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Brief Contents
Preface xi
CHAPTER 1 Accounting in Business 1

CHAPTER 2 Analyzing and Recording Transactions 78
CHAPTER 3 Adjusting Accounts for Financial Statements 154
CHAPTER 4 Completing the Accounting Cycle and Classifying Accounts 234
CHAPTER 5 Accounting for Merchandising Activities 313
CHAPTER 6 Inventory Costing and Valuation 396
CHAPTER 7 Internal Control and Cash 468
CHAPTER 8 Receivables 538
CHAPTER 9 Property, Plant, and Equipment and Intangibles 604
APPENDIX I Payroll Liabilities A-1
APPENDIX II Accounting Information Systems A-34
APPENDIX III Financial Statement Information A-35
APPENDIX IV Chart of Accounts A-94
vi
Contents
Preface xi CHAPTER 2
Analyzing and Recording Transactions 78
CHAPTER 1 The Accounting Cycle 80
Accounting in Business 1 Accounts 81
What Is Accounting? 3 The Account 81
Power of Accounting 3 Asset Accounts 81
Focus of Accounting 4 Liability Accounts 82
Forms of Organization 5 Equity Accounts 83
Business Organizations 5 T-Accounts 84
Users of Accounting Information 7 Balance of an Account 85
External Information Users 7 Debits and Credits 85
Internal Information Users 8 Double-Entry Accounting 85
Accounting Opportunities 9 Chart of Accounts 89
Financial Accounting 9 Recording and Posting Transactions 90
Managerial Accounting 10 Journal Entry Analysis 90
Taxation 10 Recording Journal Entries 91
Professional Certification 11 Posting Journal Entries 92
Ethics and Social Responsibility 11 Accounting Transactions in Action 94
Understanding Ethics 11 Accounting Equation Analysis 100
Social Responsibility 14 Mid-Chapter Demonstration Problem 101
Generally Accepted Accounting Solution 102
Principles (GAAP) 14 Ledgers 102
GAAP for Public vs. Private Enterprises 14 Trial Balance 103
Communicating Through Financial Statements 18 Summary 107
Previewing Financial Statements 18 Demonstration Problem 109
The Accounting Equation 24 Solution 110
Transaction Analysis 25 Glossary 115
Summary of Transactions 30 Knowledge Check-Up 116
Mid-Chapter Demonstration Problem 31 Concept Review Questions 117
Solution 32 Quick Study 117
Financial Statements 33 Exercises 123
Income Statement 33 Problems 134
Statement of Changes in Equity 33 Alternate Problems 141
Analytical and Review Problems 148
Balance Sheet 34
Ethics Challenge 149
Summary 36
Focus on Financial Statements 150
Demonstration Problem 39
Critical Thinking Mini Case 151
Solution 41
Cumulative Comprehension Problem: Echo Systems 152
Glossary 43
Knowledge Check-Up 45
Concept Review Questions 46 CHAPTER 3
Quick Study 47 Adjusting Accounts for Financial
Exercises 52 Statements 154
Problems 61
Alternate Problems 67 Purpose of Adjusting 156
Analytical and Review Problems 73 GAAP and the Adjusting Process 158
Ethics Challenge 75 The Accounting Period 158
Focus on Financial Statements 75 Recognizing Revenues and Expenses 159
Critical Thinking Mini Case 77 Accrual Basis Compared to Cash Basis 159
vii
CONTENTS
Adjusting Accounts 161 Quick Ratio 259

Framework for Adjustments 161 Debt to Equity Ratio 259
Adjusting Prepaid Expenses 161 Summary 261
Adjusting for Depreciation 164 Demonstration Problem 263
Adjusting Unearned Revenues 166 Solution 264
Adjusting Accrued Expenses 167 Appendix 4A Reversing Entries 266
Adjusting Accrued Revenues 170
Glossary 268
Adjustments and Financial Statements 172 Knowledge Check-Up 268
Mid-Chapter Demonstration Problem 173 Concept Review Questions 269
Quick Study 270
Solution 174
Exercises 275
Adjusted Trial Balance 175
Problems 287
Preparing Financial Statements 176
Alternate Problems 298
Summary 178
Analytical and Review Problems 308
Demonstration Problem 181
Solution 182
Appendix 3A Correcting Errors 186
Appendix 3B An Alternative in Recording Prepaid
Cumulative Comprehension Problem:
Assets and Unearned Revenues 188
Echo Systems 312
Glossary 191
Concept Review Questions 193
CHAPTER 5
Quick Study 193
Exercises 200
Accounting for Merchandising
Problems 208 Activities 313
Alternate Problems 218 Merchandising Activities 315
Analytical and Review Problem 229 Reporting Financial Performance 315
Reporting Financial Position 316
Operating Cycle 317
Inventory Systems 318
Cumulative Comprehension Problem: Echo Systems 232
Accounting for Merchandise Transactions—Perpetual
Inventory System 321
CHAPTER 4 Accounting for Merchandise Purchases—Perpetual
Completing the Accounting Cycle and Inventory System 321
Accounting for Merchandise Sales—Perpetual
Classifying Accounts 234
Inventory System 327
Work Sheet as a Tool 237 Mid-Chapter Demonstration Problem 331
Benefits of a Work Sheet (Spreadsheet) 237 Solution 331
Using a Work Sheet 238 Additional Merchandising Issues—Perpetual
Closing Process 243 Inventory System 332
Identify Accounts for Closing—Temporary and Adjusting Entries 332
Permanent Accounts 243 Summary of Merchandising Cost Flows 334
Recording and Posting Closing Entries 244 Adjusted Trial Balance for a Merchandising
Preparing a Post-Closing Trial Balance 249 Company—Perpetual Inventory System 334
Completing the Accounting Cycle 250 Income Statement Formats—Perpetual
Mid-Chapter Demonstration Problem 251 Inventory System 336
Solution 251 Expense Classification Requirements 336
Classified Balance Sheet 253 Multiple-Step Income Statement 337
Classification Scheme 253 Single-Step Income Statement 339
Classification Example 254 Financial Statement Analysis Tools for Inventory 339
Classification Groups 254 Summary 343
Financial Statement Analysis 258 Demonstration Problem 344
Current Ratio 258 Solution 346
viii
CONTENTS
Appendix 5A Periodic and Perpetual Inventory Ethics Challenge 464

Systems Compared 348 Focus on Financial Statements 465
Appendix 5B Sales Tax 354 Critical Thinking Mini Case 467
Glossary 357
Knowledge Check-Up 359 CHAPTER 7
Concept Review Questions 360 Internal Control and Cash 468
Quick Study 360
Internal Control 470
Exercises 366
Problems 374 Purpose of Internal Control 470
Alternate Problems 382 Principles of Internal Control 471
Analytical and Review Problem 390 Three Drivers of Fraud 473
Ethics Challenge 391 Limitations of Internal Control 475
Focus on Financial Statements 391 Cash 476
Critical Thinking Mini Case 393 Cash Defined 476
Cumulative Comprehension Problem: Echo Systems 393 Control of Cash 477
Control of Cash Receipts 478
CHAPTER 6 Control of Cash Disbursements 479
Inventory Costing and Valuation 396 Mid-Chapter Demonstration Problem 483
Solution 483
Inventory Items and Costs 398
Banking Activities as Controls 484
Items in Merchandise Inventory 398
Basic Bank Services 484
Costs of Merchandise Inventory 399
Bank Statement 488
Physical Count of Merchandise Inventory 400
Bank Reconciliation 490
Assigning Costs to Inventory 402
Financial Statement Analysis 498
First-In, First-Out 404
Quick Ratio 498
Moving Weighted Average 405
Summary 499
Specific Identification 406 Demonstration Problem 502
Inventory Costing and Technology 407 Solution 503
Mid-Chapter Demonstration Problem 408 Glossary 504
Solution 409 Knowledge Check-Up 505
Financial Reporting and Inventory 411 Concept Review Questions 506
Financial Reporting 411 Quick Study 506
Lower of Cost and Net Realizable Value (LCNRV) 414 Exercises 509
Errors in Reporting Inventory 416 Problems 514
Estimating Inventory 419 Alternate Problems 524
Gross Profit Method 419 Analytical and Review Problems 534
Retail Inventory Method 420 Ethics Challenge 536
Financial Statement Analysis—Assess Inventory Focus on Financial Statements 536
Management 423 Critical Thinking Mini Case 537
Inventory Turnover and Days’ Sales in Inventory 423
Summary 425 CHAPTER 8
Demonstration Problem 427 Receivables 538
Solution 428 Accounts Receivable 540
Appendix 6A Assigning Costs to Inventory and
Recognizing Accounts Receivable 541
Inventory Errors—Periodic System 429
Credit Risk Analysis Accounts Receivable 543
Glossary 434
Accounts Receivable Control Considerations 544
Concept Review Questions 436 Valuing Accounts Receivable 545
Quick Study 437 Allowance Method 545
Exercises 441 Recording Estimated Bad Debt Expense 546
Problems 447 Alternative Methods for Estimating Bad Debt 550
Alternate Problems 455 Mid-Chapter Demonstration Problem 555
Analytical and Review Problem 464 Solution 556
ix
CONTENTS
Short-Term Notes Receivable 558 Mid-Chapter Demonstration Problem 634

