Accounting Tools for Business Decision Making 5th Edition Kimmel Test Bank

1 Introduction to Financial Statements 1-1 

Knowing the Numbers: Columbia Sportswear Company 1-1

1.1 Business Organization and Accounting Information Uses 1-2

1.2 The Three Types of Business Activity 1-8

1.3 The Four Financial Statements 1-11

Appendix 1A: Career Opportunities in Accounting 1-23

2 A Further Look at Financial Statements 2-1

Just Fooling Around?: The Motley Fool 2-2

2.1 The Classified Balance Sheet 2-3

2.2 Analyzing the Financial Statements Using Ratios 2-8

2.3 Financial Reporting Concepts 2-14

3 The Accounting Information System 3-1

Accidents Happen: MF Global Holdings Ltd 3-1

3.1 Using the Accounting Equation to Analyze Transactions 3-3

3.2 Accounts, Debits, and Credits 3-11

3.3 Using a Journal 3-17

3.4 The Ledger and Posting 3-20

3.5 The Trial Balance 3-30

4 Accrual Accounting Concepts 4-1

Keeping Track of Groupons: Groupon 4-1

4.1 Accrual-Basis Accounting and Adjusting Entries 4-2

4.2 Adjusting Entries for Deferrals 4-7

4.3 Adjusting Entries for Accruals 4-15

4.4 The Adjusted Trial Balance and Closing Entries 4-23

Appendix 4A: Using a Worksheet 4-34

5 Merchandising Operations and the Multiple-Step Income Statement 5-1

Buy Now, Vote Later: REI 5-1

5.1 Merchandising Operations and Inventory Systems 5-2

5.2 Recording Purchases Under a Perpetual System 5-6

5.3 Recording Sales Under a Perpetual System 5-11

5.4 Preparing the Multiple-Step Income Statement 5-16

5.5 Cost of Goods Sold Under a Periodic System 5-21

5.6 Gross Profit Rate and Profit Margin 5-23

Appendix 5A: Periodic Inventory System 5-27

Appendix 5B: Adjusting Entries for Credit Sales with Returns and Allowances 5-30

6 Reporting and Analyzing Inventory 6-1

“Where Is That Spare Bulldozer Blade?”: Caterpillar 6-1

6.1 Classifying and Determining Inventory 6-2

6.2 Inventory Methods and Financial Effects 6-7

6.3 Inventory Presentation and Analysis 6-17

Appendix 6A: Inventory Cost Flow Methods in Perpetual Inventory Systems 6-24

Appendix 6B: Effects of Inventory Errors 6-27

7 Fraud, Internal Control, and Cash 7-1

Minding the Money in Madison: Barriques 7-1

7.1 Fraud and Internal Control 7-3

7.2 Cash Controls 7-12

7.3 Control Features of a Bank Account 7-17

7.4 Reporting Cash 7-25

Appendix 7A: Operation of a Petty Cash Fund 7-32

8 Reporting and Analyzing Receivables 8-1

What’s Cooking?: Nike 8-1

8.1 Recognition of Accounts Receivable 8-3

8.2 Valuation and Disposition of Accounts Receivable 8-5

8.3 Notes Receivable 8-15

8.4 Receivables Presentation and Management 8-20

9 Reporting and Analyzing Long-Lived Assets 9-1

A Tale of Two Airlines: American Airlines 9-1

9.1 Plant Asset Expenditures 9-3

9.2 Depreciation Methods 9-8

9.3 Plant Asset Disposals 9-16

9.4 Intangible Assets 9-19

9.5 Statement Presentation and Analysis 9-23

Appendix 9A: Other Depreciation Methods 9-30

10 Reporting and Analyzing Liabilities 10-1

And Then There Were Two: Maxwell Car Company 10-1

10.1 Accounting for Current Liabilities 10-3

10.2 Characteristics of Bonds 10-9

10.3 Accounting for Bond Transactions 10-14

10.4 Presentation and Analysis 10-20

