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vi Preface
Exhibit 10 Integrated Financial Statements
The Hershey Company

Balance Sheet
December 31
Assets = Liabilities + Stockholders’ Equity

Cash $ 588
t t t
t t $7,032 Retained Earnings
t t 299 Common Stock
$7,703 = $6,296 + $1,407
$7,703
Total Liabilities + Stockholders’ Equity
The Hershey Company The Hershey Company The Hershey Company

Statement of Cash Flows Income Statement Statement of Stockholders’ Equity
For the Year Ended Dec. 31 For the Year Ended Dec. 31 For the Year Ended Dec. 31
Operating act. $1,600 ➌ Revenues $7,791 Common Retained Other

➋
Investing act. (1,503) Expenses (6,613) ➊ Stock Earnings Items Total
Financing act. 111 Net income $1,178
Increase in cash $ 208 Bal. Jan. 1 $299 $6,371 $(5,378) $ 932
Cash, Jan. 1 380 Net income 1,178 1,178
Cash, Dec. 31 $ 588 Dividends (564) (564)
Other items 47 (186) (139)
Bal. Dec. 31 $299 $7,032 $(5,924) $1,407
Chapter 2 begins with an example format of the integrated framework used throughout
the financial chapters. Early in the course, students will gain a greater understanding of
how important trends or events can impact a company’s financial statements, which add
valuable insight into the financial condition of a business.
Exhibit 1 Integrated Financial Statement Framework
Integrated Financial Statement Framework
BALANCE SHEET
Assets = Liabilities + Stockholders' Equity
Assets = Liabilities + Common Stock + Retained Earnings
Transaction XXX XXX XXX XXX
XXX
XXX XXX XXX XXX
STATEMENT OF CASH FLOWS I NCOM E STAT EM ENT

+/– Operating activities XXX Revenues XXX
+/– Investing activities XXX Expenses XXX
+/– Financing activities XXX Net income or loss XXX
Increase or decrease in cash XXX
Beginning cash XXX
Ending cash XXX
Copyright 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Preface vii
The primary focus in Chapter 2 is on cash transactions, which helps eliminate confu-
sion for students who may have difficulty determining whether an event or transaction
should be recorded.
Transaction d
During the first month of operations, Family Health Care earned patient
fees of $5 ,500, receiving the fees in cash.
The effects of this transaction on Family Health Care’s financial statements are recorded
as follows:
1. Under the Statement of Cash Flows column, Cash from Operating activities is increased
by $5,500.
2. Under the Balance Sheet column, Cash under Assets is increased by $5,500. To bal-
ance the accounting equation, Retained Earnings under Stockholders’ Equity is also
increased by $5,500.
3. Under the Income Statement column, Fees earned is increased by $5,500.
This transaction illustrates an inflow of cash from operating activities by earning
revenues (fees earned) of $5,500. Retained Earnings is increased under Stockholders’
Equity by $5,500 because fees earned contribute to net income and net income increases
stockholders’ equity. Since fees earned are a type of revenue, Fees earned of $5,500 is
also entered under the Income Statement column.
The effects of this transaction on Family Health Care’s financial statements are shown
below.
Financial Statement Effects
BALANCE SHEE T
Assets = Liabilities + Stockholders' Equity
Notes Common Retained
Cash + Land = Payable + Stock + Earnings
Balances 4,000 12,000 10,000 6,000
d. Fees earned 5,500 5,500
Balances 9,500 12,000 10,000 6,000 5,500
STATEMENT OF CASH FLOWS INCOM E STATEM ENT

d. Operating 5,500 d. Fees earned 5,500
Ninth Edition: Learning Approach and

Enhancements
Warren’s Metric Analyses
The Ninth Edition incorporates Warren’s Metric Analyses throughout the text. It uses
common business metrics to assess a company’s financial condition and performance.
Metrics are assessed at three levels: the Transaction Level, Financial Statement Level, and
Managerial Decision-Making Level.
viii Preface
An example of metric analysis at each of these levels are as follows:
Transaction Level
To illustrate, assume that on January 3, TechSource sells merchandise for $1,800 that
cost $1,200 for cash. The effect on the accounts and financial statements of this cash sale
is as follows:
Financial Statement Effects
BA L A N CE S HEET
Assets = Liabilities + Stockholders’ Equity
Retained
Cash + Inventory = Earnings
Jan 3. 1,800 (1,200) 600
STATEMENT OF CASH FLOWS I N CO ME STATEMEN T

Jan. 3. Operating 1,800 Jan. 3. Sales 1,800
Cost of goods sold (1,200)
Gross profit 600
Transaction Metric Effects

The effects of the cash sale on the liquidity and profitability metrics are as follows:
LIQUIDITY P R O F ITA BIL ITY

Working Capital $600 Gross Profit Increases ability
Percent (33%) to achieve
minimum of 20%
Since Cash increased by $1,800 and Inventory decreased by $1,200, working capital increased by $600 ($1,800 –
$1,200). We assume that TechSource desires a minimum overall gross profit percent of 20%. Since the gross
profit percent for this sale is 33% [($1,800 – $1,200) ÷ $1,800], this sale increases TechSource’s ability to achieve
its overall minimum gross profit percent of 20%.
Financial Statement Level

The accounts receivable turnover is computed as follows:
Sales
Accounts Receivable Turnover 5
Average Accounts Receivable
Although accounts receivable are just related to “credit” sales, total sales is normally
used to compute accounts receivable turnover. This is because credit sales are normally not
reported to external users. The average accounts receivable is computed as the beginning
accounts receivable plus the ending accounts receivable for the period divided by two.
To illustrate, assume the following data for Downing Inc. for the year ending Decem-
ber 31, 20Y4:
Sales for 20Y4 $9,125,000

Accounts Receivable, Jan. 1, 20Y4 400,000
Accounts Receivable, Dec. 31, 20Y4 600,000
The accounts receivable turnover of 18.3 for Downing Inc. is computed as follows:
$9,125,000 $9,125,000
Accounts Receivable Turnover 5 5 5 18.3*
($400,000 1 $600,000) 4 2 $500,000
* Rounded to one decimal place.
Preface ix
Managerial Decision Level

In computing process yield, output is measured as the percentage of units from a process
that pass inspection (quality control). It is computed as follows:
Units Passing Inspection
Process Yield 5
Units Entering Process
To illustrate, assume that during August 12,000 units were entered into a machining pro-
cess and 10,800 units coming out of the process passed inspection. The process yield of
90% is computed as follows:
Units Passing Inspection 10,800 units
Process Yield 5 5 5 90%
Units Entering Process 12,000 units
Process yield measures the efficiency of a process. In the preceding illustration, 10% of
the units input into the machining process are either scrapped or reworked. A company’s
objective is to maximize process yield and reach a goal of zero defects.
To accompany the addition of Warren’s Metric Analyses, end-of-chapter problems have

