(eBook PDF) Accounting 26th Edition

by Carl S. Warren
Visit to download the full and correct content document:
https://ebooksecure.com/download/ebook-pdf-accounting-26th-edition-by-carl-s-warre
n/
 Expose Students to Concepts
Before Class Begins!
Motivation

Students don’t want to waste time going over concepts that they have already mastered.
With the NEW Adaptive Study Plan, they can focus on learning new topics and fully
understanding difficult concepts.

Adaptive Study Plan

The Adaptive Study Plan in CengageNOWv2 is an assignable/
gradable study center that adapts to each student’s unique needs
and provides a remediation pathway to keep students progressing.

The Adaptive Study Plan

is assignable/gradable
in CengageNOWv2 and
available for self-study
and review.

How does it work?

Step 1: Students take a chapter-level quiz consisting of randomized questions that cover
both conceptual and procedural aspects of the chapter.
Step 2: Feedback is provided for each answer option explaining why the answer
is right or wrong.
Step 3: Based on the quiz results, students are provided a remediation path that includes
media assets and algorithmic practice problems to help them improve their understanding
of the course material.
Instructors may use prerequisites that require students to achieve mastery in the Adaptive
Study Plan before moving on to new material.

The new Adaptive Study Plan offers the benefit of

customization coupled with remediation.
– Jennifer Schneider, professor at
University of North Georgia

vi

Copyright 2016 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.
 Make Content Relatable!

Show students how the material they are learning matters in real life and help them connect
accounting concepts to the world around them.

Video: Experience Managerial Accounting

Experience Managerial Accounting Videos, available
in CengageNOWv2, show students how progressive
companies such as Cold Stone Creamery, Second City,
and Hard Rock Café incorporate managerial accounting to
fuel better business performance.

Experience Managerial Accounting Videos are assignable/gradable

in CengageNOWv2 and available for self-study and review.

Pathways Commission “THIS is accounting!”

Pathways Commission “THIS is accounting!” illustrates what students
should understand as a result of their first exposure to accounting.
Incorporated into Chapter 1, this graphic gives students a big picture
view of how accounting can lead to a prosperous society.

Service Focus
Service Focus features highlight the differences between manufacturing
companies and service companies and illustrate how managerial
accounting concepts apply to service companies such as
The Walt Disney Company and Sierra Nevada.

Source: Charting a National Strategy for the

Next Generation of Accountants, The Pathways

Motivation
Commission, July 2012.

vii

Copyright 2016 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.
 Close the Gap Between
Homework and Exam Performance!
Application

Many students perform well on homework but struggle

when it comes to exams. Now, with the new Blank Sheet
of Paper Experience, students must problem-solve on
their own, just as they would if taking a test on a blank
sheet of paper.

Blank Sheet of Paper Experience

Good tool to make students understand concepts
A less-leading Blank Sheet of Paper Experience discourages
without overly relying on technology’s help. overreliance on the system.
– Ramesh Narasimhan, professor
at Montclair State University • The use of drop down menus and Smart Entry
(type-ahead) has been eliminated.
• Students must refer to the Chart of Accounts and
decide for themselves what account is impacted.
I like it because it appears to bridge the gap
between the homework and my exam. • The number of accounts in each transactions is not
given away.
– Lawrence Chui, professor
at University of St. Thomas • Whether the account should be debited or credited
is not given away.
• Transactions may be entered in any order (as long as
the entries are correct).
This will minimize students’ complaints about how the
exam looks different from the homework format. • Check My Work feedback only reports on what students
have actually attempted, which prevents students from
– Rama Ramamurthy, professor
at Georgetown University “guessing” their way through the assignment.

Check it out! Visit cnowv2demo.cengage.com for an interactive demo.

viii

Copyright 2016 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.
 Help Students Make Connections
and See the Big Picture!
Homework software should not get in the way of learning. One of the biggest complaints
students have about online homework is the scrolling, which prevents students from
seeing the big picture and understanding the accounting system. The new Multi-Panel
View addresses this issue and enhances student learning.