Appendix 10A: Straight-Line Amortization 10-26

Appendix 10B: Effective-Interest Amortization 10-29

Appendix 10C: Accounting for Long-Term Notes Payable 10-32

11 Reporting and Analyzing Stockholders’ Equity 11-1

Oh Well, I Guess I’ll Get Rich: Facebook 11-1

11.1 Corporate Form of Organization 11-3

11.2 Accounting for Common, Preferred, and Treasury Stock 11-12

11.3 Accounting for Dividends and Stock Splits 11-16

11.4 Presentation and Analysis 11-24

Appendix 11A: Entries for Stock Dividends 11-32

12 Statement of Cash Flows 12-1

Got Cash?: Microsoft 12-2

12.1 Usefulness and Format of the Statement of Cash Flows 12-3

12.2 Preparing the Statement of Cash Flows—Indirect Method 12-6

12.3 Analyzing the Statement of Cash Flows 12-17

Appendix 12A: Statement of Cash Flows—Direct Method 12-22

Appendix 12B: Worksheet for the Indirect Method 12-30

Appendix 12C: Statement of Cash Flows—T-Account Approach 12-35

13 Financial Analysis: The Big Picture 13-1

It Pays to Be Patient: Warren Buffett 13-2

13.1 Sustainable Income and Quality of Earnings 13-3

13.2 Horizontal Analysis and Vertical Analysis 13-9

13.3 Ratio Analysis 13-15

14 Managerial Accounting 14-1

Just Add Water … and Paddle: Current Designs 14-1

14.1 Managerial Accounting Basics 14-3

14.2 Managerial Cost Concepts 14-7

14.3 Manufacturing Costs in Financial Statements 14-12

14.4 Managerial Accounting Today 14-16

15 Job Order Costing 15-1

Profiting from the Silver Screen: Disney 15-1

15.1 Cost Accounting Systems 15-3

5.2 Assigning Manufacturing Costs 15-8

15.3 Predetermined Overhead Rates 15-13

15.4 Entries for Jobs Completed and Sold 15-16

15.5 Applied Manufacturing Overhead 15-22

16 Process Costing 16-1

The Little Guy Who Could: Jones Soda 16-1

16.1 Overview of Process Cost Systems 16-3

16.2 Process Cost Flow and Assigning Costs 16-6

16.3 Equivalent Units 16-10

16.4 The Production Cost Report 16-13

Appendix 16A: FIFO Method for Equivalent Units 16-21

17 Activity-Based Costing 17-1

Precor Is on Your Side: Precor17-1

17.1 Traditional vs. Activity-Based Costing 17-3

17.2 ABC and Manufacturers 17-7

17.3 ABC Benefits and Limitations 17-13

17.4 ABC and Service Industries 17-20

18 Cost-Volume-Profit 18-1

Don’t Worry—Just Get Big: Amazon.com 18-1

18.1 Cost Behavior Analysis 18-3

18.2 Mixed Costs Analysis 18-8

18.3 Cost-Volume-Profit Analysis 18-11

18.4 Break-Even Analysis 18-16

18.5 Target Net Income and Margin of Safety 18-20

Appendix 18A: Regression Analysis 18-24

19 Cost-Volume-Profit Analysis: Additional Issues 19-1

Not Even a Flood Could Stop It: Whole Foods Market 19-1

19.1 Basic CVP Concepts 19-3

19.2 Sales Mix and Break-Even Sales 19-7

19.3 Sales Mix with Limited Resources 19-13

19.4 Operating Leverage and Profitability 19-15

Appendix 19A: Absorption Costing versus Variable Costing 19-20

20 Incremental Analysis 20-1

Keeping It Clean: Method Products 20-1

20.1 Decision-Making and Incremental Analysis 20-3

20.2 Special Orders 20-6

20.3 Make or Buy 20-8

20.4 Sell or Process Further 20-11

20.5 Repair, Retain, or Replace Equipment 20-14

20.6 Eliminate Unprofitable Segment or Product 20-16

