Volume1
, Principles of Accounting,
Volume 1: Financial Accounting
SENIOR CONTRIBUTING AUTHORS
MITCHELL FRANKLIN, LE MOYNE COLLEGE (FINANCIAL ACCOUNTING)
PATTY GRAYBEAL, UNIVERSITY OF MICHIGAN-DEARBORN (MANAGERIAL
ACCOUNTING)
DIXON COOPER, OUACHITA BAPTIST UNIVERSITY
TABLE OF CONTENTS
Preface 1
1 Role of Accounting in Society 11
1.1 Explain the Importance of Accounting and Distinguish between Financial and
Managerial Accounting 12
1.2 Identify Users of Accounting Information and How They Apply Information 14
1.3 Describe Typical Accounting Activities and the Role Accountants Play in
Identifying, Recording, and Reporting Financial Activities 18
1.4 Explain Why Accounting Is Important to Business Stakeholders 24
1.5 Describe the Varied Career Paths Open to Individuals with an Accounting Education 32
Introduction to Financial Statements 61
2.1 Describe the Income Statement, Statement of Owner’s Equity, Balance
Sheet, and Statement of Cash Flows, and How They Interrelate 62
2.2 Define, Explain, and Provide Examples of Current and Noncurrent Assets,
Current and Noncurrent Liabilities, Equity, Revenues, and Expenses 77
,5 Completing the Accounting Cycle 285
5.1 Describe and Prepare Closing Entries for a
Business 286
, 5.2 Prepare a Post-Closing Trial Balance298
2.3 Prepare an Income Statement, Statement of Owner’s Equity, and Balance
Sheet 81
3 Analyzing and Recording Transactions 115
3.1 Describe Principles, Assumptions, and Concepts of Accounting and Their
Relationship to Financial Statements 116
3.2 Define and Describe the Expanded Accounting Equation and Its Relationship to
Analyzing Transactions 124
3.3 Define and Describe the Initial Steps in the Accounting Cycle 130
2
3.4 Analyze Business Transactions Using the Accounting Equation and Show the
Impact of Business Transactions on Financial Statements 135
3.5 Use Journal Entries to Record Transactions and Post to T-
Accounts 140 3.6 Prepare a Trial Balance 165
The Adjustment Process 211
4.1 Explain the Concepts and Guidelines Affecting Adjusting Entries 212
4.2 Discuss the Adjustment Process and Illustrate Common Types of Adjusting
Entries 215
4.3 Record and Post the Common Types of Adjusting Entries 227
4.4 Use the Ledger Balances to Prepare an Adjusted Trial Balance 236
4.5 Prepare Financial Statements Using the Adjusted Trial Balance 239
4
, Principles of Accounting,
Volume 1: Financial Accounting
SENIOR CONTRIBUTING AUTHORS
MITCHELL FRANKLIN, LE MOYNE COLLEGE (FINANCIAL ACCOUNTING)
PATTY GRAYBEAL, UNIVERSITY OF MICHIGAN-DEARBORN (MANAGERIAL
ACCOUNTING)
DIXON COOPER, OUACHITA BAPTIST UNIVERSITY
TABLE OF CONTENTS
Preface 1
1 Role of Accounting in Society 11
1.1 Explain the Importance of Accounting and Distinguish between Financial and
Managerial Accounting 12
1.2 Identify Users of Accounting Information and How They Apply Information 14
1.3 Describe Typical Accounting Activities and the Role Accountants Play in
Identifying, Recording, and Reporting Financial Activities 18
1.4 Explain Why Accounting Is Important to Business Stakeholders 24
1.5 Describe the Varied Career Paths Open to Individuals with an Accounting Education 32
Introduction to Financial Statements 61
2.1 Describe the Income Statement, Statement of Owner’s Equity, Balance
Sheet, and Statement of Cash Flows, and How They Interrelate 62
2.2 Define, Explain, and Provide Examples of Current and Noncurrent Assets,
Current and Noncurrent Liabilities, Equity, Revenues, and Expenses 77
,5 Completing the Accounting Cycle 285
5.1 Describe and Prepare Closing Entries for a
Business 286
, 5.2 Prepare a Post-Closing Trial Balance298
2.3 Prepare an Income Statement, Statement of Owner’s Equity, and Balance
Sheet 81
3 Analyzing and Recording Transactions 115
3.1 Describe Principles, Assumptions, and Concepts of Accounting and Their
Relationship to Financial Statements 116
3.2 Define and Describe the Expanded Accounting Equation and Its Relationship to
Analyzing Transactions 124
3.3 Define and Describe the Initial Steps in the Accounting Cycle 130
2
3.4 Analyze Business Transactions Using the Accounting Equation and Show the
Impact of Business Transactions on Financial Statements 135
3.5 Use Journal Entries to Record Transactions and Post to T-
Accounts 140 3.6 Prepare a Trial Balance 165
The Adjustment Process 211
4.1 Explain the Concepts and Guidelines Affecting Adjusting Entries 212
4.2 Discuss the Adjustment Process and Illustrate Common Types of Adjusting
Entries 215
4.3 Record and Post the Common Types of Adjusting Entries 227
4.4 Use the Ledger Balances to Prepare an Adjusted Trial Balance 236
4.5 Prepare Financial Statements Using the Adjusted Trial Balance 239
4