been added to test the students’ knowledge and understanding of the concepts.
Metric Analyses are clearly identified wtih a separate screen of color. This allows for
quick identification of the analyses through the chapters and text. This separate screen
of color also identifies the end-of-chapter section for assigning homework.
Other Enhancements
▪▪ Retained Earnings Statement is REPLACED with Statement of Stockholders Equity
throughout the text. This will reflect what students will see in business and also allows
for real-world examples of statements of stockholder’s equity for in-class illustrations
or homework.
▪▪ Financial transactions are analyzed using liquidity of profitability metric. To familiar-
ize students with this important tool, the financial chapters incorporate a variety of
liquidity and profitability depending on the chapter content.
▪▪ Each Managerial Accounting Chapter includes one metric used by managers in operat-
ing a business. Many of these metrics are operational in nature and include margin
of safety, cost per unit, process yield, and utilization rate.
▪▪ This edition includes updated or replaced chapter openers to feature recent, intrigu-
ing developments in accounting. The author has woven connections to the opening
company highlighted in each chapter throughout each chapter. This now promotes
a stronger connection for students, allowing them to gain additional insight into the
opening company and its relationship to the chapter content.
▪▪ For this edition, when Real Publicly Traded Companies appear throughout the book,
their (TICKERS) symbol is also represented. This allows students to easily look up
company’s financial data on the Internet.
Technology
What is CengageNOWv2?
CengageNOWv2 is a powerful course management and online homework tool that provides
robust intructor control and customization to optimize the student learning experience
and meet desired outcomes.
CengageNOWv2 includes the following:
▪▪ Integrated eBook
▪▪ End-of-Chapter homework with static and algorithmic versions
▪▪ Excel Online Algorithmic Activities
▪▪ Adaptive Study Plan with quizzing and multimedia study tools
▪▪ Test Bank
▪▪ Course management tools and flexible assignment options
x Preface
▪▪ Reporting and grade book options

▪▪ Tell Me More eLectures
▪▪ Show Me How Demonstration Videos
▪▪ Quick Lessons
CengageNOWv2 for Warren’s Survey of Accounting, 9e, is designed to help students learn
more effectively by providing engaging resources at unique points in the learning process:
When to use it? What to use? How will it help?

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Completing Homework Show Me How Videos Apply
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NEW! Excel Online

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ONLINE
lege accounting applications and less time troubleshooting Excel.
These new algorithmic activities offer pre-populated data directly in Microsoft Excel Online.
Each student receives his or her own version of the problem to perform the necessary data
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answers without cumbersome file management and numerous downloads/uploads.
Preparing for Class

CengageNOWv2 helps you motivate students and
prepare them for class with a host of resources.
These resources were developed with visual learners
and those that don’t like to read textbooks in mind.
Available in the Study Tools tab in CengageNOWv2,
students may access these resources on demand.
Each resource is fully assignable and gradable!
Tell Me More Lecture Activities are available
and correlate to each Learning Objective (LO). These
Lecture Assignments review the material covered in
each LO, giving students a way to review what is
covered in each objective in a digestible video activity format so they come to class more
prepared and ready to participate.
Quick Lessons are available for selected chapters. Quick Lessons are assignable/grad-
able videos that visually explain and guide students through selected core topics. Each
activity uses a realistic company example to illustrate how the concepts relate to the
everyday activities of a business. After finishing the video, a student is expected to answer
questions based on what they’ve seen. These activities offer excellent resources for students
prior to coming to lecture and will especially appeal to visual learners.
By using these resources, you have a powerful suite of content to help you ensure
students can familiarize themselves with content prior to coming to class, which is an
excellent way to help you flip the classroom!
Preface xi
Completing Homework
Students sometimes struggle with accounting homework. By using CengageNOWv2’s
powerful instructor tools you can fine-tune the amount of help that your students
receive as they work on their homework. Help your students succeed by making the
right amount of assistance available at the right time!
Show Me How Videos are available for
the most commonly assigned end-of-chapter
assignments. Linked only to algorithms, these
videos provide students with both a detailed
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lem-solving strategies without giving away the
answer.
CengageNOWv2 provides multiple layers of
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▪▪ Check My Work Feedback provides gen-
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▪▪ Check My Work Feedback in Cengage-
NOWv2 only reports on what students
have attempted, which prevents them from
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▪▪ Explanations are available after the assign-
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To view a demo of CengageNOWv2,
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Supplements for the Instructor

▪▪ Product Companion Site includes convenient downloads of
the instructor supplements, including PowerPoint presentations
and Solutions Manual. Log in at login.cengage.com.
▪▪ Test Bank Available with Cengage Learning Testing Powered by Cognero is a
flexible, online system that allows you to:
▪▪ author, edit, and manage test bank content from multiple Cengage Learning s olutions
▪▪ create multiple test versions in an instant
▪▪ deliver tests from your LMS, your classroom, or wherever you want.
▪▪ PowerPoint® Presentation Slides Included on the product companion site, each
presentation enhances lectures and simplifies class preparation.
xii Preface
▪▪ Solutions Manual The Solutions Manual contains answers to all exercises, problems,
and cases that appear in the text. As always, the solutions are author-written and veri-
fied multiple times for numerical accuracy and consistency with the core text.
Acknowledgments
Many people deserve thanks for their contributions to this text over the past several
editions. For the ninth edition Amanda Farmer, Mark Sears, LuAnn Bean Mangold, and
Brenda Bindschatel provided a thorough technical review and verification of the end-of-
chapter materials. Robin Browning and Tomeika Williams did a thorough review of the
CNOWv2 content. The comments from the following reviewers also influenced recent
edition of the text as well as the current edition:
Sharon Agee, Rollins College
Tim Alzheimer, Montana State University, Bozeman
Scott R. Berube, University of New Hampshire, Whittemore School of Business & Economics
Jekabs Bikis, Dallas Baptist University
Jerold Braun, Daytona State College
Suzanne Lyn Cercone, Keystone College
H. Edward Gallatin, Indiana State University
Robert E. Holtfreter, Central Washington University
José Luis Hortensi, Miami Dade College
Daniel Kerch, Pennsylvania Highlands Community College
William J. Lavelle, Ave Maria University
Ann E. Martel, Marquette University
Edna C. Mitchell, Polk State College
Tami Park, University of Great Falls
Craig Pence, Highland Community College
Patricia G. Roshto, University of Louisiana at Monroe
Geeta Shankar, University of Dayton
Alice Sineath, Forsyth Technical Community College
Hans Sprohge, Wright State University
Gary Volk, Wayne State College
Your comments and suggestions as you use this text are sincerely appreciated.
Carl S. Warren and Amanda G. Farmer
About the Authors
Carl S. Warren
Dr. Carl S. Warren is Professor Emeritus of Accounting at the
Terry R. Spray/InHisImage Studios