Calculations for Notes 558 Solution 635
Receipt of a Note 559 Disposals of PPE 637
End-of-Period Interest Adjustment 560 Discarding PPE 637
Honouring a Note—Customer Payment of Note 560 Selling PPE 638
Dishonouring a Note—Customer Neglects to Pay at Exchanging PPE 639
Maturity 560 Intangible Assets 641
Financial Statement Analysis—Accounts Receivable Accounting for Intangible Assets 641
Turnover and Days’ Sales Uncollected 562 Patents 642
Accounts Receivable Turnover 562 Copyrights 643
Days’ Sales Uncollected 562 Mineral Resources 643
Analysis 563 Trademarks and Brand Names 643
Summary 564 Leaseholds 644
Demonstration Problem 566 Goodwill 644
Solution 567 Summary 646
Appendix 8A Converting Receivables to Demonstration Problem 649
Cash Before Maturity 569 Solution 650
Glossary 571 Appendix 9A Revised Depreciation When
Knowledge Check-Up 572 There Is a Betterment That Creates Partial-Period
Concept Review Questions 573 Depreciation 652
Quick Study 573 Glossary 654
Exercises 576 Knowledge Check-Up 656
Problems 583 Concept Review Questions 657
Alternate Problems 591 Quick Study 657
Analytical and Review Problems 600 Exercises 661
Ethics Challenge 601 Problems 671
Focus on Financial Statements 602 Alternate Problems 680
Critical Thinking Mini Case 603 Analytical and Review Problem 689
CHAPTER 9 Focus on Financial Statements 690
Property, Plant, and Equipment and Critical Thinking Mini Case 692
Intangibles 604
APPENDIX I
Property, Plant, and Equipment (PPE) 606
Cost of PPE 608
Payroll Liabilities A-1
Subsequent Expenditures 608
PPE Subledger 610
APPENDIX II
Low-Cost Asset Purchases 610 Accounting Information Systems A-34
Land 611
Land Improvements 611 APPENDIX III
Buildings 612 Financial Statement Information A-35
Leasehold Improvements 612 Spin Master A-36
Machinery and Equipment 613
Lump-Sum Asset Purchase 613
WestJet A-60
Depreciation 614 Telus A-81
Reporting Depreciation on Assets 615
Indigo A-89
Factors in Calculating Depreciation 616
Depreciation Methods 618
Partial-Year Depreciation 626
APPENDIX IV
Revising Depreciation Rates 628
Chart of Accounts A-94
Impairment of PPE Assets 632 Index IN-1
x
Preface
A Note About Our Cover
The cover of the Sixteenth Canadian Edition is the work of Rachel Idzerda.
Rachel’s playful illustration spotlights many of the companies, entrepre-
neurs, and organizations featured in Fundamental Accounting Principles’
chapter-opening vignettes. See if you can spot the images representing
Zane Caplansky’s Deli (Chapter 1), Amazon’s drones (Chapter 6),
Betterwith Ice Cream (Chapter 7), and the Vancouver Airport Authority
(Chapter 9). Rachel is a freelance illustrator specializing in editorial illus-
tration and portraiture. She works with her husband and lives with him
and their two dogs just outside of Toronto.
INSIDE THE CHAPTERS

As educators, instructors strive to create an environment that fosters learning and provides students with the
tools they need to succeed. The Sixteenth Canadian Edition continues to meet and surpass the high standards
the market expects from Fundamental Accounting Principles. We continue to put learning first, with student-
centred pedagogy and critical thinking lessons throughout the text.
All the pedagogical tools are carefully designed for ease of use and understanding, helping the instructor
teach and giving the students what they need to succeed.
PEDAGOGY
Student Success Cycle
Student success at the post-secondary level is measured not by how much Student Success Cycle
Read the material
knowledge a student has acquired, but rather by how well a student can use
knowledge. The Student Success Cycle, illustrated by a circular icon, rein-
forces decision-making skills by highlighting key steps toward understand- Apply
Do the
your critical
ing and critically evaluating the information the student has just read. thinking skills
exercises
Read–Do–Check–Apply reinforces active learning rather than passive

learning. This tool is integrated throughout the text, including the chapter
opening page, Checkpoint questions, Demonstration Problems, and end-of- Check your answers
chapter material.
Critical Thinking Challenge

An essential element of critical think-
ing is the ability to ask questions
CRITICAL THINKING CHALLENGE
while reading (or listening or speak-
Why is assessing customer credit critical to the overall success of businesses like WN
ing). These exercises are designed to Pharmaceuticals?
help students develop the skills
related to questioning. Suggested
answers are posted on Connect.
xi
PREFACE
IFRS AND ASPE—THE DIFFERENCES IFRS and ASPE—The Differences

International Financial Reporting Standards Accounting Standards for Private Enterprises
Difference (IFRS) (ASPE) This box appears at the end of every
Recording adjusting • Requires that financial statements be • Unlike IFRS, ASPE does not explicitly require
entries presented at least annuallya; therefore, chapter to highlight any differences or im-
that financial statements be presented at least
adjustments would be prepared at least annually although it is implied given that
annually. However, for publicly listed
companies, securities commissions law
portant points about reporting and termi-
financial statements must be presented in a
timely mannerb and items must be presented
consistently from period to period.c Financial
requires publicly listed companies to present
quarterly financial statements, which in turn nology as they relate to the financial
statements are prepared at least annually for
would require that adjusting entries be tax purposes and, for example, to meet any
prepared at least quarterly. banking requirements.
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accounting course. The chapter content is
/203/MHR00306/Lar54656_disk1of1/1259654656/Lar54656_pagefiles
• Both public and private enterprises may prepare adjusting entries more frequently, such as monthly,
to enhance the accuracy of information required for decision making. IFRS 2018 compliant for Volumes I and II;
Depreciation vs.
amortization
• Uses the term depreciation (although it uses
amortization for intangible assets).
d
e
• Uses the term amortization. references are provided where appropriate.
f
a. IFRS 2018, IAS 1 para. 36.

b. ASPE, Accounting Standards, Section 1000.17(b).
c. ASPE, Accounting Standards, Section 1000.19-20.
d. IFRS 2018, IAS 16 para. 6.
e. IFRS 2018, IAS 38 para. 8.
f. ASPE, Accounting Standards, Section 3061.16.
Real-World Focus A business is an entity represented by one or more individuals selling products or services for profit. Products
sold include anything from athletic apparel (CCM, Bauer, Lululemon Athletica, Nike, Reebok) to elec-
The Sixteenth Canadian Edition has in- tronic devices (Apple, Dell, Hewlett-Packard, Samsung) and clothing (Abercrombie & Fitch, The Gap,
Zara). Service providers such as data communication providers (Bell, Rogers, Telus), food services
creased the use of real business examples (McDonald’s, Starbucks, Tim Hortons), and Internet services (Google, Twitter, Skype, Facebook,
Instagram) make our lives more connected. A business can be as small as an in-home tutoring business or as
to reflect the most current information large as George Weston Limited, the food processing company known for its President’s Choice and No
available. This continues the text’s strong Name brands, owner of the clothing label Joe Fresh, and holder of a significant investment in the supermarket
chain Loblaw Companies Limited. Nearly 100,000 new businesses are started in Canada each year, with
ties to the real world of accounting, be it most of them being founded by people who want freedom from ordinary jobs, a new challenge in life, or the
potential of earning extra money.
through detailed interviews with business-
people for the chapter-opening vignettes, examples of ethical standards and treatments, or annual reports for
both in-chapter example disclosures and end-of-chapter material. The first time an actual business is used, its
Lar54656_ch01_001-077.indd Page 2 1/10/19 5:13 PM f-0016 /203/MHR00306/Lar54656_disk1of1/1259654656/Lar54656_pagefiles
name is highlighted in bold magenta for emphasis. This integration with real-world companies helps engage
students while they read.
Food Truck Frenzy

Across the country, major urban centres are experiencing an industry trend to go to the street to entice customers with
a wide range of fresh, made-to-order food options. In Canada, the street vendor industry is in the growth phase of its
industry life cycle according to IBISWorld, a global market research firm. IBISWorld estimates the market for street
vendors in Canada will continue to grow over the next five years. Revenues are expected to reach $335 million with an
Video Links
expected annualized growth rate of 1.7% by 2023. The market is dominated by new market entrants—in most cases,
individual owners operating as sole proprietors. The most successful street vendors will take advantage of effective This text features interactive digital links directing
marketing and branding toward health-conscious consumers looking for unique dining options.
Thunderin’ Thelma made her debut on CBC’s Dragons’ Den when owner Zane Caplansky decided to expand his
famous downtown Toronto brick-and-mortar deli and enter the trendy urban food truck business. After being labelled
students and instructors to helpful videos to provide
“insane Zane” by Kevin O’Leary, and seeing the other Dragons balk at the 15% ownership interest at a proposed cost of
$350,000, Zane decided to continue his new business venture on his own. A year later, Caplansky returned to Dragons’
students with real-world application of the chapter
Den and boasted achieving profit margins between 30 and 40% and achieving $110,000 in sales in his first six months of
operation. Caplansky’s business continues to thrive, with its latest location at the Toronto Pearson International Airport. content and enhance student exposure to valuable
According to Zane, “persistence, hard work and integrity” are key to achievingLar54656_ch08_538-603.indd
success in new business initiatives.
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Sources: https://www.ibisworld.ca/industry/street-vendors.html, accessed September 15, 2017; http://www.torontolife.com/daily-dish/people-dish/2011/11/03/
zane-caplansky-on-dragons-den, accessed April 15, 2014; http://www.postcity.com/Eat-Shop-Do/Eat/November-2013/Weekly-Restaurant-Recap-Harvest-
online resources.
Kitchen/; CBC Dragons’ Den, Season 7, Episode 11, aired January 7, 2013; On the Journey Towards a Perfect Sandwich: Zane Caplansky at TEDxQueensU,
https://youtu.be/cN_8HMMnNFk, accessed September 14, 2017.
Video Links: http://www.cbc.ca/dragonsden/pitches/caplanskys-deli and https://youtu.be/cN_8HMMnNFk.
A Look Back, A Look at This

Chapter
In these brief paragraphs, students are
Receivables
directed to reflect on their learning from A Look Back
Chapter 7 provides an introduction to internal control and cash with a detailed analysis of internal control
previous chapters and are provided with guidelines, banking activities, accounting for petty cash funds, and reconciling the differences between cash
a high-level summary of the current reported in the bank account and cash in the company’s accounting records.
chapter. These helpful learning summa- A Look at This Chapter

This chapter takes a look at accounting for customer accounts receivable and short-term notes receivable,
ries assist students in understanding specifically investigating tools such as initial recognition of the receivables and subsequent measurement at
how their chapter by chapter learning the end of the accounting period. Valuation is assessed through methods to estimate bad debts, including the
benefits of an A/R aging report, and using the accounts receivable turnover ratio and days’ sales uncollected
ties into the big-picture learning ratios to evaluate financial statements.
objectives.
xii
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PREFACE
Learning Objectives
Learning Objectives have long been a standard in the Larson textbook. By giving students a head start on what
the following material encompasses, the text readies them for the work ahead.
Checkpoints CHECKPOINT
This series of questions within the chap- 5. What is the difference between private and public accountants?
ter reinforces the material presented im- 6. What are the four broad fields of accounting?
7. What is the purpose of an audit?
mediately before it. These questions 8. Distinguish between managerial and financial accounting.
9. What is the difference between external and internal users of accounting information?
allow students to “Do” problem material 10. Why are internal controls important?
Do Quick Study question: QS 1-5
by referencing what they have just
learned. Answers at the end of each
chapter will then allow them to “Check” their work, further supporting the Student Success Cycle. Under
each set of Checkpoints is a reference to the Quick Study questions (single-topic exercises) available at the end
of each chapter. Students can go ahead and try them at this point. Checkpoint solutions are at the end of the
chapter. Quick Study solutions are available on Connect.
Important Tips
Important Tip:
Important tip boxes have been incorporated
Ensure you know the following rules as illustrated in Exhibit 2.7 before reading Chapter 3. For a helpful
learning tool, review the following video by Colin Dodds, an educational music video enthusiast. throughout the text to direct students’ at-
Video Link: https://youtu.be/7EuxfW76BWU
Lar54656_ch05_313-395.indd Page 320 1/17/19 9:11 PM f-0023 /203/MHR00306/Lar54656_disk1of1/1259654656/Lar54656_pagefiles tention to critical concepts that students
often miss in their initial reading of the text.
Ethical Impact ETHICAL IMPACT

