Accounting: 3rd Edition: English

Author: Houghton Mifflin (USA) / et al
Publisher:
Publishing Date: 1980-01-10
Features: The publishing statement is to adapt to the construction and development of China's socialist market economy, to meet the needs of domestic readers to understand, learn, and draw lessons from advanced foreign management experiences and to grasp the forefront dynamics of economic theory. Tsinghua University Press cooperated with PRENTICE HALL International Publishing Company to publish a series of English-language economic management books. The books we selected are all reprinted multiple times abroad. During the book selection process, Professor Ly Yilin, Professor Jing Xin, Dr. Wang Jianying, Dr. Hu Shuguang of Renmin University of China, and Dr. Song Xuebao of the School of Economics and Management at Tsinghua University did a lot of work. We express our gratitude here. Due to the differences in the economic, political, and cultural backgrounds between the countries where the original authors are from and China, we hope readers pay attention to analysis and identification during reading. We hope that the publication of these photocopied books will help promote the development of China's economic science and contribute to the teaching of China's economic management majors. Tsinghua University Press, August 1997
Content Summary: This book is an accounting textbook that systematically introduces the theory and practice of modern corporate financial accounting and management accounting. The book is divided into seven parts and twenty-seven chapters, sequentially explaining the basic structure of accounting, accounting for assets and liabilities, partnership and corporate accounting, accounting information analysis, management accounting and cost accounting, internal decision-making, planning, and control, as well as strategic decision-making and long-term decision-making. The book also includes additional new content, mainly including accounting for natural resources and depletion, accounting for multinational operations, production cost reporting, activity-based costing, activity-based management, just-in-time management, and strategic decision-making techniques. To strengthen students' thinking and decision-making abilities, each chapter begins with real company data, lists learning objectives, and quotes sayings from company managers and investors. The data in the book are sourced from world-renowned companies such as Coca-Cola Company, Motorola Inc., IBM, Boeing Company, Chrysler Corporation, and Holiday Inn. Each chapter is followed by self-assessment questions, discussion questions, series exercises, challenging exercises, financial statement puzzles, comprehensive puzzles, and cases. This book can be used as a teaching material for accounting majors in universities and colleges, as well as for reference by accounting theorists or practitioners.
Excerpt: DeFilipponeededa minimum amount of money to start AnExtraHand. That is, she had to finance the business. She had $50 in personal cash to invest. This chapter covers owner investments to start a business. How did DeFilippoknow the total revenuesthe company earned? Her accounting records provided the amount. Without records, DeFilippowould have had to guess. Revenue is an accounting term that people use in everyday conversation. This chapter explainsthe concept of revenuemore precisely. Finally, AnExtraHand earned $900 during 1992. What are earnings'? In common usage, we might say that during 1992 AnExtraHand "made" $900. This meansthat for 1992 AnExtraHand earned a profit of $900 after all expenses for the year were subtracted. Earnings and profit are accounting termsthat mean the same thing. Expenses is another key accounting term. This chapter covers alltheseterms and introduces the financial statementsthat businesses use to report their financial affairs. You may already know many accounting terms and relationships, because accounting affects people's behavior in many ways. This first accounting course will sharpen your focus by explaining how accounting works. As you progress through this course, you will see how accounting helps people like JulieDeFilippo—and you—achieve business goals.
What Is Accounting? Accounting is the system that measures business activities, processes information into reports, and communicates the results to decision-makers. For this reason, it is called "the language of business." The better you understand the language, the better you can manage the financial aspectsofliving. A recent survey indicatesthat business managers believe it is more important for college studentstolearn accounting than any other business subject. Personal financial planning, education expenses, loans, car payments, income taxes, and investments are based on the information system that we call accounting. A key product of an accounting informationsystem, financial statements, allow peopletomake informed business decisions. Financial statements are the documentsthat report on an individual's oran organization's business in monetary amounts. Is my business making a profit? Should I hire assistants? Am I earning enough money to pay my rent? Intelligent answerstobusiness questions like these are based on accounting information. Please don't mistake bookkeeping for accounting. Bookkeeping is a procedural element of accounting, just as arithmetic is a procedural element of mathematics. Increasingly, people are using computers to do detailed bookkeeping—in households, businesses, and organizationsofall types. Exhibit 1-1 illustrates the role of accounting in business. The process starts and ends with people making decisions.
Users of Accounting Information: Decision-Makers
Decision-makers need information. The more important the decision, the greater the need for accurate information. Virtually all businesses and most individuals keep accounting records to aid in making decisions. Most of the material in this book describestusiness situations, but the principles of accounting apply to the financial affairs of other organizations and individuals as well. The following sections discuss some of the people and groups who use accounting information.
INDIVIDUALS
People such as you use accounting information in everyday affairs to manage bank accounts, to evaluate job prospects, to make investments, and to decidewhether to rent or buy a house.
BUSINESSES
Managers of businesses use accounting information to set goals for their organizations, to evaluate progress toward those goals, and to take corrective action if necessary. Decisions based on accounting information may include which building to purchase, how much merchandise inventory to keep on hand, and how much cash to borrow. JulieDeFilipponeedeknow how much she could spend on adverasi