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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.
Lar54656_ch01_001-077.indd Page 5 1/10/19 5:13 PM f-0016
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
Connect is the only learning platform that continually adapts to each student, delivering precisely what they
need, when they need it, so class time is more engaging and effective. Connect makes teaching and learning
personal, easy, and proven.
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
needs to learn at that moment in time. As a student engages with SmartBook, the reading experience continu-
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
assignment, assessment, and topical performance results together with a time metric that is easily visible for
aggregate or individual results, Connect Insight gives the instructor the ability to take a just-in-time approach
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Simple Assignment Management

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management more efficient than ever
Smart Grading
When it comes to studying, time is precious. Connect helps students learn more efficiently by providing
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• Access and review each response, manually change grades, or leave comments for students to review
xxiii
Another random document with
no related content on Scribd:
So it came to pass that the little motherless boy, weeping for the
mother he was never to see again, was now Sir Henry Alden of
Aldenmere.
At first all was confusion and dismay, but after a time Mr. Eyrle
took the reins of government and restored something like order.
When the news began to spread there were callers innumerable.
The country that night supped full of horrors. Sir Ronald Alden had
died abroad and the shock of his death had killed the beautiful,
lovely wife, so devoted to him.
They robed her in white, as they had done the first Lady Alden;
they covered her with flowers, they laid them on the silent breast, in
the white hands, and crowned with them the golden head. So fair,
and still, and silent she lay when Lord Lorriston and Kenelm Eyrle
between them led the unhappy mother into the room. No words
could tell her grief. Did there flash across her a memory of that
evening so long ago when she had taken Sir Ronald into the sunlit
garden to renew his friendship with Lady Hermione and Miss
Severn?
It was not until she had gone away and the two gentlemen stood
in the death chamber alone, that Lord Lorriston remembered the
packet.
He spoke of it to Mr. Eyrle.
“Will you fetch it, Kenelm?” he said, “and I will read it here in her
presence. I have a conviction that there we shall find the key to the
mystery.”
Kenelm went in search of it. It lay on the table in the room where
she died. He brought it at once to the earl, who took it from him.
“Before I read what may be her justification, Kenelm,” said Lord
Lorriston, “look at her face. Was anything ever so fair, so noble, so
true? That face is but the index of a soul more fair, more noble, and
truer still. Nor murder, nor jealousy, nor unholy hate ever marred the
perfect beauty of that soul, or ever found a home there. That is the
temple of a pure spirit—how could you so misjudge her?”
“Only from her own words; and those I heard against my own
will.”
Lord Lorriston bent down and kissed that white brow.
“There was no justification necessary, in my eyes,” he said; “still I
will read what is written here.”
CHAPTER LII.
SIR RONALD’S CONFESSION.
“Not to be opened until after my death,” was written on the outer