Ethics continues to be a critical founda- $18.7 Million Maple Syrup Theft
On July 30, 2012, Micheal Gavreau arrived at a warehouse to audit $30 million worth of inventory at the
tion-level concern to prepare students to Global Strategic Maple Syrup Reserve. To his surprise, several of the barrels were discovered to be empty;
others had their contents replaced with water. It was the “largest theft investigated by the Sûreté du
understand and apply ethical values in Québec in its history.” The leader of the heist was found guilty of fraud, theft, and trafficking stolen goods
and was sentenced to eight years in prison and fined $9.4 million. This situation occurred because of in-
their day-to-day decisions. This new fea- adequate internal controls. In Chapter 7 we will introduce you to the concept of internal controls and the
critical role they play in maintaining corporate assets.
ture helps develop students to reach to- What would you do if you noticed unusual activities or discrepancies at your audit client or place of
work, such as boxes that looked like they had been tampered with? Would you turn a blind eye or would
ward CPA-enabling competencies such you take the time to investigate?
as professional and ethical behaviour, Video Link: Follow this link to view a video summary of the full story of “The Sweetest Heist”: https://youtu.be/adCQ9cwYA8o.
problem solving and decision making,

communication, self-management, teamwork, and leadership skills. It will be an excellent tool instructors can
utilize to provide real-world relevance and develop these critical skills for students as they work toward devel-
oping professional competencies.
Each scenario is designed to strengthen each student’s professional competencies as they approach ethical
dilemmas that have been developed from current, real-world Canadian and global business scenarios. Each
box is designed with a concise scenario and provides open-ended questions to enable effective classroom dis-
cussions. Encourage students to use the framework presented in Chapter 1 Decision Insight on Resolving
Ethical Dilemmas to help them develop a compass to guide them through alternative courses of action.
DECISION INSIGHT
Decision Insight
Social responsibility is a key concern for today’s
Loblaw Companies Limited Converts from Periodic to Perpetual
Loblaw Companies Limited began a process of converting its corporate-owned grocery stores from a
generation of socially conscious students.
periodic inventory system to a perpetual inventory system that was completed in 2014. The improved
information is a result of an upgrade to its IT infrastructure, enabling the stores to integrate costing
Through the Decision Insight feature, account-
information more effectively for items held in inventory.
ing’s role in ethics and social responsibility is

described by both reporting and assessing its impact. Relating theory to a real-life situation piques interest and
reinforces active learning.
xiii
PREFACE
Decision Maker Guidance Answer to DECISION MAKER

This feature requires students to make Analyzing Results
Yes, you are concerned about the absence of a depreciation adjustment on the manufacturing
accounting and business decisions by us- equipment. Equipment does lose value as it is used in the business, and financial statements must
recognize this occurrence. Its absence suggests an error or a misrepresentation (there is also the
ing role-playing to show the interaction possibility that equipment is fully utilized and should have been completely depreciated or that it
was scrapped).
of judgment and awareness, as well
Analyst
as the impact of decisions made. This A current ratio of 1.2 suggests that current assets are sufficient to cover current liabilities, but it implies a
feature works well to develop enabling minimal buffer in case of errors in measuring current assets or current liabilities. Removing the past due
receivable reduces the current ratio to 0.7. Your assessment is that the bakery will have some difficulty
professional competencies such as pro- meeting its loan payments.
fessional and ethical behaviour, problem

solving and decision making, communication, self-management, teamwork, and leadership skills. These
boxes work well in conjunction with the new Ethical Impact box. Guidance answers are available at the end of
each chapter.
Extend Your Knowledge (EYK)

Supplementary material has been developed
For further study on some topics of relevance to this chapter, please see the following Extend Your Knowledge
supplements: to explore some topics in more detail than the
EYK 4-1 Work Sheet Demonstration
EYK 4-2 Corporate Supplement textbook can allow. A list of EYKs relevant to
EYK 4-3 Summary of Business Activities
EYK 4-4 Examples of Classified Balance Sheets
each chapter is presented at the end of the
chapter, alerting students to visit Connect if
they choose to delve deeper into the material.
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Financial Statements
Features and assignments that highlight
companies such as Spin Master (a
2017 Annual Report
successful Canadian toy innovator and Stretching our wings
children’s entertainment company)

and WestJet (a company that provides
services) show accounting in a modern
and global context. Because students go
directly to the financial statements of
real companies, they remain engaged in SPIN MASTER CORP.
2017 ANNUAL REPORT
the active learning process. The audited
annual financial statement section of
these annual reports (with notes to the
financial statements), as well as those of
Telus and Indigo Books & Music (with
weblinks provided to access the notes), strongertogether
are reproduced at the end of Volume 1. In
Volume 2, the annual audited financial “ THE FUTURE BELONGS TO
THOSE WHO BELIEVE IN THE
BEAUTY OF THEIR DREAMS
.”
statements are presented without notes, – ELEANOR ROOSEVELT
and weblinks are provided for student

access to the full set of Annual Reports.
ANNUAL REPORT
FOR THE 52 -WEEK PERIOD
ENDED MARCH 31, 2018
2017 ANNUAL REPORT
xiv
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End-of-Chapter Material
Fundamental Accounting Principles sets the standard for quantity and quality of end-of-chapter material.
Summary SUMMARY
Each chapter includes a Summary of the chapter by LO1 Explain the accounting cycle. The accounting
cycle includes the steps in preparing financial state-
equity item. Information is taken from accounts, ana-
lyzed, summarized, and presented in useful reports
ments for users that are repeated each reporting and financial statements for users.
Learning Objective, to reinforce what students have Lar54656_ch06_396-467.indd Page 426 1/9/19 5:20 PM f-0016
period. /203/MHR00306/Lar54656_disk1of1/1259654656/Lar54656_pagefiles
LO3 Define debits and credits and explain their role
LO2 Describe an account, its use, and its relationship in double-entry accounting. Debit refers to left,
just learned. to the ledger. An account is a detailed record of in-
creases and decreases in a specific asset, liability, or
and credit refers to right. The following table
summarizes debit and credit effects by account type:
Guidance Answer to DECISION MAKER

Guidance Answers to Decision Maker
Accounting
Lar54656_ch06_396-467.indd Clerk
Page 434 1/9/19 5:20 PM f-0016 These discuss the Decision Maker boxes presented earlier
The business entity principle is being violated because it requires that the owner’s personal expenses be
recorded separately from those of his business. By debiting the entire amount to Office Supplies, assets
will be overstated on the balance sheet. By crediting Accounts Payable for the whole amount, liabilities will
in the chapter, and reinforce the need for decision making
also be overstated. At the end of the accounting period when the amount of supplies used is recorded,
Office Supplies Expense will be overstated on the income statement, causing profit to be understated. and critical thinking skills. This feature fits into the Stu-
When profit is too low, equity is also understated.
dent Success Cycle by reinforcing the “Apply” step.
Guidance Answers to CHECKPOINT

1. Best Buy.
2. Total cost is $12,180, calculated as: $11,400 + $130 + $150 + $100 + $400.
3. The matching principle.
4. Businesses that sell unique, high-dollar-value merchandise in relatively low volume levels
might choose specific identification. Car dealerships are a good example because each car
received as merchandise inventory is unique in terms of both features and identification
number. Using specific identification allows the business to accurately tag each item coming
in and going out.
5. Moving weighted average gives a lower inventory figure on the balance sheet as compared to
FIFO. FIFO’s inventory amount will approximate current replacement costs. Moving weighted
Guidance Answers to Checkpoint average costs increase but more slowly because of the effect of averaging.
6. Because these units are the same ones that were originally written down, a reversal is appropri-
The Checkpoint material throughout the chapter ate and would be recorded as:
allows students to pause and check their progress. Merchandise Inventory ............................................................... 2,000
Cost of Goods Sold............................................................. 2,000
This feature reinforces the “Do,” “Check,” and $1,800 − $1,300 = $500/unit original write-down:
$500 × 4 = $2,000 maximum reversal
“Apply” steps of the Student Success Cycle.

7. 109
Lar54656_ch02_078-153.indd Page The12/27/18
reported2:03
inventory amount
PM f-0016 is $540, calculated as (20 × $5) + (40 × $8) + (10 × $12).
8. Cost of goods sold is understated by $10,000 in 2020 and overstated by $10,000 in 2021.
9. The estimated ending inventory (at cost) is $327,000 and is calculated as:
Step 1: ($530,000 + $335,000) − $320,000 = $545,000
$324,000 + $195,000
Step 2: = 60%
$530,000 + $335,000
Step 3: $545,000 × 60% = $327,000
10. Company B is more efficient at selling its inventory because it has higher merchandise
turnover.
GLOSSARY
Consignee One who receives and holds goods owned by period so that the financial statements of succeeding
another party for the purpose of acting as an agent and
selling the goods for the owner. The consignee gets paid
periods will be comparable.
Days’ sales in inventory A financial analysis tool used to
Glossary
a fee from the consignor for finding a buyer. estimate how many days it will take to convert the inventory
Consignor An owner of inventory goods who ships them to
another party who will then find a buyer and sell the goods
on hand into accounts receivable or cash; calculated by
dividing the ending inventory by cost of goods sold and
All terms highlighted in the chapter are included.
for the owner. The consignor retains title to the goods while multiplying the result by 365.
they are held offsite by the consignee. Faithful representation The accounting principle that
Consistency principle The accounting requirement that a requires information to be complete, neutral, unbiased,
company use the same accounting policies period after and free from error.
Demonstration Problem
This Demonstration Problem is based on the same facts as the Demonstration Problem at the end of Chap-
ter 1 except for two additional items: (b) August 1 and (k) August 18.
PROBLEM MATERIAL The following activities occurred during the first month of Joanne Cardinal’s new haircutting business
called The Cutlery:
Demonstration Problems a. On August 1, Cardinal put $16,000 cash into a chequing account in the name of The Cutlery. She also
invested $10,000 of equipment that she already owned.
These problems reinforce the chapter material and b. On August 1, Cardinal paid $2,400 for six months of insurance effective immediately.
c. On August 2, she paid $2,000 cash for furniture for the shop.
further bolster the Student Success Cycle. d. On August 3, she paid $3,200 cash to rent space in a strip mall for August.
e. On August 4, she furnished the shop by installing the old equipment and some new equipment that
she bought on credit for $21,000. This amount is to be repaid in three equal payments at the end of
August, September, and October.
xv
PREFACE
Analysis Component
An analysis component is included in each Mid- and
End-of-Chapter Demonstration Problem, as well as
Analysis Component:
several Exercises, Problems, and Focus on Financial Refer to The Cutlery’s August 31, 2020, financial statements. What do each of equity and liabilities
represent?
Statements questions. These promote critical thinking
and give students opportunities to practise their ana-
lytical skills.
CONCEPT REVIEW QUESTIONS