University of Georgia, Athens. For over 25 years, Professor
Warren has taught all levels of accounting classes. In recent
years, Professor Warren has focused his teaching efforts
on principles of accounting and auditing courses. Profes-
sor Warren has taught classes at the University of Iowa,
Michigan State University, and University of Chicago. Pro-
fessor Warren received his doctorate degree (PhD) from
Michigan State University and his undergraduate (BBA) and
master’s (MA) degrees from the University of Iowa. During
his career, Professor Warren published numerous articles in professional journals, includ-
ing The Accounting Review, Journal of Accounting Research, Journal of Accountancy, The
CPA Journal, and Auditing: A Journal of Practice & Theory. Professor Warren’s outside
interests include handball, skiing, hiking, fly-fishing, and golf. Professor Warren also
spends time backpacking U.S. national parks (Yellowstone and the Grand Canyon), play-
ing with his grandchildren, and riding ATVs and motorcycles.
Amanda G. Farmer
Amanda G. Farmer, CPA, has been a full-time lecturer
in the JM Tull School of Accounting at the University of
Georgia since 2006. Farmer is a University of Georgia
alumna. She received her Bachelor of Business Admin-
istration (BBA) and Master of Accountancy (MAcc) from
the University. After graduation, Farmer worked for Trinity
Accounting Group in Athens, G eorgia, and ran her own
company, DolCor, Inc., which provided tax and accounting
The University of Georgia
services to business and individual clients. Her primary

area of teaching is managerial accounting. She has taught
courses in principles of accounting, managerial account-
ing, survey of accounting, and professional accounting.
Farmer’s outside interests include working out, practicing
yoga, cooking, and spending time with her daughters.
xiii
Brief Contents
1 The Role of Accounting in Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2 Basic Accounting Systems: Cash Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3 Basic Accounting Systems: Accrual Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
4 Accounting for Retail Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
5 Internal Control and Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
6 Receivables and Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
7 Fixed Assets, Natural Resources, and Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
8 Liabilities and Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
9 Metric-Analysis of Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361
10 Accounting Systems for Manufacturing Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408
11 Cost-Volume-Profit Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 462
12 Differential Analysis and Product Pricing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
13 Budgeting and Standard Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547
14 Decentralized Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600
15 Capital Investment Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640
Appendix A Double-Entry Accounting Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 677

Appendix B Process Cost Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691
Online Appendix C Factory Overhead Variances (available for download from Cengage.com) A-1
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
Subject Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 714
Company Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 724
xiv
Contents
1 The Role of Accounting

in Business 1
Transaction (b) 50
Transaction (c) 51
Transaction (d) 52
Transaction (e) 53
Nature of Business and Accounting 2 Transaction (f ) 54
Types of Businesses 2 Financial Statements for a Corporation’s
Forms of Business 3
First Period of Operations 57
How Do Businesses Make Money? 4
Income Statement 57
Business Stakeholders 5
Statement of Stockholders’ Equity 58
Business Activities 7 Balance Sheet 59
Financing Activities 7 Statement of Cash Flows 59
Investing Activities 8 Integration of Financial Statements 59
Operating Activities 8
Recording a Corporation’s Second
What Is Accounting and Its Role in Business? 9 Period of Operations 60
Financial Statements 10 Financial Statements for a Corporation’s Second
Income Statement 11 Period of Operations 62
Statement of Stockholders’ Equity 12 Income Statement 62
Balance Sheet 13 Statement of Stockholders’ Equity 62
Statement of Cash Flows 13 Balance Sheet 63
Integrated Financial Statements 15 Statement of Cash Flows 63
Accounting Concepts 16 Integration of Financial Statements 64
Business Entity Concept 17 Metric-Based Analysis: Common-Sized Statements 65
Cost Concept 18
Going Concern Concept 18
3
Matching Concept 19
Objectivity Concept 19 Basic Accounting Systems:
Unit of Measure Concept 19 Accrual Basis 86
Adequate Disclosure Concept 19
Accounting Period Concept 20
Responsible Reporting 20
Accrual Accounting Concepts 87
Metric-Based Analysis: Return on Assets 22 Family Health Care’s November Transactions 88

