Index

A
Abercrombie& Fitch. 242.395 Accelerated depreciation, 164-165 Accountingassumptions going-concern assumption, 53 monetary-unitassumption, 52 separate-entity assumption, 52 time-periodassumption, 53 Accountingconstraints, 53 Accountingcycle defined,580 example,592-600 journal entries), step 1 (recording 580-583 step2 (postingjournal entriesto general ledger), 583 step3 (trial balance), 583 journal entries), step4 (adjusting 583-586 step5 (adjusted trial balance),586-587 step6 (financialstatements), 587-588 step7 (closingentries),589-591 step8 (postclosing trial balance), 591 steps, listed,580 Accounting equation, 18,59 14, Accountinginformation comparability, 51-52 consistency, 52 relevance,5l reliability, 51 users,66-67 Accountingjobs, 534 Accountingperiods,65-66 Accountingprinciples full-disclosureprinciple, 58 principle, 53 historical-cost matchingprincrple,62 revenue-recognition principle, 62 Accountingscandals, 28, 53U531 2, Accountingsoftware,125 Accountspayable,54, 120 Accountsreceivable, 101,, 56, 286 accounts receivablemethod.288190. 293 aging schedule, 288, 289 allowancemethod,288-294 balancesheetpresentation, 290 controls,303-304 defined,286 direct write-off method,293-294 estimatingbad debt expense, 288-293 example(Tom'sWear),29'l-300 extendingcredit,286 managing,287 percentage salesmethod,288, 293 of ratio analysis,301-302 recordinguncollectibleaccounts, 286-287 writing off specificaccount,290-291 Accountsreqeivable method,288-290, 293 Accountsreceivable turnoverratio, 482,487 (AR) turnoverratio, Accountsreceivable 301-302 Accrual accounting information,66-67 g, Accrual basisaccountin 63-65 Accruals, 578 adjustments accounting to records, 113- 1 1 8 defined,99 example, 120-122 financialstatements. 113-118 and. interestexpense/revenue, 100-102 102-104 other revenues/expenses, Accruedexpenses, , 122,584-585 101 Accruedliabilities, 101 Accruedrevenue, 584 Accumulated amorttzatlon, | 67 Accumulated depreciation, 1,1I,ll2, 120, t22 Acid-testratio, 123, 482, 487 Acquiring merchandise sale,210-215 for Acquisition cost,159 Activity methoddepreciation, 162-163 Additional paid-in capital,386 Adelphia, 2,28,98 Adjunct liability, 344 Adjustedtrial balance, 586-587 Adjustingjournal entries,583-586 Adjusting the books,56 Aging method, 288 Aging schedule, 288, 289 Akst. Daniel.154 Allowancefor obsolescence, 238 Allowance for uncollectibleaccounts, 286-291 Allowancemethod.286. 288-294 Amazon.com,481 Amortization bonds,344-348 defined,158 intangible assets, 167-169 Amortization schedule, 346, 347 Analysis of business 54-59, transactions, 67-70 Analysis of transactions, 54-59, 67-7 0 Annuity, 378 Apple Computers, 223 AR turnoverratio, 3Ol-302 Arthur Andersen, 28 AsYou Sow,122 Assetimpairment,169-17 0 Assetturnoverratio, 179-180,483 Assets. 59 14. Assumptions. Accountingassumptions See Audit opinion, 25 Auditors, 533 Authorizedshares, 384 AtttoZone,438,439 (ADP), 334 AutomaticData Processing Available-for-sale securities. 524