cover of the packet in Sir Ronald’s bold, clear hand, “and then to be
read by no one save my wife. Should she die first, under penalty of
my curse I forbid this to be opened, and command it to be
destroyed.”
When Lord Lorriston had read that he showed it to Mr. Eyrle.
“Will it be honorable for us to read the contents?” he asked.
“Yes,” replied Mr. Eyrle, “a sudden idea has occurred to me, and
in your daughter’s name, I think that paper should be read.”
Lord Lorriston read it aloud, kneeling by the side of the beautiful
dead woman, whose love had proved so fatal to herself and to him
who loved her. It began:
“My Dearest Hermione—I am going abroad in an expedition
that may be attended with some danger, although I have every hope
of returning in safety; yet I write this because against the accidents
of life we cannot take precaution. I know not what may happen,
therefore I write this; no one but you will read it—oh, wife of my heart
—and I lay my soul bare before you. Hermione, what has been the
life of my life, the soul of my actions? What has been the source of
all my virtues, all my few good deeds, all that is noblest and best in
me?—my love for you. What drove me mad?—my love for you. Men
have loved before, and men will love again, but I do not believe that
ever one loved a woman so entirely, so devotedly, so wholly as I
loved you.
“My darling, my wife, that love was no ordinary passion, common
words will not tell it. Do you know what dew is to thirsty flowers,
sunshine to birds, light and warmth to fair spring blossoms? that you
are to me. The light of my soul, my one hope and treasure. Ah,
sweet wife of mine, go out in the woods and count the leaves on
each tree; go to the shore and count each grain of sand; look up at
the bright heavens and count each pale, pure star; you could do that
more easily than I can tell you how deeply, how dearly, how well I
love you. The world does not hold your peer, my love. Looking back,
I cannot remember the time when I did not love you with the same
passionate love. When we were children I worshiped the ground you
stood upon, and my love grew with my growth. When I came back to
Aldenmere and found all the promise of your beautiful youth fulfilled,
and you yourself lovelier than dream of poet ever was, I swore to
myself that if any man living could win you I would be that man. My
darling, you know how I tried. I loved you, I sought you, I was never
happy out of your presence, or away from you. My very life was so
wrapped in yours that I had no existence away from you. I can
remember when I first began to hope that you would care for me. I
can remember every faint token of preference you ever gave me, all
your pretty shy, sweet, maidenly ways. Hermione, sweet, true wife,
do you remember the evening out among the flowers when I spoke
to you of love and you did not send me from you? I went home that
night with my heart on fire, resolved to ask you at once to be my
wife, for I could brook delay no longer; my love was eating my very
life away. Darling, was it a sweet, maidenly whim to make me still
more eager, or was it that you were really engrossed? For one whole
week I went every day to Leeholme, but could not contrive to spend
one solitary five minutes with you. Oh, love, my love, had it been
otherwise the story of my life would have been different.
“At last, when I could bear the silence and suspense no longer, I
wrote to you and asked you to be my wife. You remember what
followed. I received a letter, written apparently by you, refusing me
with few words. Hermione, I went mad; my love had been so mighty,
so powerful, so strong, I could not bear the shock of seeing it all
scattered to the winds. I could not bear the refusal. God keep any
other man from suffering what I did then! I could not tell you, darling,
even if I tried. I do not believe any man suffered so much and lived.
A thousand times each day I was tempted to end my own life, but the
Alden pride, so strong in the men of my race, forbade me to die
because a woman was fair and false. Ah, me! what I suffered! I
