vii
Bank Reconciliation 322
Special-Purpose Cash Funds 325
Financial Statement Reporting of Cash 326
Cash Ratios 327
Ratio of Cash Flow to Net Income 327, Ratio of Cash to
Monthly Cash Expenses 328
Summary of Learning Goals 329
Glossary 330
Chapter 8
Receivables 354
Classification of Receivables 356
Accounts Receivable 356, Notes Receivable 356, Other
Receivables 357
Uncollectible Receivables 357
Direct Write-Off Method for Uncollectible Accounts 358
Allowance Method for Uncollectible Accounts 358
Write-Offs to the Allowance Account 359, Estimating
Uncollectibles 360
Comparing Direct Write-Off and Allowance Methods 364
Notes Receivable 365
Characteristics of Notes Receivable 365, Accounting for
Notes Receivable 366
Reporting Receivables on the Balance Sheet 367
Managing Accounts Receivable 368
Screening Customers 369, Determining Credit Terms 369,
Monitoring Collections 370
Accounts Receivable Turnover and Days’ Sales In
Receivables 370
Summary of Learning Goals 372
Glossary 373
Chapter 9
Fixed Assets and Intangible Assets 398
Nature of Fixed Assets 400
Classifying Costs 400, The Cost of Fixed Assets 401, Capital
and Revenue Expenditures 403
Accounting for Depreciation 404
Factors in Computing Depreciation Expense 405, Straight-
Line Method 406, Units-of-Production Method 407, Double-
Declining-Balance Method 407, Comparing Depreciation
Methods 408, Depreciation for Federal Income Tax 409,
Revising Depreciation Estimates 409
Fixed Asset Disposals 410
Discarding Fixed Assets 411, Selling Fixed Assets 412
Intangible Assets 412
Patents 413, Copyrights and Trademarks 413,
Goodwill 414
Reporting Fixed Assets and Intangible Assets 415
Analyzing Fixed Assets 416
Operational Utilization Analysis 417, Financial Utilization
Analysis 418
Summary of Learning Goals 419
Glossary 420
Chapter 10
Liabilities 440
Current Liabilities 442
Accounts Payable 442, Notes Payable 442, Payroll
Liabilities 444
Long-Term Liabilities 447
Present Value Concepts 448, Bonds Issued at Face Value
451, Bonds Issued at Discount 454, Bond Discount
Amortization 455, Bonds Issued at a Premium 456,
Amortizing a Bond Premium 457, Bond Redemption 457,
Zero-Coupon Bonds 458
Deferred Liabilities 459
Deferred Revenue 459, Deferred Expense 459
Contingent Liabilities 461
Reporting Liabilities 462
Current Maturities of Long-Term Debt 462, Long-Term Liability
Disclosures 462, Contingent Liabilities 463
Liquidity Analysis 463
Current Liquidity Analysis 463, Long-Term Liability
Analysis 465
Appendix: Effective Interest Rate Method of
Amortization 467
Amortization of Discount by the Interest Method 468,
Amortization of Premium by the Interest Method 469
Summary of Learning Goals 470
Glossary 471