Index

A Accountsreqeivablemethod,288-290, 293 Authorizedshares,384

Abercrombie& Fitch. 242.395 Accountsreceivableturnoverratio, AtttoZone,438,439
Accelerateddepreciation,164-165 482,487 AutomaticData Processing(ADP), 334
Accountingassumptions Accountsreceivable(AR) turnoverratio, Available-for-salesecurities.524
going-concernassumption,53 301-302
monetary-unitassumption,52 Accrual accountinginformation,66-67 B
separate-entity assumption,52 Accrual basisaccounting, 63-65 BAAN,593
time-periodassumption,53 Accruals,578 Bad debtsexpense,286 Seea/so Accounts
Accountingconstraints,53 adjustmentsto accountingrecords, receivable
Accountingcycle 113- 1 1 8 Balancesheet,14-18
defined,580 defined,99 accountsrecel able, 290
example,592-600 example, 120-122 analysisof transactions,16, 17
step 1 (recordingjournal entries), financialstatements. and. 113-118 classified,61
580-583 interestexpense/revenue, 100-102 comparative,16
step2 (postingjournal entriesto general other revenues/expenses, 102-104 elements,57-61
ledger),583 Accruedexpenses, 101, 122,584-585 income statement,contrasted,19
step3 (trial balance),583 Accruedliabilities, 101 liabilities,333
step4 (adjustingjournal entries), Accruedrevenue,584 long-termassets,173-174
583-586 Accumulated amorttzatlon, | 67 sample,60, 73, 333
step5 (adjustedtrial balance),586-587 Accumulateddepreciation, 1,1I,ll2, 120, shareholders'equity,385, 395
step6 (financialstatements),587-588 t22 Bank One,490
step7 (closingentries),589-591 Acid-testratio, 123, 482, 487 Bank reconciliatton,279-284
step8 (postclosingtrial balance),591 Acquiring merchandisefor sale,210-215 Bank statement.279. 284
steps,listed,580 Acquisitioncost,159 Bames& Noble,223,247
Accountingequation,14, 18,59 Activity methoddepreciation,162-163 Basic earningsper share,402
Accountinginformation Additional paid-in capital,386 Basketpurchase,156-158
comparability,51-52 Adelphia,2,28,98 Beginninginventory enorc,274-27 5
consistency,52 Adjunct liability, 344 Berenson,Alex,526
relevance,5l Adjustedtrial balance,586-587 Berstein.Richard.482
reliability, 51 Adjustingjournal entries,583-586 BestBuy, 106,ll2,173,207,222
users,66-67 Adjusting the books,56 Black & Decker,332
Accountingjobs, 534 Aging method,288 Bloomingdale's, 210
Accountingperiods,65-66 Aging schedule,288, 289 Board of directors,533
Accountingprinciples Akst. Daniel.154 Bond,339-348
full-disclosureprinciple, 58 Allowancefor obsolescence, 238 amortization,344-348
historical-costprinciple, 53 Allowance for uncollectibleaccounts, defined.339
matchingprincrple,62 286-291 gettingthe money (issuingbonds),
revenue-recognition principle, 62 Allowancemethod.286. 288-294 341-344
Accountingscandals,2, 28, 53U531 Amazon.com,481 issuedat discount,342-343
Accountingsoftware,125 Amortization issuedat par, 342
Accountspayable,54, 120 bonds,344-348 issuedat premium, 343-344
Accountsreceivable,56, 101,,286 defined,158 paying the bondholders,344
accountsreceivablemethod.288190. 293 intangibleassets,167-169 types,341
aging schedule,288, 289 Amortization schedule,346, 347 why used,339-340
allowancemethod,288-294 Analysis of businesstransactions,54-59, Bond certificate,339
balancesheetpresentation,290 67-70 Bond covenants,340
controls,303-304 Analysis of transactions,54-59, 67-7 0 Bondsissuedat a discount,340,342-343
defined,286 Annuity, 378 Bonds issuedat a premium, 340,343-344