1. What tasks are performed with the work sheet? 7. What is the purpose of the Income Summary account?
How is it different from the Income Statement?
2. What two purposes are accomplished by recording closing
entries? 8. Explain whether an error has occurred if a post-closing trial
balance includes a Depreciation Expense, Building account.
3. What are the four closing entries?
4. Daniel is having trouble determining whether with-

9. Refer to Spin Master’s income statement in Appendix III
at the end of the book. What journal entry was recorded
Concept Review Questions
drawals, owner’s capital, interest income, and prepaid as of December 31, 2017 to close the revenue account?
insurance are temporary or permanent accounts. Explain
to him the difference between a temporary and a perma- 10. What is a company’s operating cycle?
These short-answer questions reinforce the chapter
nent account in accounting and classify the accounts into
each category.
11. Why is a classified balance sheet more useful to financial
statement users than a non-classified balance sheet? content by Learning Objective.
5. Alexis believes that temporary account information is
12. What classes of assets and liabilities are shown on a typical
deleted through the closing entries. Do you agree or classified balance sheet?
disagree? Explain. What is the relationship between
temporary and permanent accounts?
6. Describe the similarities and differences between ad-
justing and closing entries.
Quick Study QUICK STUDY

These single-topic exercises give students a quick QS 6-1 Inventory ownership LO1
1. At year-end Carefree Company has shipped, FOB destination, $500 of merchandise that is still in transit
test of each key element in the chapter and are ref- to Stark Company. Which company should include the $500 as part of inventory at year-end?
2. Carefree Company has shipped goods to Stark and has an arrangement that Stark will sell the goods for
erenced to Learning Objectives. Answers to these Carefree. Identify the consignor and the consignee. Which company should include any unsold goods as
part of inventory?
items are available on Connect.
Exercise 6-3 Specific identification cost flow assumption LO2 Exercises

CHECK FIGURES: COGS = $9,427; Gross profit = $15,073

Lar54656_ch01_001-077.indd Page 61
Refer to the data in Exercise 6-2. Assume that Urban Glam Cosmetics uses the specific identification method
Exercises provide students with an additional
1/10/19 5:13 PM f-0016 /203/MHR00306/Lar54656_disk1of1/1259654656/Lar54656_pagefiles
to cost inventory. The 700 units were specifically sold as follows:

opportunity to reinforce basic chapter concepts by
Jan. 10:
Mar. 15:
70
3
units from beginning inventory
units from beginning inventory, and
Learning Objective. Note: Selected end-of-chapter
177 units from the March 14 purchase
Oct. 5: 50 units from the March 14 purchase, and exercises and problems are marked with this icon:
400 units from the July 30 purchase
. These have Excel templates located on

Calculate cost of goods sold and the gross profit.
Connect.
PROBLEMS
Problems Problem 1-1A Identifying type of business organization LO2
Complete the chart below by placing a check mark in the appropriate column.
Problems typically incorporate two or more concepts.
There are two groups of problems: A problems and Type of Business Organization
Characteristic Sole Proprietorship Partnership Corporation
Alternate or B problems. B Problems mirror the A Limited liability
Unlimited liability
problems to help improve understanding through Owners are shareholders
repetition. Owners are partners
Taxed as a separate legal entity
xvi
PREFACE
ETHICS CHALLENGE
EC 5-1
Claire Phelps is a popular high school student who attends approximately four dances a year at her high Ethics Challenge
school. Each dance requires a new dress and accessories that necessitate a financial outlay of $100 to $200 per
event. Claire’s parents inform her that she is on her own with respect to financing the dresses. After incurring Each chapter includes at least one Ethics Challenge
a major hit to her savings for the first dance in her second year, Claire developed a different approach. She
buys the dress on credit the week before the dance, wears it to the dance, and returns the dress the next week to reinforce critical thinking skills for students and
to the store for a full refund on her charge card.
Required open up discussion about various ethical topics.

1. Comment on the ethics exhibited by Claire and possible consequences of her actions. Lar54656_ch02_078-153.indd Page 150 12/27/18 2:03 PM f-0016 /203/MHR00306/Lar54656_disk1of1/1259654656/Lar54656_pagefiles
2. How does the store account for the dresses that Claire returns?
FOCUS ON FINANCIAL STATEMENTS

FFS 2-1
Focus on Financial Statements Travis McAllister operates a surveying company. For the first few months of the company’s life (through April),
the accounting records were maintained by an outside bookkeeping service. According to those records,
McAllister’s equity balance was $75,000 as of April 30. To save on expenses, McAllister decided to keep the records
Each chapter includes two technical and analytical himself. He managed to record May’s transactions properly, but was a bit rusty when the time came to prepare
the financial statements. His first versions of the balance sheet and income statement follow. McAllister is both-
questions that incorporate into the financial state- ered that the company apparently operated at a loss during the month, even though he was very busy.
ments all major topics covered up to that point. Ad- McAllister Surveying
Income Statement
ditional questions are available online on Connect. For Month Ended May 31, 2020
Revenue:
Investments by owner ...................................... $ 3,000
Unearned surveying fees................................. 6,000
Total revenues ................................................ $ 9,000
CRITICAL THINKING MINI CASE

Prairie Insurance sells life insurance, disability insurance, vehicle insurance, crop insurance, and home-
owners’ insurance. You are employed by Prairie Insurance and have been promoted to sales division manager Critical Thinking Mini Cases
for the Western Canadian division. You will be supervising approximately 25 salespeople, along with five ad-
ministrative assistants at various locations. The salespeople travel extensively and submit expense reports These cases give students the opportunity to apply
along with sales information monthly. A sample expense report for September shows:
critical thinking skills to concepts learned in the
Prairie Insurance—Western Canadian Division
Sales Report: John Bishop chapter, thus further reinforcing the “Apply” step of
Month Ended September 30, 2020
Sales revenue* ............................................................ $56,000 the Student Success Cycle.

Expenses** ................................................................... 34,000
*Sales invoices attached

**Receipts attached
Help Me Solve It
New Help Me Solve It tutorials are available on Connect for Larson’s Fundamental Accounting
Principles. The tutorials guide students through one or two of the more challenging end-of- Help Me
chapter problems per chapter, providing them with an engaging visual and audio walk-through SOLVE IT
of the problem.
xvii
What’s New
The Accounting Standard
We listened! Through extensive reviewing and consultations with the market, we have heard the issues and
concerns instructors like you have about the materials you use to teach introductory financial accounting.
Here you will find a list of new changes to specific chapters that our author has made to ensure the content of
Larson’s Fundamental Accounting Principles remains current and fresh. Whether you are new to using Funda-
mental Accounting Principles or new to this edition, you can see that McGraw-Hill Education and Larson/
Dieckmann are setting the accounting standard in Fundamental Accounting Principles. We know you’ll like
what you see.
GENERAL UPDATES beginning of each lecture to encourage students

