the topic is covered throughout the book at those points where it is relevant to the discussion. A few examples will illustrate this treatment. The accrual of income taxes expense is described in Chapter 3 as a typical adjusting entry. Throughout the book, all illustrations show income taxes where appropriate. The topic of taxation and LIFO inventories is included in the chapter on inventories (Chapter 9), and the Accelerated Cost Recovery System is discussed in the chapter on property, plant, and equipment (Chapter 10). The computation of corporate income tax liability and income taxes allocation are covered in the discussion of liabilities (Chapter 12). The important topic of inHation accounting receives a thorough treatment in Chapter 11. The section of Chapter 17 that is devoted to international accounting should help schools meet the new accreditation standard of the American Assembly of Collegiate Schools of Business requiring that introductory courses cover the global aspect of business. Each of these topics, as well as others, may be supplemented by the selected readings from the Study Guide that accompanies this text.

Class-Tested and Accurate Learning Materials

I have thoroughly class-tested the text, exercises, problems, and other learning materials in this book. In addition, other accounting instructors at California State University, Fresno, and Northwestern University have used and verified the accuracy of the text and other materials. Complete and Flexible Learning Package

Organization

The organization of the book in three parts is designed for a one-quarter or one-semester course. The first two parts, consisting of fifteen chapters, can be considered a basic course in financial accounting. The use of Chapters 16, 17, and 18 from Part Three depends on whether the faculty of the school wishes to present these special reports and analyses in the financial or the managerial accounting course. Those faculties desiring a more conceptual approach may wish to skip all or parts of Chapters 4 and 6. Chapter 11 may be omitted by those who cover inflation accounting elsewhere in the curriculum.

However, those schools that have a comprehensive two-quarter sequence in financial accounting will find ample material in this book. They may want to cover all eighteen chapters and Appendixes A, B, and C. Each of these Appendixes is a self-contained learning unit, with learning objectives, questions, exercises, and problems that may be used in the course whenever the instructor or school chooses.

Textbook Features

Learning Objectives Action-oriented objectives beginning each chapter indicate in precise terms what the students should be able to do when they complete the chapter. These objectives are repeated in the chapter at the point where they are covered. At the end of the chapter each learning objective is reviewed. The end-of-chapter questions, exercises, and problems test the students' mastery of the objectives. Each exercise and problem is identified by a short title and the number of the learning objectives that it tests.

Accounting Practice Features To demonstrate the real-world applications of accounting, many chapters contain graphs or tables illustrating the actual practice of business in relation to the topics of the chapter. Excerpts from the annual reports of major corporations are often used as well.

Illustrations The text contains many illustrations to enhance the student's visual understanding of the material. Color is used pedagogically to highlight important points.

Key Terms and Glossary Throughout the book, key accounting terms are emphasized in color with hold type and are clearly defined in the text upon their first use. These terms are also conveniently arranged in a comprehensive glossary for easy reference.

Chapter Review A unique feature of the text is a special review section comprising a Review of Learning Objectives, which summarizes the main points of the chapter in relation to the objectives, and a Review Problem with a complete solution to demonstrate the chapter's major procedures.

Questions Discussion questions based on the major points covered are included at the end of each chapter. These questions focus on major concepts and terms and often contain discussion points.

Classroom Exercises Classroom Exercises provide practice in applying concepts taught in the chapter and are very effective in illustrating lecture points. Each exercise focuses on a single aspect of the chapter and is keyed back to a specific learning objective. The last exercise in each chapter is entitled "Interpreting Published Financial Information" and is based on an except from an actual annual report or a published article about a well-known corporation or organization. Among the companies included are K-Mart, Sears, U.S. Steel, Marathon Oil, Chrysler, Iowa Beef Processors, International Paper, United Technology, Lockheed Aircraft, and Federal Express. Each of these exercises requires the students to demonstrate their ability to interpret the published information by extracting data from what they read and by making a computation and interpretation.

