Essential of Financial
Accounting
Larson Kermit
Introduces students to
accounting information, how it is developed, and how it is used to make decisions about
corporations and ether economic organizations. The text provides an efficient, clear
presentation that Is student friendly. It supports a variety of teaching approaches and
now is very supportive of those who want to emphasize decision making, critical thinking,
and communication skills.
This edition incorporates
several major changes. Most notable are the following:
A new Chapter 1 explains the
relevance of accounting to business decisions and to the future careers of business
students. The chapter describes the role of accounting in the context of other
organizational functions such as finance, human resources, research and development,
production, marketing, and executive management. It also explains the work accountants do,
their certifications, and the pervasive importance of ethics in accounting.
Corporations are now used in
the illustrations and examples throughout the early chapters of the book. Students will
find the presentation easy to understand and it is responsive to the requests of many
adopters. The text consistently places the student reader in the role of an information
user. Thus, selected procedural matters such as the work sheet have been minimized or
removed from the body of specific chapters. (Appropriate work sheet coverage is provided
in an appendix.)
The chapter on merchandising
operations has been completely rewritten to focus on perpetual inventory systems. This
change reflects the increasing use of perpetual systems. It also shows students more
clearly how accounting deals with both the cost and revenue aspects of sales transactions.
Chapter 9 includes a new
explanation of periodic inventories with a transaction-by-transaction comparison to
perpetual systems.
Chapter 13 contains new
material that describes the differences between "C" corporations, "S"
corporations, limited liability companies, partnerships, proprietorships, limited
partnerships, and limited liability partnerships. New Progress Check questions are spaced
appropriately throughout each chapter with answers provided at the end of the chapter.
These review questions get students to stop momentarily and reflect on whether they should
spend more time studying a given section of the text before moving on. A new Quick Study
category of five-minute exercises is provided after each chapter. Instructors confirm an
increasing reliance on shorter problem material for uses in-class illustrations as well as
homework assignments. Undoubtedly, the prospect of solving problems in a short time and
the rapid feedback of having done so successfully are motivating factors that lead
students to extend their study efforts. We provide at least one Quick Study exercise for
each learning objective.
A selected number of
problems and alternate problems now have requirements that are separated into a
Preparation Component and an Analysis Component. The analysis component typically requires
students to consider the financial statement effects of alternative situations and present
their analysis in the form of an essay.
Each chapter includes a new
category of assignments under the heading Critical Thinking: Essays, Problems, and Cases.
Chapter 10 include:
Analytical Essays.
Business Communication
Cases.
Financial Reporting
Problems.
Financial Statement Analysis
Cases.
Managerial Decision Cases.
Managerial Analysis
Problems.
Ethical Issues Essays.
A new Concept Tester
question, designed as a crossword puzzle, is provided at the end of many chapters. These
puzzles motivate students to learn the meaning of the glossary terms and are supported by
the working papers.
A new opening scenario for
each chapter draws on the facts of a real company to identify some of the analysis and
decision questions addressed in the chapter. Later in the chapter, one or more references
show how the ideas being explained at that point apply to the company that was described
in the chapter opening.
The entire text reflects a
dramatically expanded emphasis on real-world examples that have been carefully selected
and integrated into the discussion. Most of these references are accompanied by photos
that draw attention to the nature of the business or the specific company used as the
example.
The book has been carefully
redesigned to generate student interest and yet provide a basis for pricing the text in a
manner that is responsive to increasing student concerns with the high cost of textbooks.
Several features of this
text warrant special consideration in your adoption decision. These include the following:
In every chapter, the book
is now written so that students learn and practice how to use accounting information in
making decisions. This shift in focus has been accomplished while maintaining the
appropriate goal of showing students how the information is developed. Too often, the
importance of this understanding to managers and other nonaccountant decision makers has
been overlooked or dismissed. By gaining an introductory understanding of the processes by
which accounting information and reports are generated, future decision makers learn the
limits of accounting information. They learn to avoid overstating or misinterpreting the
information. Thus, they are less apt to confuse such things as book values and market
values, accumulated depreciation and spendable funds, or net income and cash inflows.
An increasing number of
companies routinely convert their receivables into cash without waiting to receive
customer payments. In dealing with this modem business practice, this text replaces the
traditional discussion of discounting notes receivable with a more general examination of
the various ways businesses convert receivables into cash.
Streamlined discussions
provide clear treatment of topics such as lower of cost or market, retail inventory
methods, accelerated depreciation, MACRS, and leases. The text has a uniquely balanced set
of asset chapters. In particular, the coverage of Chapter 11 is notable. It completes the
asset coverage by discussing natural resources, intangible assets, and long-term
investments. The long-term investments portion naturally concludes with a discussion of
investments in international operations. Instructors and reviewers have uniformly called
for a new commitment to show students the relevance of accounting information and to teach
them how to use the information. The text responds to this in a variety of ways. Most
obviously, each chapter includes a section under the general heading Using the
Information. These sections show students how to calculate, interpret, and use
information. In addition, a large number of the assignments require students to analyse
and/or interpret the financial statement consequences of various transactions or events. A
complete set of Alternate Problems is published in a separate booklet that is available in
quantity to adopters.
A variety of assignments in
each chapter introduce students to the complete financial statements with footnotes and
related disclosures for two companies in different industries. Southwest Airlines Co. and
Lands' End, Inc. Mark-to-market accounting is a major break from the tradition of
historical cost accounting. As a result, the text reflects a special effort to clearly
explain it in the contexts of short-term investments, long-term investments, and
alternative valuation models.
Recommended for The
Chartered Financial Analyst/CFA/ Exam
744 pages