to complete chapter readings before class. Answers
• Larson continues to strive to achieve the ultimate
are provided on Connect under the instructor
balance between the preparer focus and user fo-
resources tab.
cus in its delivery of financial accounting to meet
the current needs of today’s diverse range of stu- • Appendix III for Volume 1 includes the complete
dents. A strong preparer focus provides students annual audited financial statements, including
with the tools to understand what is happening notes to the financial statements, for Spin Master
at the individual transaction level to the financial and WestJet, as well as the audited financial
statements, providing a strong foundation for a statements without the notes for Telus and Indigo
career in accounting, as an entrepreneur, or as a Books & Music. Appendix II for Volume 2 in-
savvy business professional. These skills are es- cludes the annual audited financial statements,
sential for students to develop to accurately un- excluding notes to the financial statements, for
derstand the numbers behind key decisions they Spin Master, WestJet, Telus, and Indigo.
will face in their careers. In addition, each chap- • Throughout each chapter in both Volumes 1 and 2,
ter provides several real-world company business new end-of-chapter practice questions have
scenarios, an increased focus on ethical issues, fi- been added in targeted areas, based on feedback
nancial statement excerpts, and financial state- from the market, where students would benefit
ment analysis tools to prepare students to be an from additional practice opportunities. Approxi-
effective decision maker in any career path they mately 25% of the exercises and problems have
choose. been refreshed in terms of numbers and/or busi-
• Increased emphasis on global perspectives, ness scenarios. Existing company scenarios have
bringing ethical issues and examples to students been expanded and updated to provide students
from around the world. with more information and updated examples to
enhance student engagement. Volume 1 and 2
• New Knowledge Check-Up (KCU) questions are
end-of-chapter content was revised by Laura
ten single-topic, multiple-choice questions de-
Dallas of Kwantlen Polytechnic University.
signed to assess initial comprehension of the key
chapter learning objectives. These reading readi- • The chapter content is IFRS 2018 compliant
ness assessments have been written by the author throughout Volume 1 and Volume 2; references
to provide students with a quick and easy test as are included where appropriate. New updates in-
to whether they achieved the critical comprehen- clude coverage of IFRS 16 Leases in Chapter 14
sion concepts in each chapter before moving and conceptual framework integrated through-
on to more comprehensive review problems. out. IFRS and ASPE differences are identified at
These can be used as a quick mini quiz at the the end of each chapter.
xviii
PREFACE
• The Sixteenth Canadian Edition includes three “Thunderin’ Thelma” as featured on CBC’s
exciting new chapter-opening vignettes, and sig- Dragons’ Den.
nificant updates to the remaining 14 featuring a • New Ethical Impact box on an $18.7 million
range of engaging topics and including inspiring maple syrup heist that helps students to assess
stories from company startups to success stories how they would handle identified irregularities.
of well-known businesses and not-for-profit
• Updated Exhibit 1.5 charting average annual sal-
organizations. Nearly all of the vignettes include
aries for accounting positions.
relevant video links for students to broaden their
• Updated section on professional certification in
real-world exposure to critical business decisions.
Canada.
• Seventeen new Ethical Impact boxes have been
• New Ethical Impact box on resolving ethical
crafted to highlight an ethical dilemma for each
dilemmas.
chapter based on a real-world example linked
directly to issues within the chapter learning • New Decision Insight on evaluating charitable
objectives. Instructors can take a moment to help organizations.
students develop these critical professional skills. • Updated section on the measurement principle,
• Real-world relevance is provided with actual highlighting current cost, fair value, and value in
businesses used as examples with several finan- use terminology
cial statement excerpts throughout Volumes 1 • Updated Exhibit 1.12 summarizing the elements
and 2, including issues relating to financial state- of financial statements, including updating the
ment presentation and disclosure. These real definition of an asset and a liability.
company names are bolded and highlighted in • Ten new Knowledge Check-Up questions to help
magenta at first mention to emphasize integra- students assess their reading readiness and to
tion of accounting concepts with actual business identify any initial learning hurdles.
practice.
Chapter 2
• New important tip boxes have been added and
• New Important Tips boxes added to provide extra
are incorporated throughout the text to direct
support in topic areas where students typically
students’ attention to critical concepts that
struggle; new box on unearned revenue to empha-
students often miss in their initial reading of
size this common learning hurdle for students.
the text.
• New Decision Insight on Cara Operations to help
• Chapter 9 on property, plant, and equipment is
students understand the real-world applicability
now included in both Volume 1 and Volume 2 to
of this chapter’s concepts relating to financial
offer flexibility to instructors, depending on
reporting.
institutional course design.
• Updated presentation and approach to mid-
• Chapter 14 includes a more integrated approach
chapter demonstration problem makes the
to bond pricing that includes instructional tips
transaction analysis section easier to follow.
on how to use a financial calculator, with helpful
hints and examples provided for students to fol- • Updated Exhibit 2.8 presentation of revenue and
low along during their chapter reading. expenses in relation to equity.
• New presentation of recording and posting trans-
actions, based on reviewer feedback to improve
CHAPTER-BY-CHAPTER UPDATES student connections of material.
Chapter 1 • New Ethical Impact box on International Ethics:
• Updated chapter-opening vignette “Food Truck Corporate Corruption vs. Cross Cultural Manage-
Frenzy” featuring entrepreneur Zane Caplansky, ment to expose students to real-world issues
founder of Caplansky’s Deli and the food truck relating to factors impacting their decision making.
xix
PREFACE
• Ten new Knowledge Check-Up questions to help on their reality series The Cupcake Girls on W,
students assess their reading readiness and to We TV, and the Oprah Network (OWN).
identify any initial learning hurdles. • Expanded Decision Maker on a vitamin manufac-
turing company with a concern over its deprecia-
Chapter 3
tion expense adjustment.
• Exciting new chapter-opening vignette featuring
• Updated Exhibit 4.15 featuring example presen-
a project run by Cities Foundation called Wasted
tation of current assets for Apple Inc.
that provides digital coins to incentivize its resi-
dents in Amsterdam’s Noord district to recycle. • New Ethical Impact box putting students in the
Includes an engaging new video link to help role of a junior accountant working for a local
students understand the program. building supply store. The CFO asks them to
capitalize a number of small items for which they
• New vignette also introduces students to the
do not understand the long-term future benefit.
concept of cryptocurrencies and provides an
overview of the organization Recereum, which is • New Decision Insight highlighting examples of
a blockchain-based platform that aims to provide how companies are maintaining high levels of
money in the form of cryptocurrency coins for their most liquid asset—cash.
“every single recycled bottle.” • Updated Decision Maker regarding a commercial
• Updated wording to introduction to the purpose loan manager’s analysis of a local bakery’s
of adjusting to help students understand the current ratio.
purpose of the adjusting process. • Ten new Knowledge Check-Up questions to help
• New Ethical Impact box for MagnaChip, which is a students assess their reading readiness and to
South Korea–based semiconductor company that identify any initial learning hurdles.
is publicly traded in the United States and was re-
cently under investigation by the SEC for engaging Chapter 5
in unethical/improper conduct. MagnaChip was • Updated chapter-opening vignette featuring
charged by the SEC with artificially increasing Mountain Equipment Co-op (MEC), including a
revenue, delaying or avoiding expenses, avoiding new video link to review MEC’s financial results.
reductions in revenue, smoothing gross margins,
• New chapter feature company Lifetime Equip-
and hiding delays in receivables collections.
ment Co-op to help students understand typical
• Updated Decision Maker box with a focus on journal entries in a merchandising business.
revenue recognition. Students assume a small
• New Ethical Impact box relating to the role of
publishing company signed basketball superstar
marketing manager and a concern over revenue
LeBron James to write a book. The company paid
recognition and channel stuffing.
LeBron $500,000 today and will pay future book
• Updated Exhibit 5.18 providing a gross margin
royalties.
snapshot for a number of different types of busi-
• Updated Exhibit 3.20, Summary of Adjustments
nesses to help students understand the financial
and Financial Statement Impact, to clarify “need
statement user perspective.
to know” journal entries for students.
• Updated Appendix 5B discussion on PST, GST,
• Ten new Knowledge Check-Up questions to help
and HST.
students assess their reading readiness and to
• Updated Exhibit 5B.1 summarizing zero-rated
identify any initial learning hurdles.
and exempt products for GST/HST.
Chapter 4 • Updated Exhibit 5B.2 organizing sales tax rates
• Updated chapter-opening vignette featuring for rate changes and restructured into a more
founders of the BC startup Cupcakes, as featured student-friendly format.
xx
PREFACE
• Ten new Knowledge Check-Up questions to help control environment and making significant life-
students assess their reading readiness and to style changes. Students are asked if they have any
identify any initial learning hurdles. concerns and what they would do.
• Two new Important Tip boxes have been added to
Chapter 6 the chapter to simplify adjustments to the book
• Updated chapter-opening vignette featuring in- balance and adjustments to the bank balance for
ventory innovation at Amazon.com, including students when preparing a bank reconciliation.
video links outlining Amazon’s warehouse opera- • Additional new Important Tip box on types of ad-
tions and demonstrating its Kiva robots. justing entries required after preparing a bank
• New Important Tip box summarizing the inci- reconciliation.
dental costs that are to be added to inventory. • New Decision Insight developed from a previous
• New chapter demonstration company, Lifetime chapter-opening vignette, featuring an analysis
Equipment Co-op, continued from Chapter 5. of “What Is Cash?” investigating today’s payment
• Updated real-world examples providing account- options in Canada, and outlining the important
ing policy disclosures for Amazon.com Inc., role of the Canadian Payments Association. A
Lululemon Athletica, Procter & Gamble Co., and video link is provided for students who want to
Tiffany & Co., illustrating examples of companies learn more about how the complex payment sys-
that use the various inventory costing alternatives. tem functions in Canada.
• New Ethical Impact box featuring the example of • Updates in the Financial Statement Analysis sec-
Fair Beans Coffee, an ethical roaster that obtains tion for the quick ratio highlight differences with
organic beans from Nicaragua. Students, in the current ratio for WestJet.
role of manager of accounting, consider how • Ten new Knowledge Check-Up questions to help
they would handle a concern over inventory students assess their reading readiness and to
valuation. identify any initial learning hurdles.
• Updated note disclosure for TJX Companies Inc.
illustrating both the retail method of inventory Chapter 8
and disclosure over inventory shrinkage. • Updated chapter-opening vignette discussing
• Ten new Knowledge Check-Up questions to help BC-based WN Pharmaceuticals, providing a
students assess their reading readiness and to valuable perspective to students in understanding
identify any initial learning hurdles. a risk-based approach to the management of
customer receivables.
Chapter 7 • Updated Exhibit 8.1, Accounts Receivable
• Exciting new chapter-opening vignette featuring Analysis for Selected Companies as a Percentage
Lori Joyce, founder of Betterwith Foods—a new of Total Assets.
Vancouver-based ice cream brand with a focus • Updated Decision Insight box covers a recent
on delivering high-quality, clean and simple ice application from Rogers Communications and
cream from farm-fresh traceable dairy. A video the development of a wholly owned subsidiary,
link is included providing Lori’s perspective on Rogers Bank.
the business. • New Ethical Impact box featuring a real-world
• Updated section on the fraud triangle and the example from an organization that discovered
drivers of fraud (includes two new exhibits). millions in fraudulent loans in a subsidiary
• New Ethical Impact box, involving a manager, company. The box asks students what they
the director of finance, demonstrating some would do if they were asked to falsify invoices
warning signs of fraud, including modifying the to help their business obtain a bank loan.
xxi
PREFACE
• Updated control considerations for customer • Updated financial statement excerpts featuring
payments. presentation of Indigo Books & Music Inc.’s
• New Decision Insight providing students with an accounting policy and depreciation schedule for
understanding of payment securities; this feature property, plant, and equipment and Microsoft’s
is linked directly to learning concepts highlighted presentation and disclosure over intangible
in the chapter-opening vignette. assets.
• New Important Tip box highlighting the logic be- • New Decision Insight identifying fixed asset
hind recording only the note receivable and not tracking and the related depreciation of the
the interest income on a dishonoured note. underlying assets as a critical role in business.
• Updated Exhibit 8.21, Comparison of Accounts • New Exhibit 9.23, World’s Most Valuable
Receivable Turnover and Days’ Sales Brands, presented in an easy to understand
Uncollected for High Liner Foods Inc. and and engaging display.
Maple Leaf Foods Inc. • Ten new Knowledge Check-Up questions to help
• Ten new Knowledge Check-Up questions to help students assess their reading readiness and to
students assess their reading readiness and to identify any initial learning hurdles.
identify any initial learning hurdles.
Appendix I
Chapter 9 • All rates (i.e., EI, CPP, provincial tax, federal tax)
updated to 2018.
• Updated chapter-opening vignette featuring
Vancouver International Airport and its latest
Appendix II
collaborative innovation CHECKiTXPRESS,
• Responding to reviewer feedback this former
which is an innovative and user-friendly bag
online appendix, Accounting Information
drop for travellers.
Systems, is now included in the body of the
• This chapter has a number of up-to-date exam-
textbook.
ples of PPE items drawn from a variety of public
companies. Appendix III
• Updated language under Cost of PPE to refer • Volume 1 includes annual audited financial
to capital expenditures as betterments and statements (including notes to the financial state-
revenue expenditure as repairs and mainte- ments) for Spin Master and WestJet and annual
nance expense to align more closely with audited financial statements (excluding notes to
industry practice. the financial statements) for Telus Corporation
• Updated presentation under Cost of PPE of types and Indigo Books & Music.
of expenses that can be capitalized are summa- • Volume 2 includes annual audited financial
rized now in bulleted form to assist in student statements (excluding notes to the financial
comprehension and retention. statements) for Spin Master, WestJet, Telus
• New Ethical Impact box on a fictitious scenario Corporation, and Indigo Books & Music.
involving an ethical issue that a junior accoun-
tant comes across in their new role managing the Appendix IV
property, plant, and equipment subledger for the • Sample chart of accounts updated to reflect
Bermuda Airport Authority. textbook content.
xxii
PREFACE
Market Leading Technology
LEARN WITHOUT LIMITS