B
BAAN,593 Bad debtsexpense, 286 Seea/so Accounts receivable Balance sheet, 14-18 accountsrecel able, 290 analysisof transactions, 17 16, classified,61 comparative, 16 elements, 57-61 income statement, contrasted, 19 liabilities, 333 long-term assets, 173-174 sample, 73, 333 60, shareholders' equity,385, 395 Bank One,490 Bank reconciliatton,279-284 Bank statement. 9. 284 27 Bames& Noble,223,247 per Basic earnings share, 402 purchase, Basket 156-158 Beginninginventory enorc,274-27 5 Berenson,Alex,526 Berstein. Richard.482 BestBuy, 106,ll2,173,207,222 Black & Decker,332 Bloomingdale's, 210 Board of directors,533 Bond,339-348 amortization,344-348 defined. 339 gettingthe money (issuingbonds), 341-344 issuedat discount,342-343 issuedat par, 342 issuedat premium, 343-344 paying the bondholders, 344 types,341 why used,339-340 Bond certificate,339 Bond covenants, 340 Bondsissuedat a discount,340,342-343 Bonds issuedat a premium, 340,343-344 Bonds issuedat par,340, 342 Book value.112.159 Bookkeeping, 576 Books,18 BordersGroup, 51 Bottom line, 66 BrocadeCommunications Systems, 384 Budgetedcashflows, 428 Business. how it works. 9 Business description,5

627

6 28

I NDE X
217 Contra-revenue, Contributedcaprtal,9, 61, 384 Contribution,9 Controls 303 clear assignment responsibility, of defrned,29 procedures, 303 documentation errors in recording transactions, 124-125 financial statements, 75-76 internalverificationof data, independent 304 invento_1y confols, 242-243 long-tbrmassets, 80 1 long-termdebt,354 Ioss/destruction data,125 of monitoring, 180 physicalcontrols, 180 stockownership,489490 stockholders' equity,402-403 access, 125 unauthorized Convertiblebond, 341 Cookingthebooks,2,528. Seealso Earningsmanipulation Cooper,Cynthia,526 Copyright, 167-168,180 Copyrightof infringement,180 bonds,347 Corporate filings, 24 Corporate 47 Corporategovernance, 6, 530-536 "CorporateSocial and Financial Meta-Analysis,"122 Performance 122 Corporatesocialperformance, Correctivecontrols,76 Cost of goodsavailablefor sale,215,274 Costofgoodssold,274 210 Costco, CPA, 13 Credit,578 Crediting,579 Credit card sales,294 Credit memo, 284 287 Creditpolicies, Creditterms,214 Cumulativeprefenedstock,390 Currentassets, 59 Current ratio, 74, 482, 487 Curves, 168 65-66 Cutoff issues, magazinesubscriptions, 105 rent, 108-109 revenue,105-106 supplies, 109-110 unearned revenue,105 Deferredexpenses, 586 Deferredrevenue.105.585-586 Defrnitely determinable liabilities, 332 Dell,7,24)6,393 DelI. Michael. T Department,12 Depletion,158, 166-167 Depositin transit,280,282 Depreciable base,159 Depreciatingan asset,111 Depreciation accelerated,164-165 activitymethod,162-1 63 decliningbalance,164-165 defined,158 double-declining balance,165 MACRS,208 straight-line,159-162 taxes,and,208 terminology,159 Depreciation expense, I 1-l 13 1 Destructionof accountingdata,125 Detectivecontrols,T6 per Diluted earnings share,402 Direct method,429430, 432434, 437 Direct write-off method,293-294 Disclosure.,lee Notesto financial statements Discount purchase, 214-215 sales,217-21.8 Discounton bondspayable,343 Discount rate,336 Discounting, 336 Disney Corporation,48 Diversification,403, 489490 Dividend.9.582 cash,388-391 defined,388 stock,394-395 Dividend declaration date,389 Dividend paymentdate,390 Dividendyield ratio,481,483,488 procedures, Documentation 303 Dollar Tree Stores,402 Double-declining balancedepreciation, 165 DVD sales,241

Business failures,530-531 Seealso Accountingscandals plan,5, 485 Business Businessrisk,27 Business scandals, 2,28, 530-53I Business transactions, 54-59, 671 0 9,