Transaction a 89
Types of Metrics 22
Transaction b 91
Level of Application 22
Transaction c 91
Return on Assets 23
Transaction d 92
Transaction e 93
2
Transaction f 94
Basic Accounting Systems: Transaction g 94
Transaction h 95
Cash Basis 45 Transaction i 96
Transaction j 97
Elements of an Accounting System 46 Transaction k 97
Rules 46 Transaction l 98
Framework 47
The Adjustment Process 99
Controls 48
Deferrals and Accruals 99
Recording a Corporation’s First Period of Operations 49 Adjustments for Family Health Care 101
Transaction (a) 49 Adjustment a1 101
xv
Adjustment a2 102 Statement of Stockholders’ Equity 166
Adjustment a3 103 Balance Sheet 166
Adjustment a4 104 Statement of Cash Flows 167
Adjustment a5 105
Metric-Based Analysis: Markup Percent 169
Adjustment a6 105
Appendix 1 170
Financial Statements 106 Transactions 170
Income Statement 108
Adjusting Entry 172
Statement of Stockholders’ Equity 109
Subsequent Period 173
Balance Sheet 110
Statement of Cash Flows 112 Appendix 2 174
Integration of Financial Statements 113 Cash Flows from Operating Activities 175
Cash Flows Used for Investing Activities 176
Accrual and Cash Basis of Accounting 113 Cash Flows Used for Financing Activities 177
Cash Basis of Accounting 114
Accrual Basis of Accounting 114
5
Family Health Care Transactions 114
Why the Accrual Basis Is Required by GAAP 115 Internal Control
The Accounting Cycle 116 and Cash 196
Metric-Based Analysis: Quick Ratio 116
Appendix 117 Sarbanes-Oxley Act 197
Internal Control 199
4
Objectives of Internal Control 199
Accounting for Retail Elements of Internal Control 199
Control Environment 200
Operations 142 Risk Assessment 200
Control Procedures 201
Nature of Retail Operations 143 Monitoring 202
Operating Cycle 143 Information and Communication 203
Financial Statements 144 Limitations of Internal Control 203
Purchase Transactions 144 Cash Controls Over Receipts and Payments 204
Perpetual and Periodic Inventory Systems 145 Control of Cash Receipts 204
Purchase of Merchandise for Cash 146 Control of Cash Payments 206
Purchase of Merchandise on Account 146
Bank Accounts 207
Purchase Returns and Allowances 149
Bank Statement 207
Sales Transactions 151 Using the Bank Statement as a Control Over Cash 209
Customer Discounts 152
Bank Reconciliation 210
Customer Refunds and Allowances 153
Bank Section of Reconciliation 211
Merchandise Returns 155
Company Section of Reconciliation 211
Freight and Sales Taxes 156 Verify that Adjusted Balances Are Equal 211
Freight 156
Special-Purpose Cash Funds 213
Sales Taxes 157
Financial Statement Reporting of Cash 215
Dual Nature of Merchandise Transactions 158
Metric-Based Analysis: Ratio of Cash to Monthly
Adjustments for Retail Operations 160
Cash Expenses 215
Inventory Shrinkage 161
Customer Refunds, Allowances, and Returns 162
Financial Statements for a Retail Business 163
Multiple-Step Income Statement 163
Sales 164
Cost of Goods Sold 164
6 Receivables and
Inventories 235
Gross Profit 164 Classification of Receivables 236
Operating Income 165 Accounts Receivable 236
Other Revenue and Expense 165 Notes Receivable 236
Single-Step Income Statement 165 Other Receivables 238
xvi
Uncollectible Receivables 238
Direct Write-Off Method for Uncollectible
Accounts 239
8 Liabilities and
Stockholders’ Equity 319
Allowance Method for Uncollectible Accounts 242 Financing Corporations 320
Write-Offs to the Allowance Account 243
Estimating Uncollectibles 245
Current Liabilities 322
Accounts Payable and Accruals 322
Retail Inventory 250 Notes Payable 323
Inventory Cost Flow Assumptions 251 Payroll 324
Comparing Inventory Costing Methods 253 Bonds 326
First-In, First-Out (FIFO) Method 253
Contingent Liabilities 329
Last-In, First-Out (LIFO) Method 253
Probable and Estimable 329
LIFO and Taxes 254
Probable and Not Estimable 329
Weighted Average Cost Method 254
Reasonably Possible 329
Financial Statement Effects 255
Remote 330
Reporting Receivables and Inventory 256 Disclosure of Contingent Liabilities 330
Receivables 257
Stock 331
Inventory 258
Common and Preferred Stock 332
Metric-Based Analysis: Accounts Receivable Issuance of Stock 332
Turnover and Inventory Turnover 260 Treasury Stock 333
Accounts Receivable Turnover 260 Dividends 334
Inventory Turnover 261 Cash Dividends 335
7
Stock Dividends 337
Fixed Assets, Natural Stock Splits 338
Resources, and Reporting Liabilities and Stockholders’ Equity 339
Intangible Assets 278 Financial Statement Metric-Analysis: Debt and
Price-Earnings Ratios 341
Nature of Fixed Assets 279 Debt Ratio 341
Classifying Costs 280 Price-Earnings Ratio 341
The Cost of Fixed Assets 281
9 Metric-Analysis of Financial
Fixed Asset Leases 283
Accounting for Depreciation 283 Statements 361
Factors in Computing Depreciation Expense 284
Straight-Line Method 285
Double-Declining-Balance Method 287 Analysis of Financial Statements 362
Comparing Depreciation Methods 288 Usefulness of Financial Statements 362
Partial Year Depreciation 289 Methods of Analysis 363
Maintenance, Repair, and Improvement Costs 290 Global Analysis 363
Depreciation for Federal Income Tax 292 Horizontal Analysis 363
Disposal of Fixed Assets 292 Vertical Analysis 366
Discarding Fixed Assets 292 Common-Sized Statements 368
Selling Fixed Assets 294 Component Analysis: Liquidity Metrics 368
Natural Resources 296 Current Position Analysis 369
Accounts Receivable Metrics 371
Intangible Assets 298 Inventory Metrics 372
Patents 298
Copyrights and Trademarks 299 Component Analysis: Solvency Metrics 374
Goodwill 300 Net Assets 374
Debt Ratio 374
Financial Reporting for Fixed Assets Ratio of Liabilities to Stockholders’ Equity 374
and Intangible Assets 302 Ratio of Fixed Assets to Long-Term Liabilities 375
Metric-Based Analysis: Asset Turnover 304 Times Interest Earned 375
xvii
Component Analysis: Profitability Metrics 376
Asset Turnover 376
Return on Total Assets 377
Return on Stockholders’ Equity 377
11 Cost-Volume-Profit
Analysis 462
Return on Common Stockholders’ Equity 378 Cost Behavior 463
Earnings per Share on Common Stock 379 Variable Costs 463
Price-Earnings Ratio 380 Fixed Costs 465
Dividends per Share 380 Mixed Costs 466
Dividend Yield 381 Summary of Cost Behavior Concepts 468
Summary of Metrics 381
Cost-Volume-Profit Relationships 469
Corporate Annual Reports 383 Contribution Margin 470
Management’s Discussion and Analysis 383 Contribution Margin Ratio 470
Report on Internal Control 384 Unit Contribution Margin 471
Audit Report 384
Cost-Volume-Profit Equations 472
Appendix 385 Break-Even Point 472
Discontinued Operations 385 Target Profit 477
Errors and Changes in Generally Accepted Accounting
Cost-Volume-Profit Graphs 479
Principles 386
Cost-Volume-Profit (Break-Even) Graph 479
Profit-Volume Graph 480
10 Accounting Systems
for Manufacturing
Operations 408
Special Relationships 483
Sales Mix Considerations 483
Operating Leverage 485
Cost-Volume-Profit Assumptions 487
Managerial Accounting 409 Metric-Based Analysis: Margin of Safety 487
12
Manufacturing Operations and Costs 410
Direct Materials Cost 411 Differential Analysis
Direct Labor Cost 412 and Product
Factory Overhead Cost 412
Prime Costs and Conversion Costs 413 Pricing 508
Product Costs and Period Costs 413
Cost Accounting Systems 415 Nature of Differential Analysis 509
Job Cost Systems 415 Applying Differential Analysis 511
Process Cost Systems 415 Lease or Sell 511
Job Order Cost Systems for Manufacturing Discontinue a Segment or Product 513
Make or Buy 514
Operations 415
Replace Equipment 516
Materials Cost 417
Process or Sell 517
Factory Labor Cost 418
Accept Business at a Special Price 518
Factory Overhead Cost 420
Work in Process 424 Setting Normal Product Selling Prices 519
Finished Goods 426 Total Cost Concept 520
Sales and Cost of Goods Sold 426 Target Costing Method 522
Period Costs 427
Metric-Based Analysis: Contribution Margin per
Summary of Cost Flows for Quixote Guitars 427
Unit of Production Constraint 524
Job Order Cost Systems for Service Production Constraints and Profits 524
Businesses 429 Production Constraints and Pricing 525
Just-in-Time Processing 430 Appendix 526
Traditional Production Process 430 Product Pricing: Product Cost and Variable
Just-in-Time Production Process 431 Cost Concepts 526
Product Cost Concept 526
Activity-Based Costing 432
Variable Cost Concept 528
Metric-Based Analysis: Cost per Unit 436 Choosing a Cost-Plus Approach Cost Concept 530
xviii
13 Budgeting and Standard
Costs 547 15 Capital Investment
Analysis 640
Nature and Objectives of Budgeting 548 Nature of Capital Investment Analysis 641
Objectives of Budgeting 548
Human Behavior and Budgeting 549 Methods Not Using Present Values 642
Budgeting Systems 551 Average Rate of Return Method 642
Computerized Budgeting Systems 553 Cash Payback Method 644
Master Budget 554 Methods Using Present Values 645

