, Sixteenth Edition
I n tro d u c t i o n t o
Management
Accounting
Global Edition
Charles T. Horngren
Stanford University
Gary L. Sundem
University of Washington – Seattle
David Burgstahler
University of Washington – Seattle
Jeff Schatzberg
University of Arizona
Boston Columbus Indianapolis New York San Francisco Upper Saddle River
Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto
Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
, To our spouses and children,
and to all our students, past and
present.
Editor-in-Chief: Donna Battista Managing Editor, Production: Jeff Holcomb
Acquisitions Editor: Ellen Geary Sr. Production Project Manager: Roberta Sherman
Publisher, Global Edition: Laura Dent Senior Manufacturing Controller, Production, Global Edition: Trudy Kimber
Director of Editorial Services: Ashley Santora Manufacturing Buyer: Carol Melville
Editorial Project Manager: Nicole Sam Sr. Art Director: Anthony Gemmellaro
Editorial Assistants: Jane Avery and Lauren Zanedis Cover Design: Jodi Notowitz
Editorial Assistant, Global Edition: Toril Cooper Interior Design: 511 Design and Anthony Gemmellaro
Director of Marketing: Maggie Moylan Leen Cover Photo: © Luis Louro, Shutterstock
Marketing Manager: Alison Haskins Media Project Manager, Editorial: James Bateman
Marketing Manager, International: Dean Erasmus Media Project Manager, Production: John Cassar
Marketing Assistant: Kimberly Lovato
Pearson Education Limited
Edinburgh Gate
Harlow
Essex CM20 2JE
England
and Associated Companies throughout the world
Visit us on the World Wide Web at:
www.pearson.com/uk
© Pearson Education Limited 2014
The rights of Charles T. Horngren, Gary L. Sundem, David Burgstahler and Jeff Schatzberg to be identified as authors of this
work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
Authorised adaptation from the United States edition, entitled Introduction to Management Accounting, Sixteenth Edition,
ISBN 978-0-13-305878-9 by Charles T. Horngren, Gary L. Sundem, David Burgstahler and Jeff Schatzberg, published by
Pearson Education © 2014.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by
any means, electronic, mechanical,photocopying, recording or otherwise, without either the prior written permission of thepub-
lisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron
House, 6–10 Kirby Street, London EC1N 8TS.
All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in
the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any
affiliation with or endorsement of this book by such owners.
Microsoft® and Windows® are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. Screen
shots and icons reprinted with permission from the Microsoft Corporation. This book is not sponsored or endorsed by or
affiliated with the Microsoft Corporation.
ISBN-13: 978-0-273-79001-3
ISBN-10: 0-273-79001-3
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
10 9 8 7 6 5 4 3 2 1
15 14 13 12 11
Typeset in 10/12 Times by GEX Publishing Services
Printed and bound by Courier/Kendallville in United States of America
The publisher's policy is to use paper manufactured from sustainable forests.
, About the Authors
Charles T. Horngren was the Edmund W. Littlefield Professor of Accounting, emeritus,
at Stanford University. A graduate of Marquette University, he received his MBA from Harvard
University and his PhD from the University of Chicago. He also received honorary doctorates
from Marquette University and DePaul University.
A certified public accountant, Horngren served on the Accounting Principles Board, the
Financial Accounting Standards Board Advisory Council, and the Council of the American
Institute of Certified Public Accountants and served as a trustee of the Financial Accounting
Foundation, which oversees the Financial Accounting Standards Board and the Government
Accounting Standards Board. He is a member of the Accounting Hall of Fame.
Horngren served the American Accounting Association as its president and as director of
research. He received the association’s first annual Outstanding Accounting Educator Award. He
also received its Lifetime Contribution to Management Accounting Award.
The California Certified Public Accountants Foundation gave Horngren its Faculty
Excellence Award and its Distinguished Professor Award. He is the first person to have received
both awards. The American Institute of Certified Public Accountants presented him with its first
Outstanding Educator Award. He was also named Accountant of the Year, Education, by the
national professional accounting fraternity, Beta Alpha Psi.
Professor Horngren was a member of the Institute of Management Accountants, where he
received its Distinguished Service Award. He was a member of the Institute’s Board of Regents,
which administers the Certified Management Accountant examinations.
Horngren authored several other accounting books published by Prentice Hall: Cost
Accounting: A Managerial Emphasis, Introduction to Financial Accounting, Accounting, and
Financial Accounting. He was also the Consulting Editor for the Charles T. Horngren Series in
Accounting.
Gary L. Sundem is professor of accounting emeritus at the University of Washington,
Seattle. He received his BA from Carleton College and his MBA and PhD from Stanford
University.
Professor Sundem has served as President of the American Accounting Association,
Executive Director of the Accounting Education Change Commission, and Editor of The
Accounting Review. He is currently president of the International Association for Accounting
Education and Research.
Sundem is a past president of the Seattle chapter of the IMA (formerly the Institute of
Management Accountants). He has served on IMA’s national board of directors and chaired its
Academic Relations and Professional Development committees. He has chaired the AACSB’s
Accounting Accreditation Committee He currently serves on the Board of Trustees of Rainier
Mutual Funds and the Board of Trustees of Carleton College, where he chairs the audit committee.
He received the Carleton College Outstanding Alumni award in 2002.
Professor Sundem has numerous publications in accounting and finance journals including
Issues in Accounting Education, The Accounting Review, Journal of Accounting Research, and
Journal of Finance. He was selected as the Outstanding Accounting Educator by the American
Accounting Association in 1998 and by the Washington Society of CPAs in 1987.