c
Callablebond, 341 Callablepreferredstock,388 Capital,2, 6l Capital expenditure, 170 Capital lease,157 Capital stock,386 Capital structure, 352 Capitalize,158 Capitalizedleases,157 Capitalizingretainedearnings, 395 Car loan,335 CarnivalCorp.,473474 Canyingvalue,112, 159,343 Cash.77.428 Cashand cashequivalents, 285 Cashbasisaccounting, 65 Cashbudget,428 Cashbudgeting,71 Cashconversion cycle,440 Cashdividends, 388-391 Cashequivalents, 285 Cashflow projection,71 Cashflow statement. Statement cash ,See of flows Cashfrom financingactivities,21 Cashfrom investingactivities,21 Cashfrom operatingactivities,21 Cashinflows/outflows,22 Cashmanagement,2TS bank reconciliation,279 -284 bank statement279. 284 . cashequivalents, 285 cashflow statement. Statement See of cashflows controls.278-279. 303-304 crediVdebit memos,284 physicalcontrols,2'7 8-279, 303 reportingcash,285 Caterpillar,223 (CPA), 13 Certifiedpublic accountant CharlesSchwab,7 Chico's,222,241,242 Circuit City, 120, l2l Classifiedbalancesheet, 6l Clear assignment responsibility, of 303 Cleveland-Cliffs,166 Closed, 589 Closingentries, 589-591 Closelyheld corporation, 7 Commonstock,385-387 Comparability, 51-52 Comparative balancesheets, 16 Compoundinterest,376, 377 Comprehensive income, 521-522 ComputerAssociates, 50, 76 28, Computerized accountingsystems,125 Computron,T5 Conservatism, 53 Consistency, 52 Constraints, 53 Contingentliabilities, 332 Contra-asset, 111 Contraliabilitv account.343

D
4. DardenRestaurants.'7 152 Date of record,389-390 Debenture, 341 Debit,578 Debit-creditrules, 579-580 Debit memo, 284 Debiting, 579 Debt. .leeLiabilities Debrto-equity ratio,352, 482, 487 164-165 Declining balancedepreciation, Deferrals,104-113,578 records, adjustments accounting to 11 3 - 1 1 8 defined,99 depreciation, I 1-1 13 1 equipment, 110 example, 120-122 expenses, 107-lI3 financial statements, and, I 13-1 I 8 gift certificates,105-106 insurance,107- 108

E
Earnedcapital,396 Earnings,476 Earningsmanipulation big bath charges, 528 cookiejar reserves, 528-529 revenue recognition,529-530 Earningsper share(EPS),401-402, 483, 487,526 Earningsrestatement, 476 Ebbers,Bemard,2, 28, 154 EBITDA,489 Effective interestmethod ,344-347 Eichenwald,Kurt,332 Employeetheft, 2IO, 219 Ending inventoryenorc,274 Enron,2, 28, 354, 441,526 planning (ERP) system, Enterprise resource 576,593

INDEX Entrepreneur,9 EPS,401-402,483,487,526 Equipment,110,210 Equity,6l ERP system, 576,593 Errors in recordingffansactions, 124-125 Estimatedliabilittes, 332 Estimateduseful life. 159 EthicsPoint,526 Ex-dividend,390 Expenses, 10 Extemalauditors,533

629

G
GAAP.12.50 Gap,Inc.,242,272273 GeneralElectric, 389 journal, 576 General Generalledger,577 Generalledgeraccountingsystem,576-578 Generalledgersystem,576 Generalstrategic risks, 27 principles Generallyaccepted accounting (GAAP), 12,s0 Gift certificates,105-106 Going-concern assumption, 53 Goodwill,168-169 Google,180 Governance-Metrics Intemational,535 Grossmargin on sales,24 Grossprofit ratio, 238-241, 483, 487 Grossprofits methodof estimatingending inventory,276 Grundfest, Joseph,476

F
Factor,287 Factoing,287 FannieMae, 107 F A S B,12 Fastow, Andrew,28 FiduciaryTrust International,125 FinancialAccounting Standards Board (FASB),12 Financialadvisor,489 Financialanalyst,489 Financialleverage,352 Financialmanagement plan, 5 Financialratios.SeeRatio analysis Financialrisks, 27 Financial scandals, 2,28, 530-531 Financialservices companies, 4 Financialstatement analysis,479486 continuedusefulness, 485-486 horizontalanalysis, 9480 47 how used,485 ratio analysis. ,See Ratio analysis verticalanalysis, 480,481 Financialstatements accounting cycle, 587-588 balancesheet. SeeBalancesheet example,67-70 income statement. Incomestatement ,See interim statements, 66 notes.SeeNotesto frnancialstatements objectives, 70-72 relationshipbetween,23 statement cashflows. ,See of Statement of cashflows statement changes shareholders' of in equity,20 type of informationprovided,67-70 Financing activities, 9,21, 429 First-in, flrst-out (FIFO), 223, 231 Fiscalyear,15 Fisher.Ken. 241 FisherCommunications. 526 Fixed assets. Longterm operational See assets FOB destination, 213 FOB shippingpoint,213 Footnotes,14.25. Seealso Notesto financial statements For-profit frrm, 3 Forecasts, 485 Formsof business organization. .See Ownershipstructure Franchise,168 Freecashflow, 440 Freightcosts, 212113, 218 Friedman,Jane.180 Full-disclosure principle, 58 Fuzzy earnings numbers.SeeEarnings manipulation