Income Statement Budgets 555 Present Value Concepts 645
Budgeted Income Statement 561 Factors That Complicate Capital Investment
Balance Sheet Budgets 562 Analysis 653
Budgeted Balance Sheet 565 Income Tax 654
Standards 565 Unequal Proposal Lives 654
Setting Standards 565 Lease Versus Capital Investment 654
Types of Standards 566 Uncertainty 655
Reviewing and Revising Standards 566 Changes in Price Levels 656
Criticisms of Standard Costs 567 Qualitative Considerations 656
Budgetary Performance Reporting 567 Capital Rationing 657
Budget Performance Report 568 Metric-Based Analysis: Financial Leverage 658
Manufacturing Cost Variances 569
Appendix A: Double-Entry Accounting Systems 677
Direct Materials and Direct Labor Variances 570
Direct Materials Variances 570 Rules of Debit and Credit 678
Direct Labor Variances 573 The Journal 679
Metric-Based Analysis: Process Yield Illustration of Double-Entry Accounting 679
and Utilization Rate 575 Posting to the Ledger 681
Process Yield 575
Utilization Rate 576 Trial Balance and Financial Statements 682
14
Review of Double-Entry Accounting 683
Decentralized Appendix B: Process Cost Systems 691
Operations 600 Comparing Job Order and Process Cost Systems 691
Cost Flows for a Process Manufacturer 693
Operational Responsibility 601
Centralized Operations 601 Weighted Average Cost Method 694
Decentralized Operations 601 Determining Costs Using the Weighted Average Cost
Method 694
Responsibility Accounting 603
Responsibility Accounting for Cost Centers 603 Cost Flows for a Process Cost System 696
Responsibility Accounting for Profit Centers 605 Using the Cost of Production Report for Decision
Service Department Charges 605 Making 698
Profit Center Reporting 608 Soda Butte Beverage Company 698
Responsibility Accounting for Investment Centers 608 Online Appendix C: Factory Overhead
Return on Investment 609 Variances (available for download from
Residual Income 613 Cengage.com) A-1
Metric-Based Analysis: Balanced Scorecard 614 The Factory Overhead Flexible Budget A-1
Innovation and Learning 614 Variable Factory Overhead Controllable Variance A-2
Internal Processes 615 Fixed Factory Overhead Volume Variance A-3
Customer Service 615 Reporting Factory Overhead Variances A-5
Financial 615 Factory Overhead Account A-5
Appendix: Transfer Pricing 616 Glossary 704
Market Price Approach 617
Negotiated Price Approach 617 Subject Index 714
Cost Price Approach 620 Company Index 724
xix
The Role of Accounting
in Business
What’s Covered:
Topics: The Role of Accounting in Business
Nature of Business Role of Accounting Metric-Based Analysis
▪ Types of Business (Obj. 1) ▪ Financial and Managerial ▪ Types of Analyses (Obj. 6)
▪ Forms of Business (Obj. 1) Accounting (Obj. 3) ▪ Return on Assets (Obj. 6)
▪ Business Strategies (Obj. 1) ▪ Income Statement (Obj. 4)
▪ Business Stakeholders (Obj. 1) ▪ Statement of Changes in
▪ Business Activities (Obj. 2) Stockholders’ Equity (Obj. 4)
▪ Balance Sheet (Obj. 4)
▪ Statement of Cash Flows (Obj. 4)
▪ Accounting Concepts (Obj. 5)
Learning Objectives
Obj.1 Describe the types and forms of businesses, Obj.4 Describe and illustrate the basic financial
how businesses make money, and business statements and how they are integrated.
stakeholders. Obj.5 Describe eight accounting concepts
Obj.2 Describe the three business activities of underlying financial reporting.
financing, investing, and operating. Obj.6 Describe types of metrics and analyze a
Obj.3 Define accounting and describe its role in company’s performance using return on
business. assets.
Chapter Metrics
Use the following metrics to analyze transactions and financial statements
tra nsact i o nS *
Liquidity: N/A
Profitabililty: N/A
F ina n c ial State me ntS
Return on Assets
*There are no transactions in this chapter.
1
2 Chapter 1 The Role of Accounting in Business
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tanuha2001/
Snap Inc.
H ow much are you willing to pay for stock of a company
that has never been traded on a public market? Investors
must come up with an answer to this question for companies
videos). On average, more than 180 million people use Snap-
chat daily creating more than three billion snaps.
In its prospectus filed with the Securities and Exchange
that offer stock to the public for the first time, which is called Commission in 2017, Snap Inc. indicated that it anticipated a
an initial public offering. price for its Class A common stock of between $14.00 and $16.00
In the United States, before such companies can offer per share. At the end of its first day of trading, its stock closed at
stock for sale, they must file a prospectus (Form S-1) with $24.48 per share and had traded as high at $26.05 per share.
the Securities and Exchange Commission. The prospectus At $24 per share, Snap Inc.’s stock is worth more than $30 billion.
includes background information on the company, including Was Snap Inc.’s stock really worth $24.48 at the end of its
its business strategy and the range of prices that the stock is first day of trading on March 2, 2017?* To answer this question,
expected to sell for in the market. Also included in the pro- investors analyze Snap Inc.’s financial condition and performance
spectus are the company’s financial statements for the past using public information, including its financial statements.
three years. In this chapter, the nature, types, and activities of busi-
Snap Inc. (SNAP) is a camera company with the nesses, such as Snap Inc., are described and illustrated. In addi-
objective of reinventing the camera by providing people an tion, the roles of accounting in business—including financial
ability to communicate and express themselves with pictures. statements, basic accounting concepts, and how to use met-
Snap’s primary product is Snapchat, which is a camera appli- rics to evaluate a business’s performance—are also described
cation that allows people to send Snaps (images, emojis, and and illustrated.
* As of the close of the market on June 27, 2019, Snap Inc. common stock was trading at $14.66 per share.
Objective 1 Nature of Business and Accounting