direct write-off method,293-294 Apple Computers,223 Bonds issuedat par,340, 342
estimatingbad debt expense,288-293 AR turnoverratio, 3Ol-302 Book value.112.159
example(Tom'sWear),29'l-300 Arthur Andersen,28 Bookkeeping,576
extendingcredit,286 AsYou Sow,122 Books,18
managing,287 Assetimpairment,169-170 BordersGroup, 51
percentageof salesmethod,288, 293 Assetturnoverratio, 179-180,483 Bottom line, 66
ratio analysis,301-302 Assets.14.59 BrocadeCommunicationsSystems,384
recordinguncollectibleaccounts, Assumptions.SeeAccountingassumptions Budgetedcashflows, 428
286-287 Audit opinion, 25 Business.how it works. 9
writing off specificaccount,290-291 Auditors, 533 Businessdescription,5

627
6 28 I NDE X

Businessfailures,530-531 Seealso Contra-revenue, 217 magazinesubscriptions,105

Accountingscandals Contributedcaprtal,9, 61, 384 rent, 108-109
Businessplan,5, 485 Contribution,9 revenue,105-106
Businessrisk,27 Controls supplies,109-110
Businessscandals, 2,28, 530-53I clear assignmentof responsibility,303 unearnedrevenue,105
Businesstransactions,9, 54-59, 671 0 defrned,29 Deferredexpenses,586
documentationprocedures,303 Deferredrevenue.105.585-586
c errors in recording transactions, 124-125
financial statements,75-76
Defrnitely determinableliabilities, 332
Dell,7,24)6,393
Callablebond, 341
Callablepreferredstock,388 independentinternalverificationof data, DelI. Michael. T
Capital,2, 6l 304 Department,12
Capital expenditure,170 invento_1y confols, 242-243 Depletion,158, 166-167
Capital lease,157 long-tbrmassets,180 Depositin transit,280,282
Capital stock,386 long-termdebt,354 Depreciablebase,159
Capital structure,352 Ioss/destruction of data,125 Depreciatingan asset,111
Capitalize,158 monitoring, 180 Depreciation
Capitalizedleases,157 physicalcontrols, 180 accelerated,164-165
Capitalizingretainedearnings,395 stockownership,489490 activitymethod,162-163
Car loan,335 stockholders'equity,402-403 decliningbalance,164-165
CarnivalCorp.,473474 unauthorizedaccess,125 defined,158
Canyingvalue,112, 159,343 Convertiblebond, 341 double-decliningbalance,165
Cash.77.428 Cookingthebooks,2,528. Seealso MACRS,208
Cashand cashequivalents,285 Earningsmanipulation straight-line,159-162
Cashbasisaccounting,65 Cooper,Cynthia,526 taxes,and,208
Cashbudget,428 Copyright,167-168,180 terminology,159
Cashbudgeting,71 Copyrightof infringement,180 Depreciationexpense,1I 1-l 13
Cashconversioncycle,440 Corporatebonds,347 Destructionof accountingdata,125
Cashdividends,388-391 Corporatefilings, 24 Detectivecontrols,T6
Cashequivalents,285 Corporategovernance,476, 530-536 Diluted earningsper share,402
Cashflow projection,71 "CorporateSocial and Financial Direct method,429430, 432434, 437
Cashflow statement.,SeeStatementof cash PerformanceMeta-Analysis,"122 Direct write-off method,293-294
flows Corporatesocialperformance,122 Disclosure.,lee Notesto financial statements
Cashfrom financingactivities,21 Correctivecontrols,76 Discount
Cashfrom investingactivities,21 Cost of goodsavailablefor sale,215,274 purchase,214-215
Cashfrom operatingactivities,21 Costofgoodssold,274 sales,217-21.8
Cashinflows/outflows,22 Costco,210 Discounton bondspayable,343
Cashmanagement,2TS CPA, 13 Discountrate,336
bank reconciliation,279 -284 Credit,578 Discounting,336
bank statement . 279. 284 Crediting,579 Disney Corporation,48
cashequivalents,285 Credit card sales,294 Diversification,403, 489490