hated my life; I loathed myself. I tried to drown all memory of my
most fatal love in the whirl of fashion, the pursuit of study. My darling,
I might as well have taught myself to fly as to forget you. Then there
came a time when the sneers of men, the sarcasm of women
aroused all the pride of my nature; it should never be said that I was
wasting away for the love of one who never loved me. I heard that
you were going to marry Kenelm, and I, reckless, despairing, half
mad and wholly wicked, married poor Clarice.
“I should have been true to you, my love—the sweet, pure love of
my youth—I should have been true to you, even though you had
never cared for me. When I married Clarice I meant most royally to
do my duty, to be kind to her, to make her happy, to indulge her, and
I succeeded. I never loved her, but I cannot tell if she found that out.
All went on calmly, if not happily, until the day when I met you in the
woods. You remember it, Hermione, then my heart leaped up like a
burning flame, devouring all before it, and then I learned that most
fatal truth, that you had never received my letter and, what was of
still more importance, you had not answered it, therefore had never
rejected me. Then I learned that you loved me. I wonder that I ever
recovered my senses when I remember the madness of my love.
You remember our farewell. With your last words ringing in my ears
—with your last gentle look haunting me—I swore to myself, like the
reckless madman that I was, to find out who had trapped me, who
had lured me to destruction, who had taken the letter I wrote to you,
and had answered it—imitating your writing and signing your name.
“How was I to find out? I swore that I would move heaven and
earth but that I would unravel the mystery in the end. I need not tell
you all my efforts. For long they seemed in vain, utterly, helplessly in
vain. At last, my attention was called to a strange fact, and that was
that my wife’s maid, Mary Thorne, seemed to be entirely mistress of
her. If Clarice ordered her to do anything she did it if she liked, if not
it was neglected. I found, too, that Clarice had given her at different
times large sums of money. I remonstrated with her, but you
remember her pretty, bewitching, caressing ways. She only smiled
and told me that she had always spoiled Mary Thorne. But,
Hermione, underneath that smile I detected fear, real fear, and I
wondered how it was. One day, going quite unexpectedly into my
wife’s dressing-room, I heard her ask Mary Thorne to do something
and the girl insolently refused. I could not bear that. I spoke sharply
and insisted on her instant dismissal, but to my surprise Clarice grew
pale with fear. ‘I do not think my mistress will allow me to leave, Sir
Ronald,’ said the woman, and she was right. Clarice hung weeping
round my neck and begged me not to send away a maid to whom
she was much attached, and who was most valuable to her. I yielded
to her wish, but from that moment a certain conviction came over me
that Mary Thorne knew some secret she was keeping from me. I
dare not think the secret concerned that letter, though instinct told
me so. I sent for my groom—the one who had taken the letter—and
what I discovered was this: The letter was safely delivered, and
placed on your toilet-table by your own maid. Mary Thorne, who was
engaged in doing something for you at the time, my darling, saw it
placed there. Mary was working in your room, she told me, on the
day that letter was delivered. You were out, and she sat sewing in
your room. While she was there Clarice went in to speak to her, and
bending over the toilet-table, saw the letter in my handwriting
addressed to you.
“Mary told me that she saw Clarice deliberately take up that letter,
place it in the pocket of her dress and then quit the room. She
returned in half an hour and placed upon the table another envelope,
the exact counterpart of the one she had taken away.”
CHAPTER LIII.
THE SLAVE OF PASSION.
They paused in the reading of that confession, and Lord

