1 An Introduction to Accounting 1
1.1 Accounting is an Information System 2
1.2 Forms of Organization 2
1.3 The Framework for the Preparation and Presentation of Financial Statements 3
1.4 Understanding of Financial Statements 5
1.5 Accounting and its Profession 9
1.6 Accounting Elements and Using the Accounting Equation 10
1.7 Ethics in Accounting 13
2 Recording Transactions 30
2.1 Economic Events and Business Documents 31
2.2 T Accounts and Debit & Credit 31
2.3 Journalizing and Posting Transactions 36
2.4 Preparing a Trial Balance 44
2.5 Practices in China 46
2.6 Using the Information！the Debt Ratio 48
3 Adjusting the Accounts, Preparing the Statements, and Completing the Accounting Cycle 64
3.1 The Need for Adjustments 65
3.2 Adjusting the Accounts 68
3.3 Adjusted Trial Balance and Preparation of Financial Statements 73
3.4 Using the Worksheet 79
3.5 Closing Entries 81
3.6 Post-closing Trial Balance 83
3.7 The Accounting Cycle 84
3.8 Practices in China 84
3.9 Classification of Balance Sheet Items 85
3.10 Using the Information！the Current Ratio 88
4 Accounting for Cash, Trading Securities and Receivables 103
4.1 Cash, Cash Equivalents, and Liquidity 104
4.2 Internal Control over Cash 104
4.3 The Petty Cash Fund 106
4.4 Reconciling the Bank Balance 107
4.5 Trading Securities 111
4.6 Credit Sales and Bad Debts 112
4.7 Promissory Notes 117
4.8 Converting Receivable into Cash 122
4.9 Using the Information！Accounts Receivable Turnover 123
5 Inventories and Cost of Goods Sold 134
5.1 Cost to Be Included in Inventories 135
5.2 Inventory Systems 137
5.3 Purchase,Discount,Return & Allowance 139
5.4 Inventory Cost Flow Assumptions 142
5.5 Revenue from Sales and Cost of Goods Sold！Perpetual Inventory System 147
5.6 Inventory Errors 151
5.7 Valuation Using Lower of Cost or Market (LCM) Method 151
5.8 Inventory Estimation Method 154
5.9 Disclose Information of Inventory in Financial Statements 156
5.10 Analysis the Information！Merchandise Turnover 157
6 Long-Term Assets: Investments, Fixed Assets, Natural Resources and Intangible Assets 175
6.1 Type of Long-Term Assets 177
6.2 Long-Term Investment 177
6.3 Acquisition of Fixed Assets 181
6.4 Depreciation 189
6.5 Disposal of Plant Assets 193
6.6 Accounting for Natural Resources 195
6.7 Accounting for Intangible Assets 196
6.8 Other Assets 199
6.9 Impairment of Long-Term Assets 200
6.10 Using the Information！Return on Total Assets & Asset Turnover 202
7 Current and Long-Term Liabilities 219
7.1 The Nature of Liabilities 221
7.2 Current Liabilities 222
7.3 Determinable Current Liabilities 222
7.4 Current Liabilities Dependent on Operating Results 226
7.5 Contingencies 228
7.6 Time Value of Money 231
7.7 Non-Current Liabilities 236
7.8 Using the Information！Times Interest Earned 244
8 Owner¨s Equity 260
8.1 Difference between a Loan and an Investment 262
8.2 Forms of Business Organization 262
8.3 Corporate Organization 264
8.4 Corporate Capital 265
8.5 Treasury Stock 270
8.6 Income & Retained Earnings 273
8.7 Dividends and Stock Split 277
8.8 Using the Information！Dividend Yield and Price-Earnings Ratio 281
9 Statement of Cash Flows 298
9.1 Cash and Cash Equivalents 299
9.2 Classification of Cash Receipts and Cash Payments 299
9.3 Preparing Cash Flow Statement！Direct Method 301
9.4 Preparing Cash Flow Statement！Indirect Method 306
9.5 Determining Cash Flows from Investing Activities 308
9.6 Determining Cash Flows from Financing Activities 311
9.7 Presenting the Information in the Form of the Statement of Cash Flows 312
9.8 Usefulness of the Statement of Cash Flows 314
Appendix 1:Balance Sheet 329
Appendix 2:Profit and Loss Account 331
Appendix 3:Future Value of $1 332
Appendix 4:Present Value of $1 334
Appendix 5:Present Value of Annuity of $1 336
Appendix 6:Future Value of Annuity of $1 338
Appendix 7:Solution of Exercises and Problems 340