H
HCA,534 Health South,2 Heldto-maturity securities, 523 Foods, 8, 285,288,301,425426 Hershey 27 principle, 53 Historical-cost Holdinggainor loss,523,524 Home Depot, 60, 74, 332-335, 354 Horizontalanalysis, 9480 47 Hostile takeover, 388 HurricaneKatrrna,478

I
r BM , 168, 21 6 Impairment,169-170 Improvementprojects,170 Incomestatement, 18-19 balancesheet.contrasted. 19 comprehensive income, 521 -522 defrned, 18 discontinued operations, 647 9 47 extraordinary rtems,47747 9 time periods,65-66 Incometaxes.,See Taxes Independent internal verification of data,304 Indirect method,429430, 435436, 438 Informationrisks, 27 Input and processing controls, 124 InstitutionalShareholder 535 Services, Insull Utility, 530 Insurance, 107-108 Intangibleassets amortizatron, 167 copyright, 167-168 defined,155 franchise,168 goodwill,168-169 patent,168 R&D costs,169 r is k s , 180 trademark,168 lntel.222.328-329 lnterest compound,376 defined,10 formula, 101 simple,376 Interestexoense. 100

Interestpayable,100 Interestreceivable,101 Internalcontrols,75. Seealso Controls InternalRevenue Service(IRS), 13 International Paper Company,334 Internet, trading stock, 7 Intuit Inc., 620 Inventory, 209-276 acquiringmerchandise sale,210-215 for controls,242-243 cost flow assumptions. Inventorycost See flow assumptions ethics,243 freightcosts, 2t2-213, 218 grossprofits methodof estimatingending inventory,276 LCM rule, 238 obsolescence, 238,243 over/understatement, 4-27 5 27 periodic inventorysystem,212, 219-220 perpetualinventorysystem,212, 219-220 purchase discounts,214-215 purchase returnsand allowances, 214 ratio analysis, 238-242 risks,243 salesdiscounts,217-218 salesreturnsand allowances, 217 salestaxes,218-219 selling merchan dise,216-279 shipping costs,272-213, 218 shrinkage, 210,219 Inventorycontrols,242-243 Inventorycost flow assumptions, 220-238 example (Tom's Wear), 233-238 FLFO,223,231 financial statements. and,226-230 how methodchosen, 232 industryusage,230 LLFO.223-225.231 methods,compared,225 specificidentificationmethod,221 taxes.231..233 weightedaveragecost,221-222 Inventory enors, 274-27 5 Inventoryobsolescence, 243 238, Inventoryshrinkage, 2I0, 21,9 Inventoryturnoverratio, 241-242, 482, 487 Investingactivities,9, 21, 429 Investments securities in available-for-sale securities, 524 held-to-maturitysecurities, 523 selling the securities, 524 trading securities,523-524 IRS, 13 Issuedshares, 384

J
J.D.Edwards, 593 I&J SnackFoodsCorp., 484-488 JetBlue, l8 Journal,576 Journalentries posting, 583 recording,580-583 Junkbond,341