cashflow statement.SeeStatementof Credit memo, 284 Dividend.9.582
cashflows Creditpolicies,287 cash,388-391
controls.278-279. 303-304 Creditterms,214 defined,388
crediVdebitmemos,284 Cumulativeprefenedstock,390 stock,394-395
physicalcontrols,2'78-279, 303 Currentassets,59 Dividend declarationdate,389
reportingcash,285 Current ratio, 74, 482, 487 Dividend paymentdate,390
Caterpillar,223 Curves,168 Dividendyield ratio,481,483,488
Certifiedpublic accountant(CPA), 13 Cutoff issues,65-66 Documentationprocedures,303
CharlesSchwab,7 Dollar Tree Stores,402
Chico's,222,241,242 D Double-decliningbalancedepreciation,165
Circuit City, 120, l2l DardenRestaurants.'7 4. 152 DVD sales,241
Classifiedbalancesheet,6l Date of record,389-390
Clear assignmentof responsibility,303 Debenture,341 E
Cleveland-Cliffs,166 Debit,578 Earnedcapital,396
Closed,589 Debit-creditrules, 579-580 Earnings,476
Closingentries,589-591 Debit memo, 284 Earningsmanipulation
Closelyheld corporation,7 Debiting, 579 big bath charges,528
Commonstock,385-387 Debt. .leeLiabilities cookiejar reserves,528-529
Comparability,51-52 Debrto-equity ratio,352, 482, 487 revenuerecognition,529-530
Comparativebalancesheets,16 Declining balancedepreciation,164-165 Earningsper share(EPS),401-402, 483,
Compoundinterest,376, 377 Deferrals,104-113,578 487,526
Comprehensive income, 521-522 adjustmentsto accountingrecords, Earningsrestatement,476
ComputerAssociates,28, 50, 76 11 3 - 1 1 8 Ebbers,Bemard,2, 28, 154
Computerizedaccountingsystems,125 defined,99 EBITDA,489
Computron,T5 depreciation,1I 1-1 13 Effective interestmethod,344-347
Conservatism,53 equipment,110 Eichenwald,Kurt,332
Consistency,52 example, 120-122 Employeetheft, 2IO, 219
Constraints,53 expenses,107-lI3 Ending inventoryenorc,274
Contingentliabilities, 332 financial statements,and, I 13-1 I 8 Enron,2, 28, 354, 441,526
Contra-asset, 111 gift certificates,105-106 Enterpriseresourceplanning (ERP) system,
Contraliabilitv account.343 insurance,107- 108 576,593
 INDEX 629

Entrepreneur,9 Interestpayable,100
EPS,401-402,483,487,526
G
GAAP.12.50 Interestreceivable,101
Equipment,110,210 Internalcontrols,75. Seealso Controls
Gap,Inc.,242,272273
Equity,6l InternalRevenueService(IRS), 13
GeneralElectric, 389
ERP system,576,593 International Paper Company,334
Generaljournal, 576
Errors in recordingffansactions,124-125 Internet, trading stock, 7
Generalledger,577
Estimatedliabilittes, 332 Intuit Inc., 620
Generalledgeraccountingsystem,576-578
Estimateduseful life. 159 Inventory, 209-276
Generalledgersystem,576
EthicsPoint,526 acquiringmerchandisefor sale,210-215
Generalstrategicrisks, 27
Ex-dividend,390 controls,242-243
Generallyacceptedaccountingprinciples
Expenses, 10 (GAAP), 12,s0 cost flow assumptions.SeeInventorycost
Extemalauditors,533 flow assumptions
Gift certificates,105-106
Going-concernassumption,53 ethics,243
F Goodwill,168-169 freightcosts,2t2-213, 218
Factor,287 Google,180 grossprofits methodof estimatingending
Factoing,287 Governance-Metrics Intemational,535 inventory,276
FannieMae, 107 Grossmargin on sales,24 LCM rule, 238
F A S B,12 Grossprofit ratio, 238-241, 483, 487 obsolescence, 238,243
Fastow,Andrew,28 Grossprofits methodof estimatingending over/understatement, 274-27 5
FiduciaryTrust International,125 inventory,276 periodic inventorysystem,212, 219-220
FinancialAccounting StandardsBoard Grundfest,Joseph,476 perpetualinventorysystem,212, 219-220