Describe the
types and forms of A business1 is an organization in which basic resources (inputs), such as materials and
businesses, how labor, are assembled and processed to provide goods or services (outputs) to customers.
businesses make Businesses come in all sizes, from a local coffee house to Starbucks (SBUX), which
money, and business sells over $22 billion of coffee and related products each year.
stakeholders. The objective of most businesses is to earn a profit. Profit is the difference between
the amounts received from customers for goods or services and the amounts paid for the
inputs used to provide the goods or services. In this text, we focus on businesses operat-
ing to earn a profit. However, many of the same concepts and principles also apply to
not-for-profit organizations such as hospitals, churches, and government agencies.
Types of Businesses
Three types of businesses operated for profit include service, merchandising, and manu-
facturing businesses. Each type of business and some examples are described below.
Service businesses provide services rather than products to customers.
Delta Air Lines (DAL) (transportation services)
The Walt Disney Company (DIS) (entertainment services)
Merchandising businesses sell products they purchase from other businesses to
customers.
Walmart (WMT) (general merchandise)
Amazon.com (AMZN) (books, music, videos)
1. A complete glossary of terms appears at the end of the text.
Chapter 1 The Role of Accounting in Business 3
Manufacturing businesses change basic inputs into products that are sold to customers.
General Motors Corporation (GM) (cars, trucks, vans)
Intel Corp (INTC) (computer microprocessors)
Snap Inc. is as service business that provides users an ability to communicate and express themselves to Snap Inc.
family and friends with short videos and images. Connection
Forms of Business
A business is normally organized in one of the following four forms:
▪▪ proprietorship
▪▪ partnership
▪▪ corporation
▪▪ limited liability company
A proprietorship is owned by one individual. More than 70% of the businesses in the
United States are organized as proprietorships. The frequency of this form is due to the ease
and low cost of organizing. The primary disadvantage of proprietorships is that the financial
resources are limited to the individual owner’s resources. In addition, the owner has unlim-
ited liability to creditors for the debts of the company.
A partnership is owned by two or more individuals. About 10% of the businesses in
the United States are organized as partnerships. Like a proprietorship, a partnership may
outgrow the financial resources of its owners. Also, the partners have unlimited liability
to creditors for the debts of the company.
A corporation is organized under state or federal statutes as a separate legal entity.
The ownership of a corporation is divided into shares of stock. A corporation issues the
stock to individuals or other companies, who then become owners or stockholders of
the corporation. A primary advantage of the corporate form is the ability to obtain large
amounts of resources by issuing shares of stock. In addition, the stockholders’ liability to
creditors for the debts of the company is limited to their investment in the corporation.
Snap Inc. is organized as a corporation in Delaware even though its offices are in Venice, California. Many Snap Inc.
companies incorporate in Delaware because of its favorable legal and business environment. Connection
A limited liability company (LLC) combines attributes of a partnership and a cor-
poration. The primary advantage of the limited liability company form is that it operates
similar to a partnership, but its owners’ (or members’) liability for the debts of the com-
pany is limited to their investment. Many professional practices such as lawyers, doctors,
and accountants are organized as limited liability companies.
In addition to the ease of formation, ability to raise capital, and liability for the debts of
the business, other factors such as taxes and legal life of the business should be considered
when forming a business. For example, corporations are taxed as separate legal entities,
while the income of sole proprietorships, partnerships, and limited liability companies
is passed through to the owners and taxed on the owners’ tax returns. As separate legal
entities, corporations also continue on, regardless of the lives of the individual owners.
In contrast, sole proprietorships, partnerships, and limited liability companies may termi-
nate their existence with the death of an individual owner.
The characteristics of sole proprietorships, partnerships, corporations, and limited
liability companies are summarized below.
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"That's good, I don't know how very well."
"You never go out much, do you? That is, you haven't until lately."
"Why, no. I've been too busy—until lately. Perhaps that was a
mistake."
"Perhaps," said Julie cryptically as she turned to the dance floor.
"You're looking very beautiful," said Marc.
"Am I?" Julie continued to look away but she couldn't restrain a faint
smile.
Marc found himself with nothing to say, but continued to stare at Julie.
He couldn't get over the change in her. His mind wandered off into a
lovely, imaginary land without night clubs, in which he and Julie were
the only inhabitants.
Jack danced on, completely at ease while around him people
started to edge away with startled glances....
This was extremely unfortunate for, out on the dance floor, Jack Snell
suddenly found himself dancing, inexplicably and most
embarrassingly, alone. Toffee had suddenly vanished into thin air. He
also found himself alarmingly confronted by Mrs. Claribel Housing, a
matron of tremendous prominence, in more ways and places than
one. Mrs. Housing understood any misdemeanor perpetrated in the
Spray Club as a personal affront, to be dealt with personally. After all,
it did cast unflattering reflections on her "Set."
"Young man," she boomed. "I wonder if you realize what a disgusting
exhibition you are presenting. I should think that if you must get
roaring drunk, you could do it somewhere less public."
Jack turned to her dazedly. "But I had a girl," he said unhappily. "I
seem to have lost her."
A soft light came into Mrs. Housing's eyes. "He's gone mad," she
shouted, turning to her partner. "He's lost his girl, and it's driven him
crazy."
If there was anything that put life into Claribel Housing, it was
"straightening out" someone else's life. She looked on Jack with the
air of the practiced social worker.
"There, there, son," she roared. "Don't take on so about it. I'm sure
she wasn't half good enough for you." She placed a beefy arm about
his shoulder, and nodded to her partner. "Everett, we must do
something for this poor soul."
Everett Housing had learned to accept his wife's "projects" with
resigned good humor.
"Yes, dear," he sighed, and followed obediently as his wife led the
hapless Jack from the dance floor. It didn't seem to concern the
matron that the dancers were stopping to observe their progress.
Back at the table, Julie, noticing the excitement, reached for Marc's
sleeve.
"Something's happening to Jack and Toffee!" she cried, jumping up.
Marc, jolted from his reverie, followed after her. They reached the
group on the dance floor just in time to witness Toffee's
reappearance.
"What's going on here?" screamed Toffee, confronting Mrs. Housing.
"Please get out of my way," said Mrs. Housing regally.
"Get out of your way!" Toffee flared. "You should be ashamed of
yourself! Picking up a girl's man when her back is turned—and on
public dance floors too! And at your age!"
Mrs. Housing seemed to explode.
"How dare you! I should think that you had caused enough trouble,—
you little floosey!" It was apparent to her that this was the young lady
who had unseated Jack's reason. At this point Jack did, indeed,
appear somewhat demented. Through the ensuing uproar, he tried
valiantly but vainly to make himself heard, and seemed merely to be
babbling to himself. Toffee was beside herself with rage.
"Why, you—you—you old back issue," she yelled. "You outsized pick-
up!" She swung her foot behind her and calculated the distance to
Mrs. Housing's shin. Unfortunately, her heel caught on the rung of Mr.
Kently's chair. That good gentleman, unconcerned of the tumult
raging just behind him, was, at the moment, determinedly offering a
toast to his wife on the occasion of their twenty-fifth anniversary. He
lifted his glass, and with the words: "And to you, my dear—," tossed
its entire contents neatly into Mrs. Kently's face. Toffee had jerked the
chair swiftly from under him. Mrs. Kently shot out of her chair with a
scream designed for blood chilling.
Across the room, a guest, somewhat befogged by too much drink,
raised a heavy head and shouted: "Murder!" at the top of his lungs.
Across from him, his companion looked up with startled eyes and
quietly slid under the table, unconscious. The man looked down at
her without concern.
"Can't stand the sight of blood," he explained to no one in particular.
The center of this excitement suddenly dissipated itself with the
stately, if hurried, departure of Mrs. Housing and her obedient
husband, but the fever of hysteria had already spread to the
remaining guests and was raging unabated. The orchestra, caught in
the spirit of the occasion, struck up a raucous rendition of "The Beer
Barrel Polka." Several guests, similarly inspired, rapped their partners
rather ungently over the head with whatever bottles were at hand.
The door to the manager's office opened briefly and slammed to.
Finally, Marc managed to fight his way through to Toffee.
"Now, see what you've done!" he yelled.
"So this is night clubbing," squealed Toffee delightedly.
"We have to get out of here," Marc guided her away from the dance
floor.
"Just when things were really getting started?" asked Toffee. "Where
are Jack and Julie?"
"They've gone and we'd better do the same."
"Just a moment," replied Toffee and disappeared into the crowd
again. Marc made a grab for her but missed. Presently she returned,
beaming triumphantly. Under her arm, she carried a bottle of
champagne.
"I don't see why we should let it go to waste," she explained. Marc
groaned and hurried her off toward the entrance.
Outside, they were greeted not only by the cool, evening air, but also
by what appeared to be the entire police force. The manager of the
Spar Club stood behind them.
"There they are, boys!" he yelled excitedly. "Grab 'em!"
Toffee was delighted to find herself, once more, the center of