K
Kelly, Kevin, 180 Kozlowski,Dennis,28, 332 Kroger,219,24l Kumar, Sanjay,28, 50

630

I NDE X
See Manipulatingearnings. Earnings manipulation 4 Manufacturingbusiness, Market indicators,480-484 Market rate of interest,341 Marketing plan, 5 Marking to market, 523 MasterCard, 294 MatchingprincipIe,62 536 Material weakness, Materiality,53 353 McDonald's, McKessonCorporation,223, 332 Measuring assets, 61-62 Measuringincome,98-99 inventory,210 Merchandise Merchandise payable, L20 4 Merchandising business, Merck, 96 Merrill Lynch,7 Micron Technology,168 Microsoft, 389,393 Mills Corporation,62 cost recoverysystem Modified accelerated (MACRS),208 52 Monetary-unitassumption, Monitoring,180 Moody's,535 MSN Money,96 24 Multistep income statement, Ordinary annuities,378 Ordinary repairs,170 income,521 Other comprehensive 101 Otherreceivables, Outstandingcheck,280, 282 Outstanding shares, 385 Over/understatement inventorv.27ar27 5 of Owner'sequity, 14 4-9 Ownershipstructure, corporation, T-9 partnership, 6-7 soleproprietorship, 5-6 Oxley, Michael, 530

t
Lands'End,2-3 Large stock dividend,395 Last-in, first-out (LIFO), 223-225, 231 Lay, Ken, 2,28,531 LCM rule, 238 Leaseaccounting,354 Leasehold improvements, 157 Leverage,352 Levitt, Afthur, 528 Liabilities, 14, 6l, 331-382 adjunct,344 balancesheetpresentation, 333 bank loan, 338 bond. SeeBond contingent,332 definitely determinable, 332 estimated, 332 example(Tom'sWear),348-351 financial statement analysis,352-353 long-termnotespayable,335-338 mortgage, 335-338 payroll, 334-335 ratio analysis,352-353 risk, 354 types,332 LLFO,223-225,231 LIFO conformity rule, 232 Limited liability, 8 Limited liability corporation(LLC), 8 (LLP), 8 Limited liability partnership Line of credit,338 Linens'n ThingsInc., 384,385 Liquidity,59,440 Liquidity ratios,480, 482 LLC,8 LLP, 8 Long-termassets, 59 Long-termliabilities, 61 Long-termoperational assets, 153-208 plantassets, acquiring 154-158 acquisition costs,155-156 assetimpaiment, 769-170 balancesheetpresentation, 3-1.7 l7 4 purchase, basket 156-158 controls, l80 depletion,166-1.67 depreciation. Depreciation .See example(Tom'sWear), 174-176 improvements, 170 intangible 167-169. assets, Seealso Intangibleassets lease buy?,157 or ratio analysis, 176-180 revisedestimates useful life, 170-17| of risks,180 sellingthe assets, 171-173 typesof assets, 155 Loss or destruction accountingdata,125 of (LCM) rule, 238 Lower-of-cost-or-market Lowe's,74

P
PlEratio,48l,483,488 P&L. SeeIncome statement Pacioli.Luca. 579 Paid-in capital,61 PapaJohn's,389, 401, 520 Par value.340. 385 Partnership agreement, 6 Patent,168 Payee,295 Payroll deductions, 334 Payroll tax expense, 334 PCAOB,12,533 PeopleSoft, 593 Pepsico, 223 receivable method,288 Percentof accounts Percentage salesmethod of ,288, 293 Periodicinventorysystem,212, 219-220 Permanent accounts, 589 Perpetual inventorysystem,212, 219-220 180 Physical controls, Plant assets. Long-term operational Sea assets pill, 388 Poison Polo Ralph LaurenCorporation,T2 Positivefinancial levenge, 352 Postclosing trial balance, 591 Posting,577,583 Prefened stock,387,388,390 Premiumon bondspayable,343-344 PrenticeHall, 4 Prepaidexpenses, 120 Prepaidinsurance, 107-108 54, Prepaidrent, 108-109 Present value, 336. SeealsoTime value of money Present valuetables, 381-382 Preventive controls,75 (P/E)ratio,481,483,488 Price-earnings Principal, 10 Principles.,See Accountingprinciples Productwarranties, 6-297 29 Profit, 50 (P&L). SeeIncome Profit and loss statement statement Profitability ratios,480, 483 Promissorynote,295 Property,plant, and equipment. SeeLongterm operational assets Prospectus, 397 Public CompanyAccountingOversight Board (PCAOB), 12,533 Purchaseallow ance,21. 4 Purchase discounts, 4-215 21 Purchase order.211. 272 retum, 214 Purchase returnsand allowances, 214 Purchase