Multi-Panel View This is just a lot better and less confusing

The new Multi-Panel View in CengageNOWv2 enables students than scrolling up and down. … Having it
to see all the elements of a problem on one screen. like that would make it much easier
• Students make connections and see the tasks as connected —not so much scrolling and it wouldn’t
components in the accounting process. be so confusing.
• Dramatically reduced scrolling eliminates student frustration. – Tyler Mason, student at Northern
With the ability to move
and resize journals,
Essex Community College
Application
ledgers, forms, and
financial statements, it Multi-Panel View makes it much easier for students to see how each piece
is easier to navigate the of the accounting cycle impacts the other pieces. Having it all in one
problem and understand view reduces student frustration and gives them a clearer picture of the
the accounting system. complete accounting cycle.
– Kristen Quinn, professor at Northern Essex Community College

ix

Copyright 2016 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.
 Close the Gap Between
Homework and Exam Performance!
pplication

Students often complete homework at odd times.

And when they use CengageNOWv2, they get
help right when they need it.

Adaptive Feedback PAGE 1 PAGE 2

Adaptive Feedback in CengageNOWv2 responds JOURNAL Score: 33/138

to students based upon their unique answers DATE DESCRIPTION POST.

REF. DEBIT CREDIT
and alerts them to the type of error they have 1 Jul. 11 Office Equipment 10,000.00 1
made without giving away the answer. 2 Cash 8,000.00 2

A 3 Note Payaable 2,000.00 3

There is a minor spelling error in the account title. You will be graded as if you had 5
PAGE 1 PAGE 2
JOURNAL Score: 33/138
entered “Note Payable.” 6
POST.
DATE DESCRIPTION REF. DEBIT CREDIT
7
1 Jul. 11 Office Equipment 10,000.00 1
Line
2 Cash 8,000.00 2 • The amount for this account is incorrect, although you’ve entered the amount in the 8
3 Note Payaable 2,000.00 3 correct column. [-2] 9
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11

Points: 0.24 / 1

Feedback
Check My Work
Identify which accounts are affected in each transaction. Keep in mind that every transaction involves at least two accounts. Determine
whether the account increases or decreases and record each increase or decrease following the rules of debit and credit. Use the Posting
Reference column to enter the corresponding account number from the general ledger account. Remember total debits should equal total
In addition to groundbreaking, adaptive feedback,
credits in your entries.
CengageNOWv2 continues to provide multiple
Learning Objective 1
layers of guidance to keep students on track and
Learning Objective 2
Learning Objective 3
progressing.
• Check My Work Feedback provides general
guidance and hints as students work through
homework assignments.
I like the adaptive feedback. It will reduce a number of
• NEW Check My Work Feedback in
errors that cause students to give up. CengageNOWv2 now only reports on what
– Kevin Jones, professor at Drexel University students have actually attempted, which
prevents them from “guessing” their way
Excellent! Often learning from feedback is more powerful through assignments.
than learning from the instructor, text, etc. • Explanations are available after the
– Lisa Brown, professor at Indiana Institute of Technology assignment has been submitted and
provide a detailed description of how to
arrive at the solution.

Check it out! Visit cnowv2demo.cengage.com for an interactive demo.

Copyright 2016 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.
 Help Students Make Connections
and See the Big Picture!
The best way to learn accounting is through practice, but students often get stuck when
attempting homework assignments on their own.

Video: Show Me How

Created for the most frequently
assigned end-of-chapter items,
hundreds of NEW Show Me How
problem demonstration videos
provide a step-by-step model of
a similar problem. Embedded tips
and warnings help students avoid
common mistakes and pitfalls.

Identified by an icon in the text margins, Show Me How videos are linked to assignments
in CengageNOWv2 and available for self-study and review.