attention. She looked up at the judge with a disarming smile. She felt
a little sorry for the poor little man—he seemed so perplexed by
everything. Marc stood beside her, wondering vaguely if he weren't
dead, and if not, why not. The judge fixed Toffee with a baleful stare.
"Who did you say your parents were?" His voice was that of a martyr.
"A moonlit night and a yearning spirit," said Toffee blandly. The
judge's eyes rolled ceilingward.
"Oh, good Lord," he sighed in pure supplication.
"What she means—," began Marc.
"You stay out of this!" snapped the judge. "I'll hear from you later."
"But judge," said Toffee. "I don't know how I can make it clearer."
"Never mind," replied the judge hotly. "Let's hear no more about it. I
sincerely wish I hadn't brought it up in the first place. Now, perhaps,
you'll tell me what went on in the Spar Club this evening, and never
mind the poetry."
"Well," said Toffee brightly, "it all started when this old fright tried to
steal Mr. Snell from me—right there on the dance floor, too." An
earnest expression crept over her face. "She should be locked up,
judge."
Marc's thoughts raced wildly. If ever there was a time for Toffee to
fade, this was unquestionably it. He clamped his eyes tightly shut and
tried frantically to picture peaceful, pastoral scenes in an attempt to
induce sleep. However, what occurred to him most frequently were
bleak countrysides strewn with assorted wreckage, symbolic of his
future.
"Exactly what is your relationship with this man?" The judge nodded
in Marc's direction without looking at him.
"Well," said Toffee. "You see, I sort of belong to him, in a way."
"You mean he's your guardian?" This appealed to Toffee and she
nodded vigorously. The judge turned to Marc.
"Young man—," he began, then looked questioningly at Toffee.
"What's the matter with him?"
Toffee turned to Marc and sudden anger flashed in her eyes.
"You double-crosser!" she hissed. Swiftly her hand shot to Marc's
unsuspecting rear and two fingers closed wickedly. Instantly, Marc's
eyes flew open and stared wildly at the judge as a piercing scream
rent the courtroom and he leaped frantically forward. A small cry of
terror was heard from the frightened judge as he disappeared
beneath the bench.
"He's attacking me!" he screamed from the floor. "Get him out of here!
Get them both out of here! Lock them up before they kill someone!"
As two official brutes closed in on them, Marc angrily faced Toffee.
"If you ever do anything like this again, I'll deliberately contract
sleeping sickness!" he shouted.
Marc awoke wondering how long he had been asleep, and, in the
grey morning light, began to inspect his quarters without enthusiasm.
The cell that he occupied was like any other, but he had been lucky
enough to have it all to himself. He lay, face up in the lower section of
the steel, double-decker and reviewed the preceding night's activities.
Suddenly, he started forward and propped himself up on one elbow.
There was a form clearly outlined in the mattress above him. He tried
to remember if anyone had been brought into the cell during the
night. As he was thinking about it, the form stirred. Slowly, he
advanced a hand to the mattress and prodded it gingerly. His
suspicions were immediately confirmed.
"Good morning," called Toffee with a hateful cheerfulness as she
peered down at him from the upper.
"I thought they put you in the women's quarters."
"They did, but I decided to materialize here, to be with you."
"But, if they find you here—," Marc gave it up. Things couldn't get any
worse. "I hope you're happy about this." He waved his hand tragically
at the cell.
"Well," said Toffee slowly. "I can think of better places. Let's leave."
"And how do you propose to get out of here?"
"You mean they intend to keep us here?"
"It is likely, considering your performance before the judge last night,
that we shall rot in this place."
"We'll just have to get out." Toffee's brow wrinkled sternly.
Marc looked grieved but made no reply. After several moments of
concentrated thought, his face lit up.
"Now, look Toffee," he said, "You say that you can materialize
anywhere. Suppose I doze off for a while, do you suppose you could
manage to "come to" outside and get the keys to this trap? After all,
they don't have our names, our real ones, on any of the records yet."
"I could do it with my eyes closed," Toffee cried happily.
"Well, don't get fancy about it."
Marc stretched out on the bed and closed his eyes, and everything
became quiet in the cell for a time. Toffee waited expectantly but
nothing happened. Marc swung his legs over the edge of the bed and
cupped his chin in his hands.
"It's no use," he sighed. "I've too much on my mind.
"Try again," urged Toffee.
"It's no use I tell you."
Toffee sat up and glanced down at Marc. Slowly an intense
expression crept over her face. Quietly, she reached down and
removed one of her shoes, and regarded it sadly. She leaned over
the edge of the bed and poised it over Marc's head. Closing her eyes,
she swung the shoe downward as swiftly as she could. Marc slumped
to the floor soundlessly.
Marc had been right in assuming that Joseph wouldn't be there to

open the door for them. He fitted the key into the lock and turned it.
"You needn't have hit me so hard," he grumbled. Toffee looked hurt.
"I got you out of there, didn't I? Of course, maybe I shouldn't have left
that note for the judge." Marc looked alarmed.
"What note?"
"Well, the poor dear was so disturbed about my parentage that I left a
note explaining the whole thing. I guess it wasn't such a good idea."
"What did you tell him?"
"That my father was a Welsh." Toffee smiled mysteriously and
crossed to inspect herself in the mantle mirror.
"I'm a wreck. You miss me while I fix up a bit?"
Marc fell into a chair as she left the room. He sat there regarding the
apartment listlessly. It seemed to reflect his own life. Orderly,
dignified, unexciting and infinitely lonely. Suddenly his reverie was
interrupted by a knock at the door. He crossed and opened it. There,
looking particularly miserable, stood Julie.
"I hope you'll excuse my coming here," she said timidly. "I've been
waiting at the office for you all morning. I tried to call you here several
times but there wasn't any answer. I decided to come over and wait
for you. Its odd that Joseph didn't answer the phone.
"He wasn't in," said Marc. "Is something wrong?"
"Well, no—not exactly." Julie hesitated. "It's just that—well—it's just
that—I want to quit my job with you, Mr. Pillsworth.
"What?" Marc's eyes widened with surprise.
"Yes, Mr. Pillsworth, I want to quit." The words came in a rush. "Now
—today. I don't want to ever have to go back."
"But you mustn't leave." There was an immediacy in Marc's tone.
"How would I get on without you? If it's a matter of salary—."
"No, it isn't that. You give me more than enough to get by on. As a
matter of fact, I don't know where I'll ever get a better job."
Marc looked at her questioningly.
"Well, I don't know just how to explain it. It's just something that's
come over me all of a sudden. I've a strange feeling that I'm wasting
my life there, as if something were closing in on me to cut me off from
everything I really want—as though the job itself were a menace to
my happiness. I guess it came over me yesterday when your cousin
—
"Niece," interrupted Marc.
"—When your niece was in the office. She seemed so gay, so much
that I should be, but am not. It seemed only fair to talk to you first,
before leaving." Marc glanced nervously toward the bedroom door.
"But what has the agency to do with it?"
"I wish I knew," said Julie. "It's just a feeling that I have."
"But I can't let you go, Julie." The note of urgency crept back into
Marc's voice. "And you mustn't envy Toffee. You see, she's just
escaping a dull existence herself—and only momentarily. She'll be
returning soon. Perhaps right away." A sudden light came into Julie's
eyes. "Besides, I know what you feel. I've felt the same thing myself
for years. The trouble was that I let myself get used to it and after a
time, I didn't know the difference. I'm sure I know how to help myself
now and I think that I could help you too—if you'll let me—if you'll
stay. Please don't leave, Julie."
As Julie listened to Marc, her expression became softly radiant.
"Perhaps you're right, Marc," she said quietly.
Marc reached out and took her hand in his. Suddenly, from behind
the bedroom door, came the soft hiss of a shower. Instantly, Julie
drew back.
"Joseph must be back," said Marc quickly.