N
Net assets, 61 14, Net income, 18, 66, 476, 521 Net loss,66 Net realizablevalue (NRV) of accounts receivable, 286 217 Net sales, New York StockExchange(NYSE), 7 Nike, 168 (NSF) check,281, 283 Non-sufficient-funds preferredstock,390 Noncumulative 59 Noncurrentassets, Noncurrentliabilities, 61 3 Norfor-profit organization, 295 Notesreceivable, 14. Notesto financial statements, 25 impairment,170 asset cash,441 285 cashequivalents, changein inventorycostflow methods, 232 its companypurchasing own stock,392 dividendpolicy, 389 reserve, 243 inventoryobsolescence 224 LIFO disclosure, revenue recognition,216 288 uncollectibleaccounts, 485 usefulness, NSF check.281.283 NYSE, 7

M
MACRS,208 Macy's,219,242 Magazine subscriptions. I 05 Maker,295 Management, 531,533 plan, 5 Management Management's report on internalcontrols, 536

238,243 Obsolescence. financing,354 Off-balance-sheet OfficeDepot,271,212,334,485 On account,54 Operatingactivities,9, 2I, 429 Operatingcy cle, 2lO, 21| Operatingrisks, 27 Oracle,593

631

a
527 Quality of earnings, Quick ratio, 123, 482, 487 168 Quiznos,

R
R&D costs,169 Ratioanalysis,480 accountsreceivable, 3Ol -302 AR turnoverratio, 301-302 asset turnoverratio, 179-180 currentratio, 74 debt,252 debtto-equity r atio,352 yield ratio,481,483,488 dividend per earnings share(EPS),401-402 example,484-488 grossproht ratio, 238-241 inventory,238-242 inventoryturnoverratio, 241-242 liquidity, 74,122-123 long-termoperational assets, 17Gl 80 overview(ratios,listed), 482483 P/E ratio,481,483,488 quickratio, l23 (ROA), 176,179 return on assets return on equity (ROE),401 shareholders'eq.Jity,401402 times-interest-earned ratio, 352-353 typesof ratios,480 understanding ratios,484 workin g capital, 722-723 Real accounts, 589 Realized,102 Receivables, 286. Seea/soAccounts receivable Recognized revente,62 Recognizingrevenueand expenses, 62 Reconciliationand control reports,125 journal entries,580-583 Recording Relativefair marketvalue method.156 Relevance, 5l Reliability, 51 Remodeling,170 Remoteshadowing,125 Rent, 108-109 Repairs, 170 Replacement cost,238 Reportedearnings, 476 (R&D) costs,169 Research development and Residual value,111,159 Retainedearnings,14,20, 61, 396 Retumon assets (ROA), 176,179,483, 487,488 Returnon equity (ROE), 401,483,487 Revenue,l0 Revenue expenditure, 170 Revenue-recognition principle, 62 Reyes,GregoryL., 384 Rigas,John,28, 98 Rigas,Timothy, 28, 98 Risk,27. Seealso Controls ROA,176,t79,483,487 ROE,401,483,487 Ruth's Chris SteakHouse,478

Salvagevalue, 11l, 159 SAP,593 Sarbanes, Paul,530 Sarbanes-Oxley Act, 403, 526, 531-534 SBA, 5 Sears,5l-52 SEC. SeeSecurities and Exchanse Commission(SEC) Secured bond,341 Securities Exchange and Commission