(FASB),12 purchasediscounts,214-215
Financialadvisor,489 purchasereturnsand allowances,214
Financialanalyst,489
H ratio analysis,238-242
HCA,534 risks,243
Financialleverage,352
Health South,2 salesdiscounts,217-218
Financialmanagementplan, 5
Heldto-maturity securities,523 salesreturnsand allowances,217
Financialratios.SeeRatio analysis
HersheyFoods,278, 285,288,301,425426 salestaxes,218-219
Financialrisks, 27
Historical-costprinciple, 53 selling merchandise,216-279
Financialscandals, 2,28, 530-531
Holdinggainor loss,523,524 shipping costs,272-213, 218
Financialservicescompanies,4
Home Depot, 60, 74, 332-335, 354 shrinkage,210,219
Financialstatementanalysis,479486
Horizontalanalysis,479480 Inventorycontrols,242-243
continuedusefulness,485-486
Hostile takeover,388 Inventorycost flow assumptions,220-238
horizontalanalysis,479480
HurricaneKatrrna,478 example (Tom's Wear), 233-238
how used,485
ratio analysis.,SeeRatio analysis FLFO,223,231
verticalanalysis,480,481 I financial statements.and,226-230
Financialstatements r BM , 168, 21 6 how methodchosen,232
accountingcycle, 587-588 Impairment,169-170 industryusage,230
balancesheet.SeeBalancesheet Improvementprojects,170 LLFO.223-225.231
example,67-70 Incomestatement, 18-19 methods,compared,225
income statement.,SeeIncomestatement balancesheet.contrasted.19 specificidentificationmethod,221
interim statements,66 comprehensiveincome, 521-522 taxes.231..233
notes.SeeNotesto frnancialstatements defrned,18 weightedaveragecost,221-222
objectives,70-72 discontinuedoperations,47647 9 Inventory enors, 274-27 5
relationshipbetween,23 extraordinary rtems,47747 9 Inventoryobsolescence, 238, 243
statementof cashflows. ,SeeStatementof time periods,65-66 Inventoryshrinkage,2I0, 21,9
cashflows Incometaxes.,SeeTaxes Inventoryturnoverratio, 241-242, 482, 487
statementof changesin shareholders' Independentinternal verification of data,304 Investingactivities,9, 21, 429
equity,20 Indirect method,429430, 435436, 438 Investmentsin securities
type of informationprovided,67-70 Informationrisks, 27 available-for-salesecurities,524
Financingactivities,9,21, 429 Input and processingcontrols, 124 held-to-maturitysecurities,523
First-in, flrst-out (FIFO), 223, 231 InstitutionalShareholderServices,535 selling the securities,524
Fiscalyear,15 Insull Utility, 530 trading securities,523-524
Fisher.Ken. 241 Insurance,107-108 IRS, 13
FisherCommunications. 526 Intangibleassets Issuedshares,384
Fixed assets.SeeLongterm operationalassets amortizatron, 167
FOB destination,213 copyright, 167-168 J
FOB shippingpoint,213 defined,155 J.D.Edwards,593
Footnotes,14.25. Seealso Notesto franchise,168 I&J SnackFoodsCorp., 484-488
financial statements goodwill,168-169 JetBlue,l8
For-profit frrm, 3 patent,168 Journal,576
Forecasts, 485 R&D costs,169 Journalentries
Formsof businessorganization..See r is k s , 180 posting,583
Ownershipstructure trademark,168 recording,580-583
Franchise,168 lntel.222.328-329 Junkbond,341
Freecashflow, 440 lnterest
Freightcosts,212113, 218 compound,376 K
Friedman,Jane.180 defined,10 Kelly, Kevin, 180
Full-disclosureprinciple, 58 formula, 101 Kozlowski,Dennis,28, 332
Fuzzy earningsnumbers.SeeEarnings simple,376 Kroger,219,24l
manipulation Interestexoense.100 Kumar, Sanjay,28, 50
630 I NDE X

t Manipulatingearnings.SeeEarnings Ordinary annuities,378

Lands'End,2-3 manipulation Ordinary repairs,170
