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Financial Accounting: Tools for Business Decision-Making, 7th Canadian Edition



Financial Accounting: Tools for Business Decision-Making, 7th Canadian Edition PDF

Author: Paul D. Kimmel

Publisher: Wiley

Genres:

Publish Date: January 9, 2017

ISBN-10: B078KLZ4JK

Pages: 883

File Type: PDF

Language: English

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Book Preface

WHAT’S NEW?

Helping Students Learn Accounting  Concepts
We have carefully scrutinized all chapter material to find new  ways to engage students and help them learn accounting concepts. A new learning objective structure helps students learn  concepts in more manageable “chunks,” with 20% more Do  It! exercises added to help students test their understanding  before moving on to the next topic. Of these, more than 60% are  new or updated. As well, we added and/or revised a significant number of explanations, examples, illustrations, and summaries throughout the text to better facilitate student learning.

Real-World Context
One of the goals of the fi nancial accounting course is to orient  students to the application of accounting principles and techniques in practice. Accordingly, we have expanded our practice  of using current examples from real companies throughout  the textbook by adding more high-interest companies that we  hope will increase student engagement. Th is edition includes  more than 300 references to real-world companies of interest  to students. Nearly a quarter of the chapter-opening feature  stories were replaced with new stories, while the remainder  were updated. New feature companies for this edition are The  North West Company and Sobeys, two well-known companies in the grocery industry. References to these companies  have been included throughout the textbook in a variety of  ways—in simplified financial statements in the chapter material, ratio analyses, Using the Decision Toolkit, end-of-chapter  cases, and financial statements in

Appendices A and B at the
end of the textbook. In addition, our author team is active in  delivering the CPA Professional Education Program and incorporated this real world perspective as each chapter, including  the end-of-chapter material, was written. International  Financial Reporting Standards (IFRS) and Accounting  Standards for Private Enterprises (ASPE) were also revised to  reflect current and pending changes to standards.

Focus on the Accounting Cycle
For many students, success in an introductory accounting course hinges on developing a sound understanding of  the accounting cycle and seeing how the material they are  working with in a particular chapter fi ts in the accounting  cycle. To help students improve their understanding, we have  added new, recurring illustrations that show students the big  picture of the accounting cycle and doubled the number of  comprehensive cases that incorporate the accounting cycle.
All of these changes provide students with more opportunities  to learn and retain accounting fundamentals integrated across  multiple chapters.

Review and Practice
A new review and practice section added to each chapter  includes, in one place, an overview of the learning objectives,  key terms, diff erences (if any) between IFRS and ASPE, and  decision tools in addition to practice opportunities using the  Decision Toolkit and a comprehensive Do It! Th e review and  practice section also includes objective-format questions that  allow students to self-assess their understanding of the topics  in each chapter. Th ese questions are comprehensive in their  coverage, with detailed feedback provided at the end of the  chapter to assist students in analyzing their results. Additional  practice objective-format questions are available in the test  bank for instructor use. End-of-Chapter Material
The end-of-chapter material underwent a comprehensive  updating to ensure that it continues to be relevant and fresh.
Well over half of the questions, brief exercises, exercises, problems, and cases in the end-of-chapter material are either new  or signifi cantly updated. Th e cases in the Expand Your Critical  Thinking section of each chapter have been reorganized into  new categories, including financial reporting, financial analysis, ethics, student view, professional judgement, and serial  cases. The serial case, which has been an important continuing  feature in each chapter in past editions, has been completely  revised in this edition to follow the evolution of a computer  consulting company from a small private company to a large  publicly traded company.