McGraw-Hill Connect® is an award-winning digital teaching and learning platform that gives students the
means to better connect with their coursework, with their instructors, and with the important concepts that
they will need to know for success now and in the future. With Connect, instructors can take advantage of
McGraw-Hill’s trusted content to seamlessly deliver assignments, quizzes and tests online. McGraw-Hill
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CONNECT KEY FEATURES:

Smartbook®
As the first and only adaptive reading experience, SmartBook is changing the way students read and learn.
SmartBook creates a personalized reading experience by highlighting the most important concepts a student
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ously adapts by highlighting content based on what each student knows and doesn’t know. This ensures that
he or she is focused on the content needed to close specific knowledge gaps, while it simultaneously promotes
long-term learning.
Connect Insight®
Connect Insight is Connect’s one-of-a-kind visual analytics dashboard—available for instructors—that pro-
vides at-a-glance information regarding student performance, which is immediately actionable. By presenting
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When it comes to studying, time is precious. Connect helps students learn more efficiently by providing
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xxiii
Another random document with
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chiefs into an acknowledgment of their authority and established two
small republics, Stella and Goshen, to the north of Kimberley.
These proceedings opened the eyes of the British government to the

policy upon which the South African Republic had entered—to annex
Bechuanaland and close the way of British communication [183]with
regions still farther north in which the nation had become interested.
To check these designs in time, a military expedition under Sir
Charles Warren entered Bechuanaland toward the end of 1884,
expelled the Africanders without bloodshed, and proclaimed the
whole region a crown colony under the name of British
Bechuanaland. This territory was annexed to Cape Colony in 1895.
In 1885 a British protectorate was established over a still more
northerly region, covering the whole country as far as the borders of
Matabeleland. In 1888 the British hold was made yet more secure by
a treaty with the king of the Matabele, Lo Bengula, by which he
bound himself to cede no territory to, and to make no treaty with, any
foreign power without the approval of the British High Commissioner.
The raising of the British flag at St. Lucia Bay, on the Indian Ocean,
in 1884, and a treaty with the Tonga tribes, binding them to make no
treaties with any other power than the English, completed the hold of
the British crown on the eastern coast line up to the southern border
of the Portuguese possessions.
The Africanders, denied expansion on the north, sought

compensation in the acquisition of [184]Swaziland, to the east of the
Transvaal republic—a small but fertile region and possessing
considerable mineral wealth. It was inhabited by some 70,000
Kaffirs, near of kin but hostile to the Zulus. After long negotiations, in
which the South African Republic, Cetawayo of the Zulus, and the
British authorities took part, the Africanders secured a concession of
right to build a railway through the marshy region lying between
Swaziland and the sea to the coast at Kosi Bay; this concession was
granted in 1890 and laid in abeyance awaiting the acquisition of
Swaziland itself, through which the railway must run. In 1894 the
whole territory of Swaziland was placed under the control of the
South African Republic, subject to a formal guaranty of protection to
the natives.
It is difficult to determine whether it was Africander dullness or British

sharpness, or both, that omitted from the Swaziland convention of
1894 the concession to the South African Republic, granted in 1890,
of a right to construct a railway to the sea through the marshy district
of Tongaland lying next the coast line. But it was omitted from that
instrument, and it was held that, as the later convention superseded
and voided the earlier one, the provision for access [185]to the sea
had lapsed. Whereupon the British government promptly secured the
consent of the three Tonga chiefs concerned, and proclaimed a
protectorate over the whole strip of land lying between Swaziland
and the ocean, up to the southern portion of the Portuguese territory.
Thus by a stroke of statecraft the access of the Africanders to the
sea by railway communication entirely under their own control was
effectually stopped.
Within nine years the British control established in Bechuanaland in

1885 was extended over the whole unappropriated country as far
north as the Zambesi. By a new treaty made with Lo Bengula in
1888 the sphere of British influence was further expanded to
embrace not only Matabeleland, but Mashonaland also—a partially
explored territory to the eastward, over which Lo Bengula claimed
some authority.
The next step in working out the policy of the British in South Africa
was the granting of a royal charter to a corporation known as the
British South African Company, formed to develop this eastern and
undefined region of Lo Bengula’s territory. Mr. Cecil Rhodes was
conspicuous as the leader in this movement. The purpose of the
company was twofold: To develop [186]the gold fields supposed to
exist there, and to forestall the Transvaal Africanders in taking
possession of the country. The charter not only invested the
company with the rights of a trading corporation, but also with
administrative powers as representative of the British crown. In 1890
the pioneer emigrants under this management began to arrive in the
chartered territory and commenced to found settlements and build
forts along the eastern plateau.
With the conflicts which arose between the British South African
Company and the Portuguese—complicated by alliances with the
natives, with the wars which arose therefrom, and with the final
adjustments and treaties that followed—we have nothing to do in
these pages. The one fact that is of interest to us in closing this
chapter of conflict in statecraft is that at last the British succeeded in
isolating the Africanders from the sea, and in throwing around them
a perfect cordon of British territories and pre-emptions. By chartering
the British South African Company to the north of the Transvaal the
last link in the chain that inclosed the two Africander republics was
completed. For there had been left no possibility of advance toward
the sea eastward on the part of the Transvaal Republic—in the
Arbitration [187]Treaty of 1872 Great Britain had obtained pre-emption
rights over the Portuguese colonial possessions. [188]
[Contents]
CHAPTER XIII.
CAUSES OF THE AFRICANDERS’ SECOND WAR OF
INDEPENDENCE.
In one sense the causes of the Second War of Independence, like those of the first,
were as remote as the British seizure of Cape Colony in 1795, and as the years
between 1814 and 1836, which saw the accumulation of grievances that led to the
“Great Trek.” Seeds of dislike to the English were then sown in the Africander mind
which have never ceased to propagate themselves—an ominous heredity—from
father to son through all the intervening generations.
The immediate causes of that war were of a more recent date. Tracing backward,
the war was brought about by the alleged grievances of a multitude of foreigners—
vastly outnumbering the citizens—who, for their own purposes, had entered the
territory of the South African Republic within a single decade; these foreigners went
there in the pursuit of wealth; the wealth [189]that enticed them there was in the rich
gold deposits of the Witwatersrand district of the Transvaal. If the gold had not been
there, or had not been discovered, the excess of foreigners would not have pressed
into the country; if the foreigners had not flocked into it in great excess of numbers
over the citizens, there would have been no alleged grievances to redress, and
therefore no war, unless one or both of the parties to it had predetermined to bring
about a conflict at this time and found some other pretext.
Tracing from cause to effect up to the war, we begin with unimportant discoveries of
gold near the eastern border of the Transvaal between 1867 and 1872. Though
these were not rich in themselves, they encouraged more vigorous and extensive
prospecting than had been practiced theretofore. This led to the discovery, in 1885,
of the marvelously rich deposits of the precious metal in beds of conglomerate in
the Witwatersrand district. The influx of strangers had been considerable from
1882, but from 1885 to 1895 the foreign additions to the population of the Transvaal
threatened to submerge the native Africander citizens, for the newcomers were
mostly men, and largely exceeded in number the [190]entire Africander population,
including the women and the children.
The first result of the new mining industry and the rapid growth of the towns was
pleasant enough—the revenues of the needy republic were increased, and there
was a promise of unprecedented prosperity. Nevertheless, in the tidal wave of
incoming aliens from the British colonies in South Africa, from Europe and from
America—most of them British, and nearly all speaking English—the far-seeing
president, Paul Kruger, and other leaders of political life in the Transvaal, early
recognized an element of peril to their cherished domestic institutions.
As a defense against the passing of controlling power into the hands of transient
settlers, the electoral franchise was somewhat restricted. Up to the convention of
1881 the probation of an alien seeking enfranchisement in the Transvaal Republic
was a residence in the country for two years. At that time, with the arbitrary
annexation of 1877 fresh in their minds, and knowing that the British authorities had
been solicited to take that step by English residents in the Transvaal, it is a matter
of no surprise that the Africanders extended the probation for franchise to five years
—the period required in the United [191]States of America. That provision was in
force when the London Convention was signed, in 1884; it passed unquestioned by
the British government, and was still in force in 1890. Up to that date the franchise
had kept the native Africander element in a safe majority.
As a concession to demands on the part of foreigners for a reduction of the period

of residence required for naturalization, Mr. Kruger proposed, in 1890, to divide the
volksraad, which consisted of forty-eight members, into two chambers of twenty-
four members each, the first to retain supreme power, the second to be competent
to legislate in all matters local to the new industrial population gathered, principally,
in and about Johannesburg, and its acts to be subject always to the veto of the first
volksraad. The measure provided, also, that in electing members of the second
volksraad only two years’ residence and the ordinary process of naturalization
should be required of aliens, their franchise for the first volksraad still being subject
to an additional five years’ probation.
This measure was passed by the volksraad after a good deal of opposition by the
more conservative members. It has been condemned as clumsy and inadequate;
but it is worth while to [192]weigh Mr. Kruger’s own words explanatory of his purpose
in it. “I intend this second volksraad,” he said, “to act as a bridge. I want my
burghers to see that the new population may safely be trusted to take part in the
government of the country. When they see that this is done, and that no harm
happens, then the two volksraads may come together again, and the distinction
between the old and the new population can be obliterated.” It should be
remembered, however, that the two years’ franchise gave the citizen no vote in the
election of the president and the executive council—for that privilege he had to fill
out the additional five years’ probation—and that no naturalized burgher could
become a member of the first volksraad.
Discontent continued to spread among the new industrial population, who

complained bitterly of exclusion from important political rights, and of grievances
which they and the mining industry suffered under the existing laws and
administration. As a means of redress a reform association was formed in 1893. It
is necessary to a correct judgment of the situation at this time to consider the
statements of both sides as to the causes of complaint.
THE RIGHT HON. JOSEPH CHAMBERLAIN.
[193]
According to Canon Little, who cannot be accused of favoring the Africanders—
“The grievances of the Uitlanders were these:

“1. That the customs tariff was excessive, making food shamefully dear, and that
the charges for railway freights were unduly heavy.
“2. That the duties on machinery and chemicals were extortionate.
“3. That these and the dynamite monopoly made the expense of all mining
operations excessive.
“4. The extreme unfairness as to the vexatious laws touching on education and the
use of language.”
Over against these allegations are the statements of Mr. F. Reginald Statham in his
“South Africa as It Is.” Mr. Statham writes from the Africander viewpoint, but gives
some guaranty of sincerity and of confidence in his own averments by an appeal to
figures—which can always be verified. Speaking in a general way of the conditions
prevailing at this period, he says:
“The idea of the persecuted and oppressed Uitlanders has become so fixed in the
minds of English people—thanks to the efforts of those who were occupied in
preparing and justifying a revolt—that even the plainest statement of facts
[194]seems powerless to dispossess it. No one will claim, no one ever has claimed,
that the government of the South African Republic is perfect. Having regard to the
extraordinary changes that have come over the country during the last ten years, it
is really a marvel that the government is not much more imperfect than it is. The
present position of the Transvaal executive has been not inaptly compared to the
position of the crew of a collier brig who might suddenly find themselves in control
of a first-class mail steamer. However desirous they might be of doing their best,
they could hardly avoid making some mistakes. If the foreign population had much
more to complain of than they have, it ought not to cause either surprise or
indignation.
“And what have they to complain of? Really, the life of the average foreigner in
Johannesburg is the freest imaginable. He can follow his trade, he can follow his
profession, no matter what it is, without any question or hindrance from the
government. His position as an Uitlander in no way hinders him from investing in
property, from practicing as a lawyer in the courts, from undertaking, in fact, as
freely as he could undertake in his own country, any lawful kind of business or
occupation. If he pays a high rent for his house, [195]that is not the fault of the
government, but of the land speculators who have bought up building stands. If his
water supply is somewhat defective, it is the fault of the big foreign capitalists, who
think more of the dividends they put in their own pockets than of the water they put
into the people’s mouths.
“A government which depends on the goodwill of a strictly Sabbatarian population

allows the Uitlander to spend his Sunday exactly as he pleases. He may play lawn
tennis if he likes—and, indeed, he generally does so; he may engage in cricket
matches, he can attend so-called sacred concerts, the programmes of which are
drawn from the music hall or the comic opera. If he is in a gayer mood he may
witness on a Sunday evening displays of “living pictures” which certainly would not
be tolerated at the Royal Aquarium. To put it shortly, allowing for little drawbacks of
climate and the expense of living, the Uitlander can live more at his ease in
Johannesburg or Pretoria than in almost any other city under the sun.
“But he is taxed.
“How is he taxed? There is probably no one in the Transvaal, rich or poor, whose
personal taxes amount to more than £5 a year. If it is [196]complained that he is
taxed through his interest in the gold industry it is easy to make an appeal to
published figures. In 1895 the Crown Reef Gold Mining Company produced gold
worth upward of £420,000, and distributed nearly £97,000 in profits. Its payment to
the Government for rents, licenses, and all other privileges and rights amounted to
£1,191 9s 10d. In the same year the Robinson Company, which had produced
£651,000 in gold and distributed £346,000 in dividends, paid to the government
£395 11s 8d. The New Chimes Company, producing £93,000 in gold and
distributing £32,000 in profits, paid under the head of rates and licenses, together
with insurance premiums, £664 16s 5d. The Transvaal Coal Trust produced
266,945 tons of coal, and paid the government £53 15s, while the Consolidated
Land and Exploration Company, in which the Ecksteins are the largest
shareholders, and which owns more than 250 farms of 6,000 acres each, paid to
the government in the shape of taxes, including absentee tax, no more than £722
2s 6d.
“These figures are sufficiently eloquent by themselves. They become more

eloquent when they are placed beside the 50 per cent impost [197]claimed by the
Chartered Company on all gold-mining enterprise in Rhodesia.
“But what about indirect taxation? Here are the facts:
“All machinery for mining purposes is subject to only 1½ per cent impost dues, the
term machinery being stretched by the government to its uttermost possibilities to
meet the mining industry, and it is made to include sheet lead, cyanide, etc. All
other articles not specially rated are subject to an ad valorem duty of 7½ per cent,
the Cape Colonist paying an ad valorem duty of 12 per cent. Specially rated articles
affecting the white miners, such as tea, coffee, butter, rice, soap, sugar, are in most
cases subject to lower, and only in one instance to higher, duties than in Cape
Colony.
“Here is a comparison:
Cape Colony. Transvaal.