Large stock dividend,395 Manufacturingbusiness,4 Other comprehensiveincome,521
Last-in, first-out (LIFO), 223-225, 231 Market indicators,480-484 Otherreceivables,101
Lay, Ken, 2,28,531 Market rate of interest,341 Outstandingcheck,280, 282
LCM rule, 238 Marketing plan, 5 Outstandingshares,385
Leaseaccounting,354 Marking to market, 523 Over/understatement of inventorv.27ar27 5
Leaseholdimprovements,157 MasterCard,294 Owner'sequity, 14
Leverage,352 MatchingprincipIe,62 Ownershipstructure,4-9
Levitt, Afthur, 528 Material weakness,536 corporation,T-9
Materiality,53 partnership,6-7
Liabilities, 14, 6l, 331-382
adjunct,344 McDonald's,353 soleproprietorship,5-6
balancesheetpresentation,333 McKessonCorporation,223, 332 Oxley, Michael, 530
bank loan, 338 Measuringassets, 61-62
bond. SeeBond Measuringincome,98-99
contingent,332 Merchandiseinventory,210 P
Merchandise payable, L20 PlEratio,48l,483,488
definitely determinable,332
Merchandisingbusiness,4 P&L. SeeIncome statement
estimated,332
Merck, 96 Pacioli.Luca. 579
example(Tom'sWear),348-351
Merrill Lynch,7 Paid-in capital,61
financial statementanalysis,352-353
Micron Technology,168 PapaJohn's,389, 401, 520
long-termnotespayable,335-338
Microsoft, 389,393 Par value.340. 385
mortgage,335-338
Mills Corporation,62 Partnershipagreement,6
payroll, 334-335
Modified acceleratedcost recoverysystem Patent,168
ratio analysis,352-353
(MACRS),208 Payee,295
risk, 354
Monetary-unitassumption,52 Payroll deductions,334
types,332
Monitoring,180 Payroll tax expense,334
LLFO,223-225,231
Moody's,535 PCAOB,12,533
LIFO conformity rule, 232
MSN Money,96 PeopleSoft,593
Limited liability, 8
Multistep income statement,24 Pepsico,223
Limited liability corporation(LLC), 8
Percentof accountsreceivablemethod,288
Limited liability partnership(LLP), 8
Percentageof salesmethod,288, 293
Line of credit,338 N Periodicinventorysystem,212, 219-220
Linens'n ThingsInc., 384,385 Net assets,14,61
Permanentaccounts,589
Liquidity,59,440 Net income, 18, 66, 476, 521
Perpetualinventorysystem,212, 219-220
Liquidity ratios,480, 482 Net loss,66
Physicalcontrols,180
LLC,8 Net realizablevalue (NRV) of accounts Plant assets.SeaLong-term operational
LLP, 8 receivable,286
assets
Long-termassets,59 Net sales,217
Poisonpill, 388
Long-termliabilities, 61 New York StockExchange(NYSE), 7
Polo Ralph LaurenCorporation,T2
Long-termoperationalassets,153-208 Nike, 168
Positivefinancial levenge, 352
acquiringplantassets,154-158 Non-sufficient-funds(NSF) check,281, 283
Postclosingtrial balance,591
acquisitioncosts,155-156 Noncumulativepreferredstock,390
Posting,577,583
assetimpaiment, 769-170 Noncurrentassets,59
Prefenedstock,387,388,390
balancesheetpresentation,l7 3-1.74 Noncurrentliabilities, 61
Premiumon bondspayable,343-344
basketpurchase,156-158 Norfor-profit organization,3
PrenticeHall, 4
controls,l80 Notesreceivable,295
Prepaidexpenses,120
depletion,166-1.67 Notesto financial statements,14. 25 Prepaidinsurance,54, 107-108
depreciation..SeeDepreciation assetimpairment,170
Prepaidrent, 108-109
example(Tom'sWear), 174-176 cash,441
Presentvalue, 336. SeealsoTime value of
improvements,170 cashequivalents,285
money
intangibleassets,167-169.Seealso changein inventorycostflow methods,
Presentvaluetables,381-382
Intangibleassets 232
Preventivecontrols,75
leaseor buy?,157 companypurchasingits own stock,392
Price-earnings (P/E)ratio,481,483,488