A and B Problems To provide maximum flexibility in homework assignments, two sets of problems are included. In general, the problems are arranged in order of difficulty, with Problems A-I and B-1 in each chapter being the simplest, and the last in the series the most comprehensive. Each problem is identified in the text by the learning objectives it tests. The A and B problems have been matched by topic, so that A-1 and B-1, for example, are equivalent in content as well as in level of difficulty. Difficulty ratings, time estimates, and complete solutions are available to the instructor.

Financial Decision Case Each chapter contains a case that emphasizes the usefulness of accounting information in making decisions. Each case provides the business background and financial information in a decision context. The decision maker may be management, an investor, an analysis, or a creditor. In the role of the decision maker, the student is asked to extract the relevant data from the case, make relevant computations as necessary, and make a decision.

Technical Appendix As a further aid to learning, Appendix contains Compound Interest and Present Value Tables as well as information on how to use them.

Supplementary Learning Aids

The supplementary learning aids provide a variety of useful tools for the student. They consist of the Study Guide with Selected Readings, Working Papers (Sets A and Practice Set, and two Computer-Assisted Practice Sets.

Study with Selected Readings This learning aid is a chapter-by- chapter guide to help the student understand the main points of the chapter. Each chapter begins with a summary, in numbered paragraph form, of the major concepts and applications in the chapter. Next, to test the student's basic knowledge of the chapter content, there is a matching test of the most important words and concepts, a completion test, a true-false test of important relationships, and a multiple-choice test. Finally, students are asked to apply their knowledge in short exercises. The answers to all tests and exercises are provided at the end of the Study Guide.

The Study Guide also contains approximately one reading per chapter, selected from professional journals and the popular press to provide more in-depth understanding of the topics in the chapters. Another feature of the Study Guide is a summary of financial accounting theory. In addition, the Study Guide contains the complete financial statements with all footnotes, supplementary disclosures, management commentary, and audi- tor's report for the Coca-Cola Bottling Company.

Working Papers The working papers are designed to reduce pencil push-ing by students to a minimum. Each problem has an appropriate form, certain information is preprinted, and in some cases, part of the answer is entered to provide a model for the student.

Practice Set: Soft-Tec, Inc. Soft-Tec, Inc., is a small wholesale distributor of computer software packages for microcomputers. It is designed to present a realistic set of transactions and records for this company for a one-month period. The practice set may be used at any point after Chapter-7.

Computer-Assisted Practice Sets: Berger Automotive Company and Stormer Painting Company These are computer-assisted, interactive practice sets that require no programming experience on the part of the student or the instructor and actually can be done manually if the instructor wishes. These practice sets cover financial accounting and deal with service proprietorships that grow into corporations. Although the practice sets stress transaction analysis, they also demonstrate the computer's ability to speed the flow of accounting data. The practice sets require only forty to ninety minutes a week and can be handled as a laboratory or as a test.

Instructor's Aids

Instructor's Handbook The Instructor's Handbook 15 a resource aid for the instructor in teaching the course. For each chapter the Handbook provides a list of the topic headings in the text; a learning objectives chart for the end-of-chapter assignments; an analysis of the time and difficulty involved in solving each problem; lecture resource materials that provide, for each learning objective, a summary statement, a list of new words and terms, related text illustrations, and a suggested lecture outline; and finally a ten-minute quiz with answers.

Instructor's Solutions Manual The Instructor's Solutions Manual - ins solutions to all questions, exercises, and problems in the text. We rate each problem as easy, medium, or difficult and suggest the time in minutes that an average student will need to solve it. Charts indicate the learning objectives covered by each question, exercise, and problem. Test Bank and Achievement Tests Comprehensive and flexible sets of testing materials are available for the instructor. I have written all test items myself.

The Test Bank, which is available either in printed form or as a computer program, offers a variety of testing material for each chapter. Short exercises and problems are included as well as true-false and multiple- choice items. Overall, the Test Bank totals more than eight hundred items.

There are also nine preprinted Achievement Tests, each with an A or B version. Each test covers two or three chapters as in the Test Bank.

Transparencies Approximately 650 transparencies, which are free to adopters, provide instructional charts and diagrams as well as solutions to all A and B Problems.

Check List of Key Figures This item is available in quantity to instructors.