Sixth Edition. Jae K. Shim, Ph.D. Former Professor of Accounting College of Business Administration California State University, Long Beach

Transcription

1 BARRCWS Accounting Handbook Sixth Edition Jae K. Shim, Ph.D. Former Professor of Accounting College of Business Administration California State University, Long Beach Joel G. Siegel, Ph.D., CPA Former Professor of Accounting Nick Dauber, MS, CPA Lecturer in Accounting Anique A. Qureshi, Ph.D., CPA Professor of Accounting and Information Systems

2 Contents Preface vii 1 Financial Accounting: The Financial Statements 1 Income Statement Reporting 1 Balance Sheet 14 Statement of Cash Flows 34 2 Financial Accounting: Financial Reporting Requirements 45 Interim Reporting 45 FASB Accounting Standards Codification 47 Accounting Changes 48 Prior Period Adjustments 50 Disclosure of Accounting Policies 51 Segmental Reporting 51 Imputing Interest on Notes 52 Business Combinations 54 Consolidation 54 Investments in Securities 58 Fair Value Measurements 64 Fair Value Option for Financial Assets and Financial Liabilities 66 Leases 72 Pension Plans 78 Other Postretirement Benefits 88 Income Tax Accounting 89 Foreign Currency Translation and Transactions 93 Financial Instruments 96 Related Parties 99 3 Management Accounting/Cost Management I 101 Introduction: The Role of Management Accounting 101 Cost Accounting vs. Cost Management 102 Part I: Processing Cost Data for Cost Accumulation 110 Cost Concepts, Terms, and Classifications 110 Cost-Accumulation Systems 114 Costing Joint Products and By-products 126 Allocation of Service Department Costs to Production Departments 127 Activity-Based Costing 130 Activity-Based Management 134

3 Just-in-Time (JIT) and Total Quality Management (TQM) 141 Measuring Quality Costs 145 Backflush Costing 148 Throughput 148 Environmental Costs and Ecoefficiency 151 Life-Cycle Costs and Target Costing 155 Part II: Using Cost Data for Planning 160 Cost Behavior Analysis Analysis of Mixed Costs 160 Cost-Volume-Profit (CVF) and Break-Even Analysis 171 Absorption Versus Variable Costing 178 Budgeting for Profit Planning 182 A Shortcut Approach to Formulating the Budget Management Accounting /Cost Management II 195 Part III: Using Cost Data for Control 195 Responsibility Accounting: Introduction 195 Standard Costs and Variance Analysis for Cost Centers 196 Segmental Reporting for Profit Centers 220 Responsibility Accounting for Investment Centers 230 Balanced Scorecard 236 Transfer Pricing 238 Part IV: Using Cost Data for Decision Making 243 Short-Term and Nonroutine Decisions 243 Capital Budgeting Decisions 253 How Does MACRS Affect Investment Decisions? Financial Statement Analysis 269 Importance 269 Horizontal Analysis 270 Ratio Analysis 274 Summary and Limitations of Ratio Analysis Individual Income Taxation: Preparation and Planning 303 How to Postpone Taxes 303 Sources of Tax-Exempt Income 304 How to Delay Paying Tax on Interest 306 Gains or Losses on Securities Transactions 307 Tax Strategies When Children Are Involved 308 Itemized Deductions 309 Self-Employment 314 Personal Exemptions 315 Standard Deduction 316 Tax Implications of Pension Plans 316 Real Estate Transactions 318 Gifts 320

4 Determination of Tax 320 Estate Flanning 322 Advantages of Having a Trust 324 Alternative Minimum Tax Dictionary of Accounting Terms Information Technology in Accounting 799 Accounting Packages 799 Activity-Based Costing (ABC) Software 805 Spreadsheets (Electronic Worksheets) 807 Auditing Tasks 810 Spreadsheet-Assisted Auditing 813 Tax Preparation and Flanning 815 Using Database Management Systems (DBMS) 816 Software Systems That Impact Value Chain Management 817 Wireless Technology Quantitative Methods for Accounting 823 Decision Making 823 Linear Programming and Shadow Pricing 828 Learning Curve 834 Inventory Flanning 835 Program Evaluation and Review Technique (PERT) Auditing and Internal Control Over Financial Reporting 849 Sarbanes-Oxley Act and the Public Company Accounting Oversight Board (PCAOB) 849 Audit Reports 851 Compilation of Financial Statements 868 Review of Financial Statements 871 Reports on Prospective Financial Statements 873 Audit Documentation 881 Internal Auditing 881 Section 404 of the Sarbanes-Oxley Act 883 The SOX Section 302 and Section 906 Considerations Personal Financial Flanning 897 Objectives of Personal Financial Flanning Governmental and Nonprofit Accounting 935 Characteristics of Nonbusiness Organizations 935 Governmental Accounting 937 Nonprofit Organizations and Financial Reporting 964

5 13 International Accounting and International Financial Reporting Standards (IFRS) 971 Introduction: Accounting Dimensions of International Business 972 Foreign Currency Exchange Rates 973 U.S. GAAP vs. IFRS 982 Required Financial Statements and Structural Differences in Primary Financial Reporting 982 IFRS Differences Affecting the Statement of Financial Position 985 IFRS Differences Affecting the Income Statement Forensic Accounting 993 Why Is Forensic Accounting Necessary? 994 When Does One Employ a Forensic Accountant? 995 Where Is a Forensic Accountant Used? 996 How Does a Forensic Accountant Work? 997 Forensic Accounting and Fraud Examination 998 Forensic Specialists' Investigation Procedure 1000 Forensic Computing and the Use of Technology 1001 IT and Data Mining Used to Detect Corporate Fraud 1002 A Case in Forensic Accounting 1003 Appendices 1019 Appendix A: Summary of the Sarbanes-Oxley Act of Appendix B: Sarbanes-Oxley Compliance Practice Aid 1031 Index 1055