"Taking a shower?"
"Oh, yes—he often takes showers this time of day. Very clean man.
Says cleanliness is next to Godliness, or something of the sort. Very
clean—spotless, you might say." Marc began to realize that he was
babbling and stopped short.
"Of course," said Julie, smiling. "I should have remembered Joseph. It
gave me rather a start, I thought we were alone.
"You'll be back in the morning then?" Marc asked anxiously. "Please
say you will."
Julie regarded Marc thoughtfully.
"Yes," she said slowly. "It doesn't seem now that there was ever
anything wrong." She turned toward the door.
"Julie—"
"Yes?" She turned, and as she did so Marc caught her in his arms.
He kissed her briefly and released her, stepping back embarrassedly.
Julie smiled up at him for a moment and then said quickly:
"It's a wonderful job, I wouldn't quit for anything." The door closed
softly behind her.
When Toffee entered the living room she found Marc staring out of
the window with a curiously foolish grin. She stood beside him for a
moment and looked out at the city.
"Go put some clothes on," he said. Toffee was wrapped in a huge
towel, draped precariously over one shoulder.
"What for? At this moment, more of me is covered, than at any time
since we met."
"Yes I guess so." For a moment they stood silently before the window.
"Toffee—," Marc began.
"Yes, Marc?"
"Why are you here? What is it you want—really?"
"My wish is for you Marc, it has been from the beginning. If I've
caused you trouble, perhaps it was because you needed it. I'll be
returning soon, but I can't help wanting to linger for a while."
"But how will your return be accomplished?"
"You'll know when the times comes." She smiled up at him. "Maybe
it's time I put those clothes on after all." She went into the bed room.
Marc slumped into a chair. In a way he had enjoyed Toffee and her
trouble, but now she would be in the way. "You'll know when the time
comes," she had said. He was certain that the time had arrived, but
he still hadn't any idea about sending her back to the subconscious.
Perhaps it would be best to go back to the beginning. How had it
started? He reviewed the strange occurrence over and over again.
For the fifth time, he went back to the beginning. Suddenly, he
brought his fist down on the arm of the chair.
"Of course, that's it," he murmured. "Her father was a Welsh." He
laughed shortly. "It's so simple, I should have known all along."
After a time, the bed room door flew open. Toffee was making a
grand entrance. As she moved toward him, Marc thought briefly that
he had never seen her so beguiling. At the center of the room, she
paused.
"Isn't it wonderful? I like it even more than the black one."
"You might say, it leaves everything to be desired," said Marc.
"Oh?"
"—by some young swain," he added.
"Marc there just isn't any hope for you."
"I'd have agreed with you two days ago."
"And now?"
"Who knows?"
"I'm sure I don't."
"That's as it should be." Marc started for the bed room. "I could use a
little sprucing up myself." At the door he turned back. "Suppose we
make a special occasion of dinner tonight—go somewhere, where the
food is especially good? I know a place that serves a wonderful welsh
rarebit. I was there just night before last." Toffee's smile immediately
disappeared and for a moment her eyes searched Marc's face, which
had, suddenly, become quite serious. Her smile reappeared as
suddenly as it had faded, but it seemed a bit more set.
"I'm sure I'll love it," she said.
Marc spoke slowly and his voice carried a touch of sadness.
"And remind me to stop by the drug-store for sleeping tablets. I ran
out the other night."
"Sure Marc." Toffee looked away toward the window as Marc left the
room.
The countryside had somehow reassembled itself—as lovely and
serene as before, with a blue mist playing about the trees. Toffee and
Marc moved down the hillside toward a small valley obscured by the
mist.
"I should be angry with you," said Toffee. "You didn't waste any time
in sending me back, once you knew how."
"You said I'd know when the time came."
"How did you find out?"
"I kept wondering where it had all started, and then I remembered
that foods sometimes cause certain kinds of dreams. Then too, I
remembered that you had said that your father was a Welsh. I didn't
have to be clever to put it all together and get welch rarebit,
especially since it was the very thing I had eaten the first night. It all
seemed pretty silly, but somehow it sort of fitted in with what's
happened. You're not angry are you?" He looked down at her
affectionately.
"Of course not, Marc. There's something you've forgotten. I exist only
in your mind. I am as you see me. If I had stayed longer, if I had come
to stand in the way of your happiness, I should have become ugly
and wretched. I've served my purpose and it's time for me to return.
Really, you haven't so much to do with it as you suppose. It's been a
wonderful adventure for me, Marc."
"I'm glad, Toffee," Marc said simply. "I'll never forget what you've done
for me."
"Just remember Marc, that I'm not so unlike other, ordinary women.
There is none of us who can remain lovely unless she does so in the
eyes of a man whom she loves. Be good to Julie."
"You knew about Julie?"
"Of course," laughed Toffee. "I knew from the beginning, before you
did. I know more about you than you do yourself. That's another point
I hold in common with other women."
They had reached the edge of the valley and suddenly Toffee
stopped.
"This is where I have to leave you." She smiled up at Marc. Suddenly,
he took her in his arms, very tenderly, and kissed her. As he released
her, the bell began to ring in the distance, as it had before.
"Goodbye," Toffee said softly, starting toward the valley.
As she moved, the earth seemed to dissolve behind her, leaving a
narrow chasm between them. With each step the bell became more
and more distinct. Suddenly, impulsively, Marc turned toward her.
"Wait!" he called, and reached out a hand to her.
Marc's hand fell to the alarm clock and he awakened to a bright, new
morning with a vague sense of loss. Suddenly he swung his legs over
the edge of the bed and got to his feet.
Julie would be at the office. He didn't want to be late.
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Accounting 27th Edition Carl Warren - eBook PDF

(eBook PDF) Financial & Managerial Accounting 15th

(eBook PDF) Corporate Financial Accounting 14th Edition

Exhibit 10 Integrated Financial Statements

The Hershey Company

Assets = Liabilities + Stockholders’ Equity

The Hershey Company The Hershey Company The Hershey Company

Operating act. $1,600 ➌ Revenues $7,791 Common Retained Other

Exhibit 1 Integrated Financial Statement Framework

Integrated Financial Statement Framework

STATEMENT OF CASH FLOWS I NCOM E STAT EM ENT

Financial Statement Effects

STATEMENT OF CASH FLOWS INCOM E STATEM ENT

Ninth Edition: Learning Approach and

An example of metric analysis at each of these levels are as follows:

Financial Statement Effects

STATEMENT OF CASH FLOWS I N CO ME STATEMEN T

Transaction Metric Effects

LIQUIDITY P R O F ITA BIL ITY

Financial Statement Level

Sales for 20Y4 $9,125,000

Managerial Decision Level

To accompany the addition of Warren’s Metric Analyses, end-of-chapter problems have

▪▪ Reporting and grade book options

When to use it? What to use? How will it help?

Cengage Mobile App

NEW! Excel Online

Preparing for Class

Cengage Unlimited is a first of-its-kind digital subscription designed specifically to lower

Supplements for the Instructor

Terry R. Spray/InHisImage Studios

services to business and individual clients. Her primary

1 The Role of Accounting in Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Appendix A Double-Entry Accounting Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 677

1 The Role of Accounting

Metric-Based Analysis: Return on Assets 22 Family Health Care’s November Transactions 88

Managerial Accounting 409 Metric-Based Analysis: Margin of Safety 487

Master Budget 554 Methods Using Present Values 645

F ina n c ial State me ntS

*There are no transactions in this chapter.

Objective 1 Nature of Business and Accounting

1. A complete glossary of terms appears at the end of the text.

Toffee was delighted to find herself, once more, the center of

Marc had been right in assuming that Joseph wouldn't be there to

"Joseph must be back," said Marc quickly.

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1 The Role of Accounting in Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1