Blueprint Problems
Blueprint Problems are teaching problems that walk students through
a single accounting topic. These problems cover the primary learning
objectives and are designed to help students understand foundational
content and the associated building blocks versus memorizing the
formulas or journal entries.

Application

Blueprint Problems are assignable/

gradable in CengageNOWv2.
NetSolutions Continuing Case Study
Students follow a fictitious company, NetSolutions, which demonstrates
a rich variety of transactions. The continuity of presentation helps students
master difficult concepts such as the accounting cycle.

xi

Copyright 2016 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.
 Help Students Go Beyond Memorization
to True Understanding!
Students often struggle to understand how concepts relate to one another. For most
students, an introductory accounting course is their first exposure to both business
Mastery

transactions and the accounting system. While these concepts are already difficult to master
individually, their combination and interdependency in the introductory accounting course
often pose a challenge for students.

Dynamic Exhibits
To overcome this gap, the authors have
created a series of interactive Dynamic
Exhibits that allow students to change
the variables in a scenario and see how a
change ripples through the accounting
system. Dynamic Exhibits allow students
to see connections and relationships like
never before!

Identified by an icon in the text, Dynamic Exhibits are embedded within

the MindTap eReader in CengageNOWv2. They are assignable/gradable
in CengageNOWv2 and available for self-study and review.

Blueprint Connections
Blueprint Connections are scenario-based teaching problems that solidify concepts
and demonstrate their interrelationships, as well as promote critical thinking. Blueprint
Connections combine multiple topics, allowing students to explore a larger concept
more fully, and strengthen analytical skills.

Blueprint Connections are assignable/gradable in CengageNOWv2.

xii

Copyright 2016 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.
 Help Students Build Critical Thinking Skills!

Students often resort to memorization as a way to pass the course, but such surface learning
does little to develop the critical thinking skills and deep understanding that are necessary
for success in future business courses.

Activation Exercises
To overcome these challenges, the
authors have created Activation
Exercises to provide a learning
system that focuses on developing a
better understanding of:
• Key terms and definitions
• Economics of
business transactions
• How transactions are recorded
in the accounting system
• How transactions are
ultimately reflected in the
financial statements
The Activation Exercises are assignable/gradable in CengageNOWv2.
These “what if” exercises help students
understand relationships using
interactive tools.

The Activation Exercises structure builds the critical

These exercises are interactive and actually allow thinking skills that are necessary for students to succeed
students to experiment with the data, visually in both introductory accounting and future accounting
viewing the impact when data is altered. The courses. Reviewers have enthusiastically praised the
exercises show not only how a transaction looks in authors’ online activities and indicated that they would
the journal and ledger accounts, but also the impact be both ideal for pre-class activities and after-class
assignments.
it ultimately has on financial statements. Finally,
students are challenged to analyze the overall
impact of a transaction by answering questions
related to the topic. This is an excellent learning tool.
– Rita Mintz, professor at Calhoun Community College
Mastery
Financial Statement Analysis and Interpretation
The Financial Statement Analysis and Interpretation sections, at the end of financial
accounting chapters, help students understand key ratios and how stakeholders
interpret financial reports. These sections encourage students to go deeper into the
material to analyze accounting information and improve critical thinking skills.

xiii

Copyright 2016 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.
 Online Solutions

CengageNOWv2 is a powerful course management and online homework

resource that provides control and customization to optimize the student
learning experience. Included are many proven resources including
algorithmic activities, test bank, course management tools, reporting and
assessment options, and much more.