Lorriston, looking at Kenelm, said to him:
“This is worse than my darkest dreams ever foreshadowed.”
But Kenelm made no reply. He was thinking of the two fair
women he had seen lying here dead, both slain by the fatal love of
one man. Then they read on:
“I was determined,” said Sir Ronald, “to solve the mystery, to
know who had taken my letter and who had written that false
missive. No one ever knew the pains I took over it, the enormous
expense! But I would have spent the last shilling I have in the world
rather than have failed. For many long months I had detectives
employed secretly, but the mystery seemed so great they could not
fathom it. At last I heard it, as I have said, through Mary Thorne, who
had been Clarice’s maid. She told me this story: On the day of that
visit to Thringston, she was sitting helping in some work in Lady
Hermione’s room, when she saw her mistress start in, and after
looking earnestly at the address of the letter, put it in the pocket of
her dress and go out of the room quietly as she entered it. In half an
hour she returned and placed an envelope there so exactly similar
no one could tell them apart. That little circumstance struck Mary
Thorne as being very peculiar. Most maids make themselves
mistresses of their mistress’ secrets. Mary knew that of poor Clarice.
She knew that Clarice loved me. She knew, also, in common with the
rest of the world, that I loved Lady Hermione. Most things, even our
nearest and dearest secrets that we hesitate almost in telling each
other, are known and discussed in the servants’ hall. There is no
doubt that all this had been told there.
“So Mary Thorne watched her young mistress. It is not pleasant
to have to write of the treachery of those we have trusted. Clarice
trusted this girl implicitly, and she, in return, betrayed her, read her
letters, watched all she did, and made herself mistress even of the
poor lady’s hidden faults. Clarice stole my letter—the one I had
written to you—stole it, read it, and destroyed it by tearing it into
minute pieces. These pieces, Mary Thorne, with infinite patience and
perseverance worthy of a better cause, put together, and managed
to read sufficient of it to know that it was an offer of marriage from
me to my dearest Hermione.
“When she told me, my first impulse was to raise my hand and
slay. One moment’s reflection showed me that it was, after all, the
fault of her class—that want of honor, that morbid desire to pry into
the secrets of others, all come from the loose, imperfect method of
training.
“I pass it over now, as I did when I heard it. My eyes fell once
more on that letter—the letter that has proved the curse of my life. I
read again the words I had written when full of hope, as a spring
morning is of beauty. They seemed to raise living heads like
poisonous adders and sting me. No further proof was wanting to me.
Mary Thorne had evidently thought some day or other, to make her
price of these fragments of a letter. She had carefully preserved
them—she had gathered them from a fireplace in Clarice’s room.
Then she watched her mistress. Clarice, under pretext of a violent
headache, shut herself up in her room, and spent many hours in
practicing writing. Pieces of paper that the girl had preserved
showed that she had been imitating your handwriting. Should
Kenelm Eyrle ever read this story, or hear of it, he will remember that
we had often in our childish days been astonished by the facility with
which Clarice imitated different handwritings.
“Shut up in her room, she forged that letter in your name to me.
Deliberately, wickedly, cruelly, falsely forged the words that cut me
off from the world of men, blighted my life, marred every hope and
plan, brought curse and ruin upon me, the words that have lost me
this world, and, I fear, oh! I fear, will lose me the next. Mary Thorne
watched her young mistress dress herself and steal unobserved
from the house to post the letter that was my death warrant. And
then she waited and watched, thinking that when I recovered from
your dismissal I should turn with my whole heart to her. I did not do
so. I have never loved any woman but you, my Hermione. I never
could. I tried, but it was not in my power. You are soul of my soul, life
of my life, my heart has never beat for any love but yours. So, my
wife, I heard this tale of treachery, of the cruel and wicked wrong
done to me. Mary Thorne had saved all these fragments of papers
and lived in the hope of some day making money of them. She was
in love with James Conyers, the groom who had taken the letter, and
whose assistance I had sought. The bribe I offered proved sufficient
for her. It was a large sum of money to be paid on the spot, and a
promise that James Conyers should have the farm called ‘The