21 Pricing 21-1

They’ve Got Your Size—and Color: Zappos.com 21-1

21.1 Target Costing 21-3

21.2 Cost-Plus and Variable-Cost Pricing 21-5

21.3 Time-and-Material Pricing 21-10

21.4 Transfer Prices 21-13

Appendix 21A: Absorption-Cost and Variable-Cost Pricing 21-22

Appendix 21B: Transfers Between Divisions in Different Countries 21-26

22 Budgetary Planning 22-1

What’s in Your Cupcake?: Erin McKenna’s Bakery NYC 22-1

22.1 Effective Budgeting and the Master Budget 22-3

22.2 Sales, Production, and Direct Materials Budgets 22-8

22.3 Direct Labor, Manufacturing Overhead, and S&A Expense Budgets 22-14

22.4 Cash Budget and Budgeted Balance Sheet 22-18

22.5 Budgeting in Nonmanufacturing Companies 22-23

23 Budgetary Control and Responsibility Accounting 23-1

Pumpkin Madeleines and a Movie: The Roxy HotelTribeca 23-1

23.1 Budgetary Control and Static Budget Reports 23-3

23.2 Flexible Budget Reports 23-7

23.3 Responsibility Accounting and Responsibility Centers 23-14

23.4 Investment Centers 23-24

Appendix 23A: ROI versus Residual Income 23-30

24 Standard Costs and Balanced Scorecard 24-1

80,000 Different Caffeinated Combinations: Starbucks 24-2

24.1 Overview of Standard Costs 24-3

24.2 Direct Materials Variances 24-8

24.3 Direct Labor and Manufacturing Overhead Variances 24-13

24.4 Variance Reports and Balanced Scorecards 24-18

Appendix 24A: Standard Cost Accounting System 24-24

Appendix 24B: Overhead Controllable and Volume Variances 24-26

25 Planning for Capital Investments 25-1

Floating Hotels: Holland America Line 25-2

25.1 Capital Budgeting and Cash Payback 25-3

25.2 Net Present Value Method 25-6

25.3 Capital Budgeting Challenges and Refinements 25-12

25.4 Internal Rate of Return 25-17

25.5 Annual Rate of Return 25-20

APPENDIX A Specimen Financial Statements: Apple Inc. A-1

APPENDIX B Specimen Financial Statements: Columbia Sportswear Company B-1

APPENDIX C Specimen Financial Statements: Under Armour, Inc. C-1

APPENDIX D Specimen Financial Statements: Amazon.com, Inc. D-1

APPENDIX E Specimen Financial Statements: Walmart Inc. E-1

APPENDIX F Time Value of Money F-1

APPENDIX G Reporting and Analyzing Investments G-1

Available in Wiley Course Resources and Wiley Custom:

*APPENDIX H Payroll Accounting H-1

H.1 Recording the Payroll H-1

H.2 Employer Payroll Taxes H-8

H.3 Internal Control for Payroll H-11

*APPENDIX I Subsidiary Ledgers and Special Journals I-1

I.1 Subsidiary Ledgers I-1

I.2 Special Journals I-4

*APPENDIX J Accounting for Partnerships J-1

J.1 Forming a Partnership J-1

J.2 Accounting for Partnership Net Income or Net Loss J-6

J.3 Accounting for Partnership Liquidation J-11

J.4 Admission and Withdrawal of Partners J-15

APPENDIX K Accounting for Sole Proprietorships K-1

K.1 Corporation versus Sole Proprietorship Equity Accounts K-1

K.2 Accounts that Change Owner’s Equity K-2

K.3 Retained Earnings Statement versus Owner’s Equity Statement K-4

K.4 Closing the Books for a Sole Proprietorship K-5

CHAPTER 15A Job Order Costing (nondebit-and-credit approach)

CHAPTER 16A Process Costing (nondebit-and-credit-approach)

Cases for Management Decision Making