ratio analysis,176-180 dividendpolicy, 389
Principal, 10
revisedestimatesof useful life, 170-17| inventoryobsolescence reserve,243
Principles.,See Accountingprinciples
risks,180 LIFO disclosure,224
Productwarranties,296-297
sellingthe assets,171-173 revenuerecognition,216
Profit, 50
typesof assets,155 uncollectibleaccounts,288
Profit and loss statement(P&L). SeeIncome
Loss or destructionof accountingdata,125 usefulness, 485
statement
Lower-of-cost-or-market(LCM) rule, 238 NSF check.281.283
Profitability ratios,480, 483
Lowe's,74 NYSE, 7
Promissorynote,295
Property,plant, and equipment. SeeLong-
M o term operationalassets
MACRS,208 Obsolescence. 238,243 Prospectus,397
Macy's,219,242 Off-balance-sheet financing,354 Public CompanyAccountingOversight
Magazinesubscriptions.I 05 OfficeDepot,271,212,334,485 Board (PCAOB), 12,533
Maker,295 On account,54 Purchaseallow ance,21.4
Management,531,533 Operatingactivities,9, 2I, 429 Purchasediscounts,214-215
Managementplan, 5 Operatingcy cle, 2lO, 21| Purchaseorder.211. 272
Management'sreport on internalcontrols, Operatingrisks, 27 Purchaseretum, 214
536 Oracle,593 Purchasereturnsand allowances,214
 631

a Salvagevalue, 11l, 159

SAP,593
free cash flow, 440
importance,428,441
Quality of earnings,527
Sarbanes,Paul,530 indirect method, 429430, 435436, 438
Quick ratio, 123, 482, 487
Sarbanes-OxleyAct, 403, 526, 531-534 Statementof changesin owner's eqity,2O
Quiznos,168
SBA, 5 Statementof changesin shareholders'
Sears,5l-52 equity,20
R SEC. SeeSecuritiesand Exchanse Statementof financialposition.SeeBalance
R&D costs,169
Commission(SEC) sheet
Ratioanalysis,480 Securedbond,341 Statementof income.SeeIncome statement
accountsreceivable, 3Ol -302 SecuritiesandExchangeCommission Stayingup to date,537
AR turnoverratio, 301-302 (sEC),7 Stockdividend,394-395
assetturnoverratio, 179-180 corporatefilings, 24 Stockexchange,7
currentratio, 74 defined.7 Stockmarket,7
debt,252 delegationto FASB, 12 Stock option, 384
debtto-equity r atio,352 improperreporting,75 Stock ownership,risks, 489490
dividendyield ratio,481,483,488 rPo,397 Stock split, 395-396
earningsper share(EPS),401-402 Securitizationof accountsreceivable,441 Stockbrokers,7
example,484-488 Segregationof duties, l8O, 242 Stockholder,T
grossproht ratio, 238-241
Selling merchandise,216-219 Stockholders'equity,14.Seealso
inventory,238-242 Separate-entity assumption,52 Shareholders'equity
inventoryturnoverratio, 241-242 Serialbond, 341 Straight-lineamortization,167,347-348
liquidity, 74,122-123 Servicecompany,3 Straight-linedepreciation,159-162
long-termoperationalassets,17Gl 80 Shareholder,7 Subsidiaryledgers,577
overview(ratios,listed), 482483 Shareholdervalue,482 Subway,168
P/E ratio,481,483,488 Shareholders'equity, 14, 383426 Sullivan, Scott,2'7, 154
quickratio, l23
balancesheetpresentation,385, 395 SunTrust,536
return on assets(ROA), 176,179
cashdividends,388-391 Supermarket,11
return on equity (ROE),401
common stock,385-387 Supplies, 109-110,210
shareholders'eq.Jity,401402 contributed capital, 384 Supportingevidence,125
times-interest-earned ratio, 352-353 example(Tom'sWear),397401 Swartz,Mark, 28, 332
typesof ratios,480 major components,384
understandingratios,484 preferredstock,387, 388
workin g capital, 722-723 ratio analysis,401402 T
Real accounts,589 retainedearnings,396 T-Mobile,238
Realized,102 risks facedby owners,402403 Talbots.102. lO3