Willows’ when the lease of the then tenant had expired. One
morning, a beautiful bright morning, when the world was full of
melody, she told me this. We were standing under a grove of tall,
stately oak trees, and, Hermione, as the words dropped slowly from
her lips they maddened me. I can remember watching the sunlight
as it came filtering through the great green boughs. I can remember
listening to the sweet song of a little bird, while mad anger and
fierce, wild passion ran riot in my veins. Ah, my darling! a man
commits a great crime, and his excuse is, ‘I was mad!’ People cry
him down. They say, ‘This is but an excuse; he was sane enough!’
Ah! my wife, I know that madness comes in swift, keen darts of
flame, in a fiery surging of hot blood through heart and brain, in a
sudden impulse that calls in a mighty voice for the deed to be done
—and it is done. As I stood under the trees, Hermione, the sunlight
grew blood-red. The girl, in her weak, shrill voice, finished her tale.
She had given me every detail of the forgery and the fraud. When
her voice ceased, it was as though some cord had snapped
suddenly in my brain, and I turned away. ‘You will not forget your
promises, Sir Ronald?’ she said. ‘No; I will not forget them.’ And as I
walked from the oak trees I kept repeating to myself those words, ‘I
will not forget them!’
“Was I mad? Only God knows. I can remember that every beat of
my pulse sent a burning thrill through me, that the beating of my
heart seemed to come to me as a hot, heavy sound. Hermione, do
you remember? Oh! sweet wife, how it pains me to look across the
gulf of years, the sweet, sinless happy years; do you remember that
one evening at Leeholme Park? You showed some curiosities that
your cousin had brought from abroad with him. Amongst them was a
small, sharp, bright, pointed Grecian dagger, an antique of great
value, with a jeweled handle—one which Grecian ladies wore as a
toy, which had, without doubt, been used in many a deathblow. I took
it up in my hands to admire it, and you gave it to me, asking me with
a smile never to let your cousin know, or he would be jealous.
“It must have been fate that led me that morning to the little
drawer, where I kept all my souvenirs of you. This lay amongst them,
and I saw that one of the rubies was missing from the handle. I had
some intention of going over to Leeholme that day, so I put it in my
pocket, thinking that I would call at a jeweler’s and have it replaced. I
wish it had not been so, Hermione. Had not that weapon been in my
hands, the deed would not have been done. I walked on with the
same hot surging through heart and brain, this same dull roaring, as
of distant cannon in my ears, and the sunlight was all red. It came to
me like a picture in a red frame. I saw a lake—clear, cool, deep, dark
water—with green boughs bending over it. One bough was swinging
to and fro in the wind, and on it sat a little bird singing sweet, jubilant
notes. Clarice sat underneath the tree. She looked so white and cool
in the midst of the hot sunlight, and the mad, red wildfire that danced
before my eyes. She was smiling—looking at the water and smiling
as though her thoughts were happy ones.
“Hermione, how far was I guilty? Standing within the pure
presence of the great God, I swear to you I do not know. I was not
master of myself. The red flame seemed to leap about me and to
mock me! Hisses of laughter sounded in my ears! Oh! my darling,
when I saw her sitting there, so bright, so beautiful, so happy—when
I remembered that her fraud had parted me forever from you, I went
mad! It all returns to me as the memory of a scene in which I had no
share—as though I had stood by and seen some other person do it. I
remember taking out the dagger and creeping silently behind her
chair, she neither saw nor heard me. She was singing in a soft, low
voice to herself. I saw the rings of golden hair on her white neck. A
fury of murderous hate came over me. She had parted me from you.
“A thousand mocking devils seemed to be mocking around me as
I plunged that dagger right into her heart. She uttered no cry, no
sound, but fell with her face foremost into the lake, and I ran away.
“I remember how the green bough was swaying and the little
birds singing when I turned round to see, and there was a gleam of
golden hair in the cool, dark water. Hermione, I am making no false
excuses to you—I am not seeking to clear myself from blame—but
sure as I am now living and writing the words, so sure was I mad
when I murdered the unhappy girl, whose only fault had been loving
me too well and forging a letter that she thought would bring me to
her feet. I was mad! God knows it! Believe me, sweet wife!”
CHAPTER LIV.
A DREAM AND THE AWAKENING.
Lord Lorriston’s voice died away in a low sob as he read the