Key Features of Each Chapter Chapter 1: The Purpose and Use of Financial Statements
• Feature story is about Th e North West Company and how  accounting aids decision-making
• Identifies the users and uses of financial accounting  information and forms of business organization—  proprietorship, partnership, private corporation, and  public corporation
• Describes the business activities—financing, investing,  and operating activities—that affect companies
• Explains the content, purpose, and interrelationships of  each of the financial statements—income statement, statement of changes in equity, statement of fi nancial position,  and statement of cash flows
• Uses financial statements of a hypothetical company (to  keep it simple), followed by those for a real company, The  North West Company (to make it relevant)
• Key changes: Clarifi ed concept of internal users of fi nancial  information. Added discussion on why ASPE exists and why  a private company may choose to use IFRS. Switched order  of discussion of debt and equity fi nancing and added context to discussion of dividends. Revised discussion of investing  activities related to investments in shares and debt securities and added information about asset disposals. Content  added related to management discussion and analysis.
Chapter 2: A Further Look at Financial Statements
• Feature story is about CT Real Estate Investment Trust, its  users, and use of accounting standards
• Presents the classifi ed statement of fi nancial position and  the items typically found in each section
• Explains how ratio analysis is used to analyze a company’s  liquidity, solvency, and profi tability
• Applies ratio analysis to CT REIT, Choice Properties  REIT, and their industry (working capital, current debt to  total assets, basic earnings per share, and price-earnings  ratios)
• Describes the conceptual framework of accounting
• Key changes: Updated terminology relating to current  value and income. Added explanation of future economic  benefits. Added illustration of operating cycle. Expanded  illustration of statement of financial position classifi cations. Expanded discussion of using price earnings ratio  to assess the price of a company’s shares relative to the  company’s earnings. Added material on acceptance of  IFRS-based financial statements by U.S. securities regulators. Included management stewardship of assets in  objectives of financial reporting. Added discussion of users  identifi ed in conceptual framework and explanation of the  difference between fundamental and enhancing qualitative  characteristics. Revised conceptual framework illustration.
Chapter 3: Th e Accounting Information System
• Feature story is about BeaverTails’ experiences with an  accounting information system
• Covers transaction analysis, explaining how accounts,  debits, and credits are used to record transactions
• Explains the fi rst four steps in the accounting cycle, including analyzing, journalizing, and posting transactions and  preparing the trial balance
• Key changes: Updated receivable transactions in the Sierra Corporation accounting cycle example. Expanded the discussion of when to record and not to record transactions in  reference to the elements of financial statements. Clarified a number of concepts incorporated in this chapter, including the use of negatives in the accounting equation, the use  of the chart of accounts, and the distinction between formal general ledger accounts and T accounts. Reformatted  the accounting equation analysis to the same format used  in Chapter 4 so that students can more easily compare information in different parts of the accounting cycle from  one chapter to the next. Added a section on how opening  balances aff ect accounting equation analyses. Repositioned  the discussion of normal balances earlier in the chapter.
Added a review of fi nancial statement relationships to  help students better understand the directional impact of  shareholders’ equity and how the statements fi t together.  Expanded the discussion about the preparation of a trial  balance, including how to fi nd errors. Chapter 4: Accrual Accounting Concepts
• Feature story is about Western University’s application of  accrual accounting
• Explains revenue and expense recognition
• Emphasizes the diff erence between cash and accrual  accounting
• Completes the accounting cycle, from adjusting entries to  the closing process
• Key changes: Updated the revenue recognition section  to incorporate new criteria consistent with anticipated  changes to the revenue recognition standard and conceptual framework. Clarifi ed and reordered discussion  of accrued revenues and expenses. Added original  transaction entries throughout adjusting entry section.  Reorganized summary tables and added eff ects on net  income and shareholders’ equity. Expanded discussion  and illustration of closing entries, using same format  employed in Chapters 3 and 4. Chapter 5: Merchandising Operations
• Feature story is about Loblaw Companies Limited’s initiatives to improve its process of getting products from its  suppliers to its shelves
• Identifi es the key diff erences between service and merchandising companies
• Introduces inventory systems using perpetual inventory  system (the periodic inventory system is presented in an  appendix)
• Explains how to record purchases and sales of merchandise
• Presents single-step and multiple-step income statements
• Applies ratio analysis to Loblaw, Metro, and their industry  (gross profi t margin and profi t margin)
• Key changes: Restructured multiple illustrations throughout the chapter, including income measurements, fl ow of  costs, freight terms, cost of goods purchased, cost of goods  available for sale, cost of goods sold, and net sales. Added  table outlining the advantages of each type of inventory  system. Included discussion on professional judgement  required when classifying expenses by function.
Chapter 6: Reporting and Analyzing Inventory
• Feature story is about lululemon athletica inc.’s inventory  management
• Explains how inventory quantities and ownership are  determined
• Covers cost formulas and their fi nancial statement eff ects  using perpetual inventory system (the periodic inventory  system is presented in an appendix)
• Discusses eff ects of inventory errors on fi nancial statements
• Outlines how to value and record inventory at the lower of  cost and net realizable value
• Applies ratio analysis to lululemon, Limited Brands, and  their industry (inventory turnover and days in inventory)
• Key changes: Deleted section on detailed inventory count  procedures. Revised discussion of errors to focus on two  types of errors: errors made when determining the cost  of inventory and errors made recording goods in transit. Expanded discussion of goods in transit and clarified more specifi cally the nature of misstatements arising from  errors in recording purchases of merchandise inventory  as well as errors made when determining the cost of this  inventory.


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