Butter 3d per lb. 5s 0d per 100 lbs.
Cheese 3d per lb. 5s 0d per 100 lbs.
Coffee 12s 6d per 100 lbs. 2s 6d per 100 lbs.
Rice 3s 6d per 100 lbs. 1s 6d per 100 lbs.
Soap 4s 2d per 100 lbs. 5s 0d per 100 lbs.
Sugar 6s 3d per 100 lbs. 3s 6d per 100 lbs.
Tea 8d per lb. 2s 6d per 100 lbs.
Guns £1 per barrel. 10s 0d per barrel.
“As regards monopolies and concessions, the dynamite monopoly is often quoted
as an instance [198]of the manner in which monopolies are granted, to the detriment
of the mining interest. It has been complained that the government retains a right to
charge 90s a case for what can be produced for 30s a case. These figures,
however, are exaggerated both ways. The government charge is 85s a case, and
as the dynamite used by De Beers, at Kimberley, costs more than 60s a case laid
down there, it can hardly be held that 85s is a high charge in Johannesburg, having
regard to the much greater distance of Johannesburg from the sea. In this matter of
the dynamite concession, moreover, it was a choice between a foreign monopoly
and a local monopoly, while in the reports of mining companies in which explosives
are separately accounted for it is shown that while total working expenses run up to
over 30s per ton, the cost of explosives is less than 1s 3d per ton.
“As regards the railway concessions, the truth of the matter is that the Transvaal
Railway Company—the Netherlands South African Railway Company, that is—by
providing competing routes to Johannesburg from Natal and Delagoa Bay, keeps in
check the monopoly which would certainly be taken great advantage of by [199]the
Cape Colony if the only route to Johannesburg was from Cape ports.”
It may be allowed—it must be—that the old saw, “figures will not lie,” is unsound. In
the hands of capable and unscrupulous persons they will lie like Ananias and
Sapphira. But, like that of Ananias and Sapphira, the lie in figures brings swift
detection and punishment. It ought to be easy, therefore, for those who have filled
the ears of the world with charges of Africander oppression practiced upon the
foreigners in the way of “excessive customs tariff,” “extortionate duties on
machinery,” and the “dynamite monopoly that made the expense of all mining
operations excessive,” to convince the world-jury to which they have appealed that
they have a case. They ought at least to be able to show that in British Rhodesia
the impost on the profits of gold mining was not 50 per cent, while in the Transvaal
it was about 8 per cent thereof; that in British Cape Colony the ad valorem duty on
articles not specially rated was not 12 per cent, while in the Transvaal it was 7½ per
cent; that in British Cape Colony specially rated articles affecting the white miner as
to expense of living were not taxed all the way from 100 to 500 per cent higher than
in the Transvaal, with the single exception [200]of soap; that an import duty of 1½
per cent on mining machinery was extortionate as compared with the tariff of other
nations, or that a higher duty than 1½ per cent was collected in the Transvaal; and
that a profit of 25s a case on dynamite, less the cost of transportation from
Kimberley to Johannesburg, and only causing the expense for explosives used in
mining to be 1s 3d per ton of ore out of a total cost of 30s per ton, was an
oppressive monopoly causing the cost of mining to be excessive.
Concerning the other grounds of complaint Mr. Statham writes:
“There are, besides the material grievances alluded to above, what may be called
the political grievances, such as (1) the alleged government of the country by a
small faction of Hollanders, (2) the language grievance, (3) the educational
grievance, and (4) the franchise grievance.
“As regards the first mentioned of these, an honest and impartial person would
search for evidence of it in vain. All the members of the executive, with one
exception, are South African born; so are the majority of heads and sub-heads of
departments. * * * The only Hollander of any distinction in the government [201]is the
state secretary, Dr. Leyds, a man of exceptional ability and integrity, who, in spite of
enormous difficulties and constant attacks, has deserved and retained the
confidence both of the president and the volksraad. To say that he is the ablest and
most cultured official in South Africa is to say what is simply true, and if his ability
has excited jealousy and resentment, it is only what a general study of human
nature would lead one to expect.
“As regards the language question and the education question, consideration has to
be paid to the language most usually spoken in the country. Entirely misleading
ideas are liable to be formed on this point, owing to the erroneous impression as to
the relative strength of the Dutch and the foreign population. A habit has arisen of
speaking as if the foreign population greatly outnumbered the burgher population.
The case is quite the opposite of this. The census of Johannesburg taken in 1896
by the Johannesburg Sanitary Commission showed that the population of the place
had been greatly overestimated, the male European population of all ages
amounting to 31,000. As there are 25,000 burghers on the military register of the
republic, it seems fair to assume that the burgher population is at least [202]150,000,
while the foreign population is probably not more than half of that. Of the 150,000
burghers and their families fully two-thirds do not understand English. Is it, then,
unreasonable to claim that the official language, the language of official documents,
shall be the language spoken by two-thirds of the people, or do the women and
children count for nothing? But although the official language by law is Dutch, there
is not a single government office in which there is not English or German spoken to
those who cannot speak Dutch. In the higher courts the judges frequently shut their
eyes to the use of the English language in the witness-box, and in the lower courts
English is invariably spoken by English litigants.
“As regards the education question, there is not now much need to discuss it. The
volksraad during the session of 1896 passed a law in further expansion of the
principles laid down in the law of 1892, and under the regulations drawn up in
accordance with the law, as now expanded, state schools, in which English-
speaking children will be taught in English, and which are placed under the control
of representative school boards, have been established in the gold-mining districts.
“The franchise question has been made the [203]subject of special complaint. Here,
however, there are several difficulties in the way. In the first place, the majority of
the foreign population do not want the franchise, because they are quite content
with their position as it is and do not want to become—as they would have to do if
they exercised the franchise—burghers of the South African Republic. The very
agitation over the question has increased the difficulty, for the more there seems to
be a possibility of a serious misunderstanding between the Transvaal and Great
Britain, the less disposed British subjects become to place themselves in a position
which might compel them to fight against their own countrymen. Meantime the
government and the volksraad have been compelled to the conclusion that the
agitation for the franchise is not genuine—that it has not been encouraged with the
view to obtaining a concession, but with the object of establishing a grievance. They
have seen, too, that to grant wholesale political privileges to the foreign residents in
Johannesburg, even if those foreign residents were willing to become naturalized,
would be to a great extent to deliver up the interests of all the dependent classes—
the shopkeepers, the miners, the professional men—into the hands of a small
group of [204]capitalists, who would use their influence, as they have used it
elsewhere, to corrupt the political atmosphere and to subject the interests of every
individual to their own. The political tyranny that exists in Kimberley, where
employes of De Beers are compelled to vote to order on pain of dismissal, supplies
a sufficient illustration of what would happen in Johannesburg if once the financial
conspirators secured political control. A further and most significant illustration is
supplied by a well-known incident in connection with the revolutionary movement in
Johannesburg, when miners under the control of the leading conspirators were
ordered to take up arms under penalty of forfeiting their wages. That in the great
majority of cases they preferred the latter course is in itself a complete exposure of
the hollowness of the whole revolutionary movement. In all known cases of
revolution arising from discontent on the part of a mining population it has been the
miners who have taken the lead and dragged others in with them. In this case the
miners, who had never dreamed of discontent, were ordered to take up arms and
refused.
“Out of the facts of the position actually existing in Johannesburg and other gold-
mining [205]centers it was utterly impossible for any honest man to manufacture a
serious complaint, least of all such a complaint as would in any respect justify a
revolution to secure redress. So far from being treated with unfairness or hardship,
the foreign residents in the Transvaal have been treated with marked consideration.
The interests of the gold industry have been consulted in every possible way. If the
government has not in some instances been able to do all it might have wished to
do, it has been because the reckless language of a portion of the press and the
overbearing attitude of the capitalist agitators have aroused the suspicion and the
resentment of the volksraad.
“Yet out of this position of things a case had to be got up against the Transvaal
government in order to justify the revolutionary movement that had been planned in
the interest of the small groups of capitalists who had determined to make
themselves as supreme over the gold industry in Johannesburg as they had
become over the diamond industry in Kimberley.”
It has seemed necessary to quote Mr. Statham thus at length in order that the
alleged grievances of the foreigners in the Transvaal, and the Africander answer
thereto may be considered [206]side by side. To say the least, Mr. Statham has not
dealt in vague generalities. His assertions are specific and his figures can easily be
investigated. It is for those who sympathize with the complaints which led to
prolonged agitation and finally to war, to show that Mr. Statham was in error. Until
they shall have done so charges of “oppressive” and “extortionate” imposts, taxes
and tariffs will lie, not against the South African Republic, but against the British
administration in Cape Colony, Natal and Rhodesia.
Mr. Statham’s contention that the Dutch ought to be the official language of the
Transvaal seems well founded. The account he gives of a somewhat tardy
provision—made after the raid of December, 1895—for the instruction of English
children in the English language evinces a disposition to meet the reasonable
demands of the foreigners in that regard; but the delay in doing so is to be
regretted. The matter of franchise became the subject of acrimonious diplomatic
negotiation and the immediate cause of war, which will be treated of more fully in a
later chapter. [207]
[Contents]
CHAPTER XIV.
CAUSES OF THE AFRICANDERS’ SECOND WAR OF
INDEPENDENCE.—CONTINUED.
The foreigners’ Reform Association, sometimes called the National Union, was
organized at Johannesburg in 1893. Its professed object was to secure redress
of grievances. This is always allowable in a free country; but it is matter of record
that the spirit and methods of this particular association were not calculated to
propitiate the people to whom they must look for any relief from the sufferings of
which they complained.
Two incidents will sufficiently illustrate this. In 1894 Lord Loch, the British High
Commissioner for South Africa, visited the Transvaal to conduct certain
negotiations with the executive concerning Swaziland. The presence of this
distinguished Crown Official in the Transvaal was made the occasion by the
association of offering a public insult to President Kruger in Pretoria, of
promoting a violent outburst of pro-British [208]and anti-Africander sentiment in
Johannesburg, and of a conference between Lord Loch and Mr. Lionel Phillips, a
member of one of the leading financial houses in Johannesburg, in which was
considered the propriety of assembling a body of imperial troops on the borders
of the Transvaal for the support of any revolutionary movement that might be
made. These proceedings were reminiscent to the Africanders of an earlier
demonstration, prior to the forming of the National Union. In 1890 President
Kruger visited Johannesburg to confer with leading citizens on the mitigation of
the grievances complained of. The foreigners celebrated his coming in that
friendly way by drinking to excess, by singing in his ears “God Save the Queen”
as a suitable song of welcome to the President of the South African Republic,
and by tearing down the national flag of the Transvaal which was floating in front
of the house in which the conference was being held. With a moderation not to
be expected from Paul Kruger, the president charitably attributed the offensive
proceedings to “long drinks”; but the people in general and their representatives
were much embittered by them, and the effect was unfavorable to the carrying of
any measures for the benefit of the foreigners.
BLOEMFONTEIN.
[209]
Throughout 1894 and 1895, both on the surface of things and beneath it,
appearances were ominous of coming disturbance. On the surface there was,
from Cape Town, an open advocacy of violent measures in Johannesburg,
should such be found necessary to bring about the desired changes in favor of
the foreigners. Mr. Edmund Garrett, editor of the “Cape Times,” openly stated at
Bloemfontein, in 1895, that his presence in South Africa was connected with a
purpose on the part of Mr. Cecil Rhodes, premier of Cape Colony, and his
associates, to “force the pace.” And it was at this time that, as before stated, the
British authorities suddenly annexed the Tongaland territory, through which the
Africanders had secured a concession and projected a railway to the sea—thus
deepening the impression to a painful and alarming certainty that the Imperial
Government was intentionally unfriendly to that of the South African Republic.
Under the surface very momentous things were going on. In Rhodesia a
volunteer police force was being enrolled by Sir John Willoughby. This
gentleman, speaking for his superior, Doctor Jameson, assured the men that
they would only be required to serve in a “camp of exercise” [210]once a year,
and that they would not be taken beyond the borders of Rhodesia.
Fitting in very significantly with this movement, the Bechuanaland Protectorate—
lying next neighbor to Rhodesia on the south and to the Transvaal on the west—
was transferred to the Chartered Company controlling Rhodesia, a measure that
enabled Doctor Jameson to station his volunteer police force on the Transvaal
border without taking them out of the enlarged Rhodesia.
Meantime, rifles, ammunition and Maxim guns were smuggled across the border
from Kimberley to Johannesburg, to be in readiness for an armed uprising of the
foreigners on a date to be agreed upon. Over in the British territory of Rhodesia,
Doctor Jameson’s force—ostensibly for local police purposes—was armed and
near the border, ready to co-operate with the revolt about to be initiated at
Johannesburg. As a provision for the sustenance of the invading force, a
number of so-called “canteens,” said to be for the convenience of a projected
stage line, but really stores of food for Jameson’s troopers and their horses,
were established at convenient distances along the road over which the force
was to advance upon Johannesburg. [211]
At the same time, the official opening of the new railway from Pretoria to
Delagoa Bay was made the occasion of such marked congratulation from the
Imperial Government as implied nothing but the most friendly relations.
Afterwards the Africanders held that the Imperial congratulations were sincere,
and that the fact of their being sent was evidence that the policy of implacable
hostility toward the South African Republic being pursued by Mr. Cecil Rhodes
was in no sense the policy of the British government.
It is almost past belief, however, that so small a matter as the closing of a ford,
or “drift,” across the Vaal River could be made the subject of international
dispute, and become the cause of ill-will between two nations on terms of
perfect amity and good will; but so it was. In a rate war between the Cape
Government Railway system and the Transvaal Railway Company, in order to
force the hand of the Transvaal Company, the Cape authorities adopted the
practice of unloading freight on the south side of the Vaal, on Free State soil,
and sending it on by ox-wagons across the “drift” and so transporting it over the
more than fifty miles to Johannesburg—this to deprive the Transvaal section of
the through railway of the carrying trade from [212]the border to Johannesburg
until it submitted to a certain prescribed rate. In order to protect a railway
enterprise in which it was a partner, the Transvaal government promptly
proclaimed the “drift” closed to traffic. The Cape government then complained to
the imperial authorities, and obtained from the Colonial Office a decision that the

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Principles Volume 1 16th Canadian

CHAPTER 1 Accounting in Business 1

Adjusting Accounts 161 Quick Ratio 259

Appendix 5A Periodic and Perpetual Inventory Ethics Challenge 464

Short-Term Notes Receivable 558 Mid-Chapter Demonstration Problem 634

INSIDE THE CHAPTERS

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Guidance Answer to DECISION MAKER

Guidance Answers to CHECKPOINT

“Apply” steps of the Student Success Cycle.

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CONCEPT REVIEW QUESTIONS

4. Daniel is having trouble determining whether with-

Quick Study QUICK STUDY

Exercise 6-3 Specific identification cost flow assumption LO2 Exercises

CHECK FIGURES: COGS = $9,427; Gross profit = $15,073

to cost inventory. The 700 units were specifically sold as follows:

. These have Excel templates located on

Characteristic Sole Proprietorship Partnership Corporation

Alternate or B problems. B Problems mirror the A Limited liability

repetition. Owners are partners

Taxed as a separate legal entity

Required open up discussion about various ethical topics.

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FOCUS ON FINANCIAL STATEMENTS

CRITICAL THINKING MINI CASE

Sales revenue* ............................................................ $56,000 the Student Success Cycle.

*Sales invoices attached

GENERAL UPDATES beginning of each lecture to encourage students

Market Leading Technology

LEARN WITHOUT LIMITS

CONNECT KEY FEATURES:

Simple Assignment Management

These proceedings opened the eyes of the British government to the

The Africanders, denied expansion on the north, sought

It is difficult to determine whether it was Africander dullness or British

Within nine years the British control established in Bechuanaland in

As a concession to demands on the part of foreigners for a reduction of the period

Discontent continued to spread among the new industrial population, who

THE RIGHT HON. JOSEPH CHAMBERLAIN.

According to Canon Little, who cannot be accused of favoring the Africanders—

“The grievances of the Uitlanders were these:

“2. That the duties on machinery and chemicals were extortionate.