Recent CengageNOW Enhancements

• Refreshed Design: This refreshed look will help you and your students focus easily
and quickly on what is important, while maintaining the same functionality that
CengageNOW users know and love.
• Integration with Popular Learning Management Systems: Single login, deep linking,
and grade return! (Check with your local Learning Consultant for more details!)
• Upload Files Capability: You can now upload files in CengageNOW for student use—
including videos, Excel files, Word files, and more.
• Email Instructor Feature: Students can now send you a screenshot of the question
they are working on directly through CengageNOW and ask specific questions about
where they are stuck.
• Better Date Management: When modifying assignment due dates for a whole course,
the system will now automatically adjust due dates based on a new start date, making
it easier to reuse a course from one term to the next and adjust for snow days.
• Streamlined Assignment Creation Process: A simplified and streamlined Assignment
Creation process allows instructors to quickly set up and manage assignments
from a single page!
• New Report Options: New reporting options allow you to get better reports on
your students’ progress.
• New Student Registration Process: When you create a course, a URL will be generated
that will automatically take students right into the instructor’s course without them
having to enter the course key!

xiv

Copyright 2016 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.
MindTap eReader
The MindTap eReader for Warren/Reeve/
Duchac’s Accounting is the most robust
digital reading experience available.
Hallmark features include:
• Fully optimized for the iPad.
• Note taking, highlighting, and more.
• Embedded digital media such as
Dynamic Exhibits.
The MindTap eReader also features
ReadSpeaker®, an online text-to-speech
application that vocalizes, or “speech-
enables,” online educational content. This
feature is ideally suited for both instructors
and learners who would like to listen
to content instead of (or in addition to)
reading it.

Cengage Learning
General Ledger Software (CLGL)
CLGL exposes students to computerized
accounting software without teaching the
specifics of a certain software system—
preparing students for any software program
they might encounter in the real world.
• Now available in CengageNOWv2,
CLGL allows students to work through
end-of-chapter assignments and practice
sets in a format that emulates commercial
general ledger software, but in a manner
that is more forgiving of errors.
• Assignments are automatically
graded online.
• Selected problems that can be solved
using CLGL are designated by an icon
in the textbook and are listed in the
assignment preparation grid in the
Instructor’s Manual.

xv

Copyright 2016 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.
 New to This Edition
In addition to the many new digital assets created for this Chapter 6
edition of Accounting, the textbook content itself has also
been revised. The most significant changes for this edi- • Updated the Sales Discounts and Sales Returns and
Allowances discussion for accuracy with the new
tion involve the inclusion of the new revenue recognition revenue recognition standard
standard and a greater emphasis on service companies in
the managerial accounting chapters. Chapter 10
In all chapters, the following improvements have been • New chapter opener on McDonald’s
made:
Chapter 11
• Updated dates and real company information for currency • New chapter opener on Starbucks
• Added headers and sub-headers to help students navi- • Updated Exhibit 3 to reflect current wage withholding rates
gate through the chapter and easily reference sections
when completing homework assignments Chapter 12
• Set unlabeled graphics as numbered exhibits for easier • New chapter opener on the Boston Celtics
student reference
Chapter 14
• Used more bulleted lists to call students’ attention to
specific information • Updated learning objective 1 to more clearly explain
alternatives in financing corporations
• Refreshed end-of-chapter assignments with different
numerical values and updated information Chapter 15
The new revenue recognition standard required the • New chapter opener on The Coca-Cola Company
following changes: • Significantly streamlined learning objective 5
• Revised the definitions of revenue and revenue • New Business Connection on cash and investments in
r­ecognition in Chapters 1–3, including the glossary. the pharmaceutical industry
These revisions are consistent with the new revenue Chapter 16
recognition standard, Revenue from Contracts with
Customers (Topic 606), FASB, May 2014. • New chapter opener on National Beverage Co.
• Revised Chapter 6, Accounting for Merchandising • Updated Exhibit 1 to more clearly detail specific
Businesses, to be consistent with the preceding examples of sources and uses of cash
­standard. These revisions include using the net method Chapter 18
for all purchase and sales discounts. In addition, the
accounting for customer returns and allowances,
­ • New exhibit with income statements for merchandising
and manufacturing businesses
­including cash refunds, has been updated. As a result,
sales discounts and sales return and allowances Chapter 19
­accounts are no longer used. • New Service Focus on job order costing in a law firm
• Added new Appendix E, Revenue Recognition, which Chapter 21
describes and illustrates the new Five-Step process
for recognizing revenue. The illustration includes • New chapter opener on Ford Motor Company
the ­accounting for a bundled product with different Chapter 22
­performance obligations.
• New chapter opener on Hendrick Motorsport
Chapter 1
• New Service Focus on film budgeting
• New Business Connection includes The Pathways • Updated two learning objectives to reflect the differ-
Commission definition of accounting ences between operating and financial budgets
Chapter 2 • New Exhibit 7 on the master budget for a manufactur-
ing company
• New Business Connection on Microsoft’s unearned
revenue Chapter 23
Chapter 3 • New Business Connection on standard costing for
• New chapter opener on Pandora breweries
• Revised introduction to revenue recognition • New Service Focus on standard costing in the restau-
rant industry
• New Business Connection on Microsoft dealing with
unearned revenue for support services Chapter 24
Chapter 4 • New Service Focus on Charles Schwab
• New chapter opener on Zynga Chapter 26
• Updated exposition of Appendix 1 showing end-of- • New chapter opener on Vail Resorts, Inc.
period spreadsheet usage • New Service Focus on network business models
xvi