Receivables,286. Seea/soAccounts Tangibleassets,155
stock (authorized,issued,outstanding),
receivable 384-385 Tatget,4, 210, 219, 242, 243
Recognizedrevente,62 stock dividend,394-395 Taxes
Recognizingrevenueand expenses,62 stock split, 395-396 corporateincome,9
Reconciliationand control reports,125 depreciation,208
fteasurystock,391-394
Recordingjournal entries,580-583 inventorycostflow assumptions, 231,233
Sharesof capital stock,7
Relativefair marketvalue method.156 SherwinWilliams, 353 IRS, 13
Relevance,5l LIFO/FIFO. 231.233
Shipping costs,272-213, 278
Reliability, 51 MACRS,208
Shippingterms,213
Remodeling,170 reporting,479
Shoplifting,2l9
Remoteshadowing,125 Simpleinterest,376, 377 sales,218-219
Rent, 108-109 Technology,489
Single-stepincome statement,24
Repairs,170 Skilling, Jeff,2,28 Temporaryaccounts,589
Replacementcost,238 10-K report, 24
Small BusinessAdministration(SBA), 5
Reportedearnings,476 Small stock dividend,394-395 Term bond, 341
Researchanddevelopment(R&D) costs,169 "SmartestGuys in the Room, The," 2 TexasInstruments,393
Residualvalue,111,159 "Thanksto the Fed, CashIs Almost
Social responsibllity,122
Retainedearnings,14,20, 61, 396 Exciting" (Spors),278
Solvencyratios, 480, 482
Retumon assets(ROA), 176,179,483, 3115.n145.214
Sony,238
487,488 Specificidentificationmethod,227 Time-periodassumption,53
Returnon equity (ROE), 401,483,487 Time value of money, 376-382
Standard-setting bodies,12
Revenue,l0 Staples, Inc.,155,485 presentvalue of annuity,378-380
Revenueexpenditure,170 presentvalue of singleamount,376-378
Starbucks. 222.375
Revenue-recognition principle, 62 Statedvalue,340 presentvaluetables,381-382
Reyes,GregoryL., 384 simplevs. compoundinterest,3'76,377
Statementof cashflows, 21-22, 427474
Rigas,John,28, 98 TimeWarner. 105. 106
cashflows from investingand financing
Rigas,Timothy, 28, 98 Times-interest-earned ratio. 3 52-3 53.
activities,436437
Risk,27. Seealso Controls cashflows from operatingactivities- 482,487
ROA,176,t79,483,487 direct method,432434 Timing differences,99
ROE,401,483,487 TootsieRoll, 224
cashflows from operatingactivities-
Ruth's Chris SteakHouse,478 indirect method,435436 Trademark.168. 180
classification of c ash,429 Trading securities,523-524
s convertaccrualamountsto cash,431432 Treasurystock,391-394
Safeway,219 dehned,21 Trial balance,583
Salesdiscounts,217-218 direct method,429430, 432434, 437 adjusted,586-587
Salesreturnsand allowances.217 ethics(earningsmanipulation),441 defined,577
Salestaxes, 218-21.9 financial statementanalysis, 438440 postclosing, 591
632 I NDE X

Turco,Preston,2l0
TweeterHomeEntertainment
Group,243
v Whole FoodsMarket, 241,242
Withdrawal,582
Verticalanalysis,480, 481
2llo,nl30,2l4 Vinson,Betty,27 Woolsey,JohnG., 278
Tyco,2,28,332 Working capital, 122-123, 482, 487
WorldCom,2, 27, 28, Ml, 526
u w
Unauthorized accessto accounting
Wal-Mart, 5l-52, 155,2ll, 479481
Walgreens,332 x
information, 125 Walt Disney Company,48
Xerox,2,75
Uncollectibleaccounts..leeAccounts Warranties,296-297
receivable
Under/overstatement of inventory,274-27 5
Watkins,Shenon,526 z
Weightedaveragecost,221--222 Zero interestbond, 341
Unearnedrevenue.105.585 Wendy's,223,353
Units of productiondepreciation,162-163 What-if financial statements,485
Unrealizedgainsand losses,521, 523,524 WhatMatters Mosr (Hollander),122
Unsecuredbond, 341 Whistleblowers,526
Uses of accrual accounting information,
66-67