words.
“It is terrible,” said Kenelm, “that Ronald is right. When he did that
deed he was mad. What a fearful love his was.”
Then Lord Lorriston read on:
“There came to me, Hermione, a curious instinct of self-
preservation the moment that terrible deed was done. The red flame,
the mocking devils, the hissing flame all vanished. I was cold, sick,
faint, shuddering with awful, unknown dread. I went straight home
into the library. I opened some paper, took a pen in my hand and
waited.
“How long did I wait? Oh, my God! when I remember the agony
of those bright, sunny, cruel hours—how the sun shone, how the
flowers bloomed, how the bees and butterflies flitted past the roses
in the window, how the birds sang, how warm gusts of sweet odor
came floating into the room, and I sat motionless, silent, mute and
dumb with horror, waiting till some one should come and tell me what
was the matter in the woods. Waiting with a soul so full of horror I
wonder that I did not die. Waiting with such sick dread as no words
can realize—every golden gleam of sunlight bringing to my mind the
fair hair floating in the dark water. Waiting until it seemed to me the
whole world was still in one awful pause—the sunbeams never
moved, the listening air was still—the deep, brooding silence grew
so awful, so terrible that I tried to cry out, but could not.
“Then it came—the rush of many feet, the murmur of many
voices, all crying for Sir Ronald—Sir Ronald—for my lady was
drowned in the wood!
“Mary Thorne had found her, and she was the first to tell me the
tale. There was no suspicion in her mind. I saw at once she never in
the least suspected me of having caused the lady’s death. Oh!
Hermione, I cannot tell you all the horrors. I do not know how I bore
it. A thousand times each day the impulse came to me to own myself
guilty and to put an end to my tortures. I made all kinds of pretexts
and excuses to throw people off their guard, to give them a false
clue, a false step, yet longed that they should turn round suddenly
and find me guilty.
“People talk of remorse. Ah! my darling; the remorseless sting of
that terrible pain never left me. It seemed to eat my very heart away,
to prey upon my mind. It robbed me of health, of strength, of peace. I
suffered terribly—God knows—most terribly for my sin! I could never
tell you how much. Perhaps the most bitter hour of all was when I
stood with Kenelm by the body of Clarice and heard the story of his
love for her. How cruel Fate was! I loved you! Kenelm loved Clarice,
and we were parted.
“Can you imagine what a long, dark, dull brooding dream is,
Hermione? That was mine after she was buried. A man who commits
a murder is hung for the crime; his lot is merciful compared to that of
the man who repents and lives on. I have wept tears of blood for
mine. I would have given my life over and over again ten thousand
times never to have done the deed. I would have suffered the
extremity of torture for the power to undo it.
“But remorse and repentance were all in vain; nothing could bring
my wife back to me. She was gone forever. Nothing could undo my
crime. Its record was written in the Book of God. Who could tear out
the page? Hermione, I wore myself to a shadow. I neither slept, nor
ate, nor rested. My nights and days were one long agony. I used to
lie on my face for long hours together praying God to pardon me—to
pity me—but peace and rest were all over in this world. I only
remember that time as a hideous darkness in which there came no
gleam of light.
“Until, like a white dove over troubled waters, like a sunbeam in
deepest night, like a soft, sweet strain or harmony amongst terrible
discord, came your little note, Hermione, and then, like snow before
the sun, my sorrow seemed dispelled. I dared to raise my head, I
dared to hope that God had pardoned me. I dared to hope white-
winged peace might hover over me once more.
“You know the rest, sweet wife. For a short time I was happy
because my love for you was so mighty there was no room for
anything else in my heart, but after a time the fear, the shame, the
remorse, the unutterable dread, the terrible anguish, all came over
me again, and I knew that in the end they would kill me. Ah! my wife,
what words will thank you for your love and care? Yet the more
noble, the more true I found you, the deeper and more intolerable
grew my remorse.
“Then my little children were born, and I looked in the sweet,
innocent faces. My pain was martyrdom, and as they grew and
began to talk to me, to love me, I loathed myself with the deepest
loathing. Were my red hands such as holy lips should cover with
tender kisses?
“Hermione, I can bear it no longer, so I am going away. It is at my
own instigation that this offer has been made to me. I can bear the
sweetness, the brightness, the purity of your presence, the