Copyright 2016 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.
 Instructor Resources

Solutions Manual Handouts (with solutions) are also included. Quickly

Author-written and carefully verified multiple times identify the assignments that best align with your
to ensure accuracy and consistency with the text, the course with the assignment preparation grid that
Solutions Manual contains answers to the Discussion includes information about learning objective coverage,
Questions, Practice Exercises, Exercises, Problems (Series difficulty level and Bloom’s taxonomy categorization,
A and Series B), Cases, and Continuing Problems that time estimates, and accrediting standard alignment for
appear in the text. These solutions help you easily plan, business programs, AICPA, ACBSP, and IMA.
assign, and efficiently grade assignments.
PowerPoint Slides Bring your lectures to life with
Test Bank slides designed to clarify difficult concepts for your
students. The lecture PowerPoints include key terms
NEW for this edition, Test Bank content is now delivered
and definitions, equations, examples, exhibits, and all
in an online platform. Cengage Learning Testing
Example Exercises (with solutions) from the textbook.
Powered by Cognero is a flexible, online system that
allows you to: • NEW for this edition, descriptions for all graphics
in the PowerPoints have been added to enhance
• Author, edit, and manage test bank content from
PowerPoint usability for students with disabilities.
multiple Cengage Learning solutions
• Two separate PowerPoint decks that include just
• Create multiple test versions in an instant
the Example Exercises (and solutions) and just the
• Deliver tests from your LMS, your classroom, Exhibits from the textbook are ideal for instructors
or wherever you want that create their own PowerPoint decks and just
Also NEW for this edition, 100 new Test Bank questions want to refresh them.
have been added (in addition to revising numeric values
for approximately 20% of the existing questions). Excel Template Solutions Excel Templates
are provided for selected long or complicated
Companion Website end-of-chapter exercises and problems to
assist the student as they set up and work the
This robust companion website provides immediate
problem. Certain cells are coded to display a
access to a rich array of teaching and learning
red asterisk when an incorrect answer is entered, which
resources–including the Instructor’s Manual, PowerPoint
helps students stay on track. Selected problems that
slides, and Excel Template Solutions. Easily download
can be solved using these templates are designated by
the instructor resources you need from the password-
an icon in the textbook and are listed in the assignment
protected, instructor-only section of the site.
preparation grid in the Instructor’s Manual. The Excel
Template Solutions provide answers to these templates.
Instructor’s Manual Discover new ways to engage
NEW for this edition, 10 more Excel Templates have been
your students by utilizing the Instructor’s Manual ideas
added.
for class discussion, group learning activities, writing
exercises, and Internet activities. Moreover, simplify
Practice Set Solutions Establish a fundamental
class preparation by reviewing a brief summary of
understanding of the accounting cycle for your students
each chapter, a detailed chapter synopsis (NEW for this
with Practice Sets, which require students to complete
edition), teaching tips regarding a suggested approach
one month of transactions for a fictional company.
to the material, questions students frequently ask in the
Brief descriptions of each Practice Set are provided
classroom, lecture aids, and demonstration problems
in the Table of Contents. The Practice Set Solutions
in the Instructor’s Manual. Transparency Masters and
provide answers to these practice sets.