3
I n tro d u c t i o n t o
Management
Accounting
Global Edition
Charles T. Horngren
Stanford University
Gary L. Sundem
University of Washington – Seattle
David Burgstahler
University of Washington – Seattle
Jeff Schatzberg
University of Arizona
Boston Columbus Indianapolis New York San Francisco Upper Saddle River
Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto
Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo
, To our spouses and children,
and to all our students, past and
present.
Editor-in-Chief: Donna Battista Managing Editor, Production: Jeff Holcomb
Acquisitions Editor: Ellen Geary Sr. Production Project Manager: Roberta Sherman
Publisher, Global Edition: Laura Dent Senior Manufacturing Controller, Production, Global Edition: Trudy Kimber
Director of Editorial Services: Ashley Santora Manufacturing Buyer: Carol Melville
Editorial Project Manager: Nicole Sam Sr. Art Director: Anthony Gemmellaro
Editorial Assistants: Jane Avery and Lauren Zanedis Cover Design: Jodi Notowitz
Editorial Assistant, Global Edition: Toril Cooper Interior Design: 511 Design and Anthony Gemmellaro
Director of Marketing: Maggie Moylan Leen Cover Photo: © Luis Louro, Shutterstock
Marketing Manager: Alison Haskins Media Project Manager, Editorial: James Bateman
Marketing Manager, International: Dean Erasmus Media Project Manager, Production: John Cassar
Marketing Assistant: Kimberly Lovato
Pearson Education Limited
Edinburgh Gate
Harlow
Essex CM20 2JE
England
and Associated Companies throughout the world
Visit us on the World Wide Web at:
www.pearson.com/uk
© Pearson Education Limited 2014
The rights of Charles T. Horngren, Gary L. Sundem, David Burgstahler and Jeff Schatzberg to be identified as authors of this
work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
Authorised adaptation from the United States edition, entitled Introduction to Management Accounting, Sixteenth Edition,
ISBN 978-0-13-305878-9 by Charles T. Horngren, Gary L. Sundem, David Burgstahler and Jeff Schatzberg, published by
Pearson Education © 2014.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by
any means, electronic, mechanical,photocopying, recording or otherwise, without either the prior written permission of thepub-
lisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron
House, 6–10 Kirby Street, London EC1N 8TS.
All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in
the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any
affiliation with or endorsement of this book by such owners.
Microsoft® and Windows® are registered trademarks of the Microsoft Corporation in the U.S.A. and other countries. Screen
shots and icons reprinted with permission from the Microsoft Corporation. This book is not sponsored or endorsed by or
affiliated with the Microsoft Corporation.
ISBN-13: 978-0-273-79001-3
ISBN-10: 0-273-79001-3
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
10 9 8 7 6 5 4 3 2 1
15 14 13 12 11
Typeset in 10/12 Times by GEX Publishing Services
Printed and bound by Courier/Kendallville in United States of America
The publisher's policy is to use paper manufactured from sustainable forests.
, About the Authors
Charles T. Horngren was the Edmund W. Littlefield Professor of Accounting, emeritus,
at Stanford University. A graduate of Marquette University, he received his MBA from Harvard
University and his PhD from the University of Chicago. He also received honorary doctorates
from Marquette University and DePaul University.
A certified public accountant, Horngren served on the Accounting Principles Board, the
Financial Accounting Standards Board Advisory Council, and the Council of the American
Institute of Certified Public Accountants and served as a trustee of the Financial Accounting
Foundation, which oversees the Financial Accounting Standards Board and the Government
Accounting Standards Board. He is a member of the Accounting Hall of Fame.
Horngren served the American Accounting Association as its president and as director of
research. He received the association’s first annual Outstanding Accounting Educator Award. He
also received its Lifetime Contribution to Management Accounting Award.
The California Certified Public Accountants Foundation gave Horngren its Faculty
Excellence Award and its Distinguished Professor Award. He is the first person to have received
both awards. The American Institute of Certified Public Accountants presented him with its first
Outstanding Educator Award. He was also named Accountant of the Year, Education, by the
national professional accounting fraternity, Beta Alpha Psi.
Professor Horngren was a member of the Institute of Management Accountants, where he
received its Distinguished Service Award. He was a member of the Institute’s Board of Regents,
which administers the Certified Management Accountant examinations.
Horngren authored several other accounting books published by Prentice Hall: Cost
Accounting: A Managerial Emphasis, Introduction to Financial Accounting, Accounting, and
Financial Accounting. He was also the Consulting Editor for the Charles T. Horngren Series in
Accounting.
Gary L. Sundem is professor of accounting emeritus at the University of Washington,
Seattle. He received his BA from Carleton College and his MBA and PhD from Stanford
University.
Professor Sundem has served as President of the American Accounting Association,
Executive Director of the Accounting Education Change Commission, and Editor of The
Accounting Review. He is currently president of the International Association for Accounting
Education and Research.
Sundem is a past president of the Seattle chapter of the IMA (formerly the Institute of
Management Accountants). He has served on IMA’s national board of directors and chaired its
Academic Relations and Professional Development committees. He has chaired the AACSB’s
Accounting Accreditation Committee He currently serves on the Board of Trustees of Rainier
Mutual Funds and the Board of Trustees of Carleton College, where he chairs the audit committee.
He received the Carleton College Outstanding Alumni award in 2002.
Professor Sundem has numerous publications in accounting and finance journals including
Issues in Accounting Education, The Accounting Review, Journal of Accounting Research, and
Journal of Finance. He was selected as the Outstanding Accounting Educator by the American
Accounting Association in 1998 and by the Washington Society of CPAs in 1987.
3