tenderness of your love, the affection of my children, no longer. I go
out like Cain, with the red brand upon my brow.
“I shall never return, love. Something tells me that death awaits
me in that far-off land, that I am unworthy to sleep where the heroes
of my race rest. I who married a woman and slew her. I have asked
you, on my return, to meet me under our favorite tree. I shall never
see you there, but go, my love, sometimes, when the wind whispers
in the leaves, and it will tell how dearly I loved you. The great God is
very merciful and He knows what I have suffered. It may be that my
restless spirit will sigh among the branches. Go there, sweet wife,
when the dew falls, and remember that I loved you with a love
exceeding that of all other men.
“You will come, in time, to think of my life as a short one of
tragedy—a love story that ended in madness and murder—a dream
that had a most terrible awakening.
“You may ask me why—when I have tried so hard to elude all
suspicion, and have succeeded—why have I preserved the dagger—
why have I written this? I cannot tell you, Hermione. There is an old
saying, ‘Murder will out.’ I feel compelled to write this confession.
The idea is strong upon me that if I do not, harm and evil will come to
you, and, my wife—life of my life, soul of my soul—we shall meet no
more. You may never read this; it may be lost, it may be
undiscovered, but if ever it comes to light, in reading it, judge me
mercifully, for I was mad when I took the life of the woman I had
sworn to love and cherish. I pray God in His mercy to pardon me,
and I pray Him to keep from all men a love so terrible as mine.”
And there the manuscript ended. Lord Lorriston laid it down, and,
kneeling by the side of his dead daughter, he wept aloud. It was a
terrible story—a story of love so mighty in its wild passion it had
blighted their lives.
Kenelm Eyrle listened to the deep sobs of the strong man, then
he laid his hand reverently in the folded hands of the dead lady.
“It seems to me,” he said, “that she was born the victim. Clarice
betrayed her, and Ronald’s love has brought her nothing but misery.”
Then they discussed the story of her self-sacrifice. Kenelm
understood it. He told Lord Lorriston how they had opened the box to
find the document, and had found there the dagger.
“This confession must have been lying near it, and Hermione
took it without my knowing. She had read it and declared herself
guilty in order to save him.”
“She loved him well, poor child,” said Lord Lorriston.
“She would have died for him,” continued Kenelm. “She would
have gone, for his sake, to prison, and from the prison to the
scaffold, if by doing so she might have saved him.”
“She loved him dearly. His death has broken her heart,” said Lord
Lorriston. “In her case death is far more merciful than life—she
would have been wretched, knowing his guilt, and wretched,
knowing his death. It is better as it is.”
Even the father who had loved her so dearly kissed her face and
murmured the same words, “It is better as it is.”
The story of that last hour of her life is known to none. The doctor
said she died of disease of the heart; it might be so—but those who
loved her knew her heart was broken. She had taken out that
strange, sad confession of his, so mingled with love of her in order to
destroy it, and she died with it in her hands.
What passed between her soul and God, who shall tell? Her
terrible sorrow, her shame, her despair—she had to suffer it all
alone; there was no one to help her bear it in that terrible hour; no
one to soothe her agony; she struggled with it and died alone. The
merit of the grand, self-sacrifice she would so willingly have
accomplished was all her own; she had taken upon herself the
burden of his guilt and been willing to suffer for it. All her sweet
woman’s nature rose in rebellion against it—her true and loyal
nature, that had in it no taint of anything mean or false—her delicate,
sensitive, spiritual nature, that loved right and hated wrong, but she
had trampled all under foot, and by reason of her great love had
been willing to die the most shameful of deaths for his sake.
They thought a great deal of it at the time, but in after years they
thought still more. How dearly she had loved him! How great was the
sacrifice she would have made for him, when for his sake she was
willing to die on the scaffold to shelter his sin!
The whole country round was grieved at the intelligence. People
said, with tears in their eyes, they were not surprised; they would not
believe in the doctor’s fable of disease of the heart—that she died
because she loved Sir Ronald so well; she could not live without him.
Gloom and mourning spread from place to place, for she had been
loved as dearly in the cottages of the poor as in the halls of the rich.
CHAPTER LV.
THE REST IS PEACE.
“There must have been a spell in Aldenmere,” so people said.