(sEC),7

corporate filings, 24 defined.7 delegation FASB, 12 to improperreporting,75

rPo,397
441 Securitization accounts of receivable, Segregation duties, l8O, 242 of Selling merchan dise,216-219 Separate-entity assumption, 52 Serialbond, 341 Servicecompany,3 Shareholder, 7 Shareholder value,482 Shareholders' equity, 14, 383426 balancesheetpresentation, 385, 395 cashdividends, 388-391 common stock,385-387 contributed capital, 384 example(Tom'sWear),397401 major components, 384 preferredstock,387, 388 ratio analysis,401402 retainedearnings,396 risks facedby owners,402403 stock (authorized, issued,outstanding), 384-385 stock dividend,394-395 stock split, 395-396 fteasurystock,391-394 Shares capital stock,7 of SherwinWilliams, 353 Shipping costs,272-213, 278 Shipping terms,213 Shoplifting,2l9 Simpleinterest, 6, 377 37 24 Single-step income statement, Skilling, Jeff,2,28 Administration(SBA), 5 Small Business Small stock dividend,394-395 "SmartestGuys in the Room, The," 2 Social responsibllity,122 Solvencyratios, 480, 482 Sony,238 Specificidentificationmethod,227 Standard-setting bodies,12 Staples, Inc.,155,485 Starbucks. 222.375 Statedvalue,340 Statement cashflows, 21-22, 427474 of cashflows from investingand financing activities,436437 cashflows from operatingactivitiesdirect method,432434 cashflows from operatingactivitiesindirect method,435436 classifi cation of c ash,429 convertaccrualamounts cash,431432 to dehned,21 direct method,429430, 432434, 437 441 ethics(earnings manipulation), financial statementanalysis, 438440

free cash flow, 440 importance,428,441 indirect method, 429430, 435436, 438 Statement changes owner's eqity,2O of in Statement changes shareholders' of in equity,20 Statement financialposition.SeeBalance of sheet Statement income.SeeIncome statement of Stayingup to date,537 Stockdividend,394-395 Stockexchange, 7 Stockmarket,7 Stock option, 384 Stock ownership, risks, 489490 Stock split, 395-396 Stockbrokers,7 Stockholder, T Stockholders'equity, Seealso 14. Shareholders' equity Straight-lineamortization,167,347-348 Straight-linedepreciation, 159-162 Subsidiaryledgers,577 Subway,168 Sullivan, Scott,2'7 154 , SunTrust, 536 Supermarket, 11 Supplies, 109-110,210 Supportingevidence,125 Swartz,Mark, 28, 332

T
T-Mobile,238 Talbots.102. lO3 Tangible assets, 155 Tatget,4, 210, 219, 242, 243 Taxes corporate income,9 depreciation, 208 inventorycostflow assumptions, 231,233 IRS, 13 LIFO/FIFO. 231.233 MACRS,208 reporting,479 sales,218-219 Technology,489 Temporaryaccounts, 589 10-K report, 24 Term bond, 341 TexasInstruments, 393 "Thanksto the Fed, CashIs Almost Exciting" (Spors),278 3115. n145.214 Time-periodassumption, 53 Time value of money, 376-382 presentvalue of annuity,378-380 presentvalue of singleamount,376-378 present valuetables, 381-382 simplevs. compound interest, 3'76,377 TimeWarner. 105. 106 Times-interest-earned ratio. 3 52-3 53. 482,487 Timing differences, 99 TootsieRoll, 224 Trademark.168. 180 Trading securities, 523-524 Treasurystock,391-394 Trial balance, 583 adjusted, 586-587 defined,577 postclosing, 591

s
Safeway, 219 Salesdiscounts, -218 217 Salesreturnsand allowances. 217 Salestaxes, 218-21.9

632

I NDE X

Turco, Preston,2l0 Tweeter HomeEntertainment Group,243 2llo,nl30,2l4 Tyco,2,28,332

v
Verticalanalysis, 480, 481 Vinson,Betty,27

Unauthorized accessto accounting information, 125 Uncollectibleaccounts. Accounts .lee receivable Under/overstatement inventory,274-27 5 of Unearned revenue.105.585 Units of productiondepreciation, 162-163 Unrealizedgainsand losses, 521, 523,524 Unsecured bond, 341 Uses of accrual accounting information, 66-67

Whole FoodsMarket, 241,242 Withdrawal,582 Woolsey,JohnG., 278 Working capital, 122-123, 482, 487 WorldCom, 27, 28, Ml, 526 2,

Wal-Mart, 5l-52, 155,2ll, 479481 332 Walgreens, Walt Disney Company,48 Warranties,296-297 Watkins,Shenon,526 Weightedaveragecost,221--222 Wendy's,223,353 485 What-if financial statements, WhatMatters Mosr (Hollander),122 526 Whistleblowers,

Xerox,2,75

Zero interestbond, 341