This was the second fair young wife who had been carried from
there to the grave; the second who had met with a tragical death.
What would become of the place? Who would take care of the
children? These and a hundred other questions they asked, but no
one answered them.
They did not bury Lady Hermione by Clarice’s side. Lord
Lorriston, knowing all, could not endure the thought of it. She was
taken thence, and the grave is on the western side of Leeholme
churchyard, a warm, lovely, sunny spot, where the sun shines and
the dew falls, where birds sing sweetest music and flowers yield
richest perfume. The story of her deep, true love and unutterable
sorrow, of her grief and heroic self-sacrifice, are buried with her.
The little Harry was heir to Aldenmere, but Lord Lorriston said the
associations connected with the place were all so sad, that the
children should not live there; they should make their home at
Leeholme until the young heir was of age, and then he could please
himself about returning there. The servants were all paid off; they
were not sorry to leave a place rendered gloomy by two such
tragedies. Some of them declared that long as they lived they should
never regain their natural spirits.
Aldenmere was closed. The head gamekeeper and his wife were
put in charge of the place. The state apartments, the magnificent
guests’ chambers, the superb reception-rooms, were all closed and
left to solitary desolation. Lord Lorriston declared that he never even
wished to see the place again—it was so full of sorrowful memories
for him.
The little orphan children were taken home to Leeholme, where,
under the loving care of Lord and Lady Lorriston, they grew in
strength, beauty and goodness. The after life of Sir Henry Alden, of
Aldenmere, was eventful, but his story has been told by pens more
eloquent than mine. The little child whom Sir Ronald kissed and
blessed before he went on that long voyage from which he was
never to return, made his name famous all over Europe. There was
one thing he never knew, and that was the true history of his father’s
life. Nor was that secret ever known.
Kenelm Eyrle found some means of pacifying the detectives he
had so hastily summoned. They never heard one word of the truth,
nor was it ever told; Lord Lorriston never even told his wife, and the
secret of the first Lady Alden’s death remains a secret still.
Lord and Lady Lorriston found comfort after a time in the children
they had adopted. Baby Maud grew up the exact picture of her
mother, the same sweet face and tender eyes. There were times
when, as Lorriston grew older, he would forget the tragedy at
Aldenmere, and, seeing the golden head, would call her Hermione.
There were times, too, when he longed to take the child on his knee
and tell her how nobly her mother had kept her vow. But he never did
so. The children grew up with no other knowledge save that their
parents had both died when they were very young.
There were times, too, when Kenelm Eyrle regretted his
sternness, his lost desire for vengeance, his long years of search for
the criminal whom he afterward found in his dearest friend. If he had
been less vigorous, less exact, Lady Hermione might have lived. He
was very lonely; the great purpose of his life was accomplished; he
had found out who murdered Clarice, but in making that discovery he
made many others. Clarice was not what he had thought her. He had
believed her one of the noblest and truest of women; now he found
out that she had committed the most dishonorable of all frauds. The
whole of the sad tragedy at Aldenmere was the consequence of her
fault. If she had not stolen that letter and forged another there would
have been no wrong, no suffering, no murder; after all, she had but
reaped what she had sown—lo, that while his pity for her never grew
less, his love, the intense passionate worship he had felt for her
during life and for her memory after death, decreased. He had
believed her an angel—she was but a faulty woman; he had believed
her a goddess—she was but an ordinary fellow-creature, with more
faults and imperfections than fell to the lot of most people.
The very consciousness of this made him more lonely than ever.
He had so fitted his life with a reverential and worshiping love of her,
that now that love had changed its character, his life seemed empty.
He had not been to the Dower House for some time, because he felt
that it was not kind nor wise to add to the perplexities of Lady
Pelham.
One morning a messenger came with a note for him. It said
simply: “You have been so kind to me that I cannot help writing to tell
you that my husband lies even now on his deathbed and has sent for
me. He has promised to do me justice and to clear my good name
before the world.”
A few days afterward he read in the papers that Sir Alfred
Pelham was dead, and before his death he had exonerated his wife
from all blame. He had sworn to her innocence, and had withdrawn
the charges brought against her after begging her to pardon him.
Kenelm Eyrle read it with pleasure. He read long articles in which
the law, as it exists, enabling a man to wrong his wife in so deadly a
fashion, was reprobated as it deserved to be.
He often found himself wondering whether she would return to
the Dower House or not; he found his thoughts returning continually
to her. Her beautiful face haunted him. He remembered her indignant
appeals to Heaven for the justice she was not likely to obtain from
man. It was a source of keen pleasure to him when she wrote to say
that she intended to return to the Dower House, the only place where
she had ever known either peace or happiness. She did return. It
would be long to tell how their friendship ripened into love—how
gradually the living love replaced the dead one in Kenelm Eyrle’s
breast.
He is not so confident now over matters; time was when he would
have laughed to scorn any one who had hinted that Clarice could be
not only replaced but surpassed. Now he was not so violent in his
opinions nor so apt to rush into extremes. The first impetuous love of
his youth was lavished on Clarice Severn; the love of his sadder,
wiser manhood was given to Juliet Payton. They were married some
time afterward and lived happily enough at “The Towers.” Mrs. Eyrle
is very kind to Sir Ronald’s orphan children, for long after Lady
Hermione’s death, Kenelm never saw them without tears in his eyes.
Children of his own make “The Towers” merry with their happy
laughter; life is made up of sunshine and shade. He had suffered
much, but peace and rest came to him after long years. There is one
duty he never omits, and that is visiting the graves of the fair women
who lost their lives through an unhappy love.
THE END.

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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

Read–Do–Check–Apply reinforces active learning rather than passive

Critical Thinking Challenge

IFRS AND ASPE—THE DIFFERENCES IFRS and ASPE—The Differences

a. IFRS 2018, IAS 1 para. 36.

Food Truck Frenzy

Video Links: http://www.cbc.ca/dragonsden/pitches/caplanskys-deli and https://youtu.be/cN_8HMMnNFk.

A Look Back, A Look at This

chapter. These helpful learning summa- A Look at This Chapter

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Ethical Impact ETHICAL IMPACT

problem solving and decision making,

ing’s role in ethics and social responsibility is

Decision Maker Guidance Answer to DECISION MAKER

fessional and ethical behaviour, problem

Extend Your Knowledge (EYK)

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successful Canadian toy innovator and Stretching our wings

children’s entertainment company)

statements are presented without notes, – ELEANOR ROOSEVELT

and weblinks are provided for student

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

“Not to be opened until after my death,” was written on the outer

They paused in the reading of that confession, and Lord