xvii

Copyright 2016 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.
 Student Resources

Study Guide
Now available free in CengageNOWv2, the Study Guide allows students to easily assess
what they know with a “Do You Know” checklist covering the key points in each chapter.
To further test their comprehension, students can work through Practice Exercises, which
include a “strategy” hint and solution so they can continue to practice applying key
accounting concepts.

Working Papers
Now available free in CengageNOWv2, students will find the tools they need to help
work through end-of-chapter assignments with these working papers. The preformatted
templates provide a starting point by giving students a basic structure for problems and
journal entries. Working Papers are also available in a printed format as a bundle option.

Practice Sets
For more in-depth application of accounting practices, instructors may choose from among
six different Practice Sets for long-term assignments. Each Practice Set requires students to
complete one month of transactions for a fictional company. Practice Sets can be solved
manually or with the Cengage Learning General Ledger software.

Website
Designed specifically for your students’ accounting needs, this website features student
PowerPoint slides, Excel Templates, learning games, and flashcards.
• PowerPoint Slides: Students can easily take notes or review difficult concepts with the
student version of this edition’s PowerPoint slides.
• Excel Templates: These Excel Templates help students stay on track. If students
enter an incorrect answer in certain cells, a red asterisk will appear to let them know
something is wrong. Problems that can be solved using these templates are designated
by an icon.
• Crossword Puzzles: Students can focus on learning the key terms and definitions for
each chapter in a different way by completing these crossword puzzles.
• Flashcards: Students can prepare with these flashcards, which cover the key terms and
definitions they need to know for each chapter.

xviii

Copyright 2016 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.
 Acknowledgements

The many enhancements to this edition of Accounting are the direct result of one-on-one interviews, sur-
veys, reviews, WebExes, and focus groups with over 300 instructors and students at institutions across the
country over the past two years. We would like to take this opportunity to thank those who helped us
better understand the challenges of the principles of accounting course and provided valuable feedback on
our content and digital assets.
Instructors: Colleen Chung, Miami Dade College Gary Bower, Community College of
Aaron Pennington, York College of Cynthia Bolt, The Citadel Rhode Island
Pennsylvania Cynthia J. Miller, University of Geoffrey D. Bartlett, Drake University
Adam Myers, Texas A&M University Kentucky Gerald Smith, University of Northern
Aileen Huang, Santa Monica College Cynthia Johnson, University of Iowa
Ajay Maindiratta, New York University Arkansas at Little Rock Glenn (Mel) McQueary, Houston
Alex Gialanella, Manhattanville College Darlene Schnuck, Waukesha County Community College
Andrea Murowski, Brookdale Technical College Gloria Grayless, Sam Houston State
Community College Dave Alldredge, Salt Lake Community University
Angelo Luciano, Columbia College, College Greg Lauer, North Iowa Area
Chicago David Centers, Grand Valley State Community College
Ann Gervais, Springfield Technical University Gregory Brookins, Santa Monica
Comm College David E. Laurel, South Texas College
Ann Gregory, South Plains College College Harold Little, Western Kentucky
Anna Boulware, St. Charles Dawn Lopez, Johnson & Wales University
Community College University Jacqueline Burke, Hofstra University
Anne Marie Anderson, Raritan Valley Dawn Peters, Southwestern Illinois James Lock, Northern Virginia
Community College College Community College
April Poe, University of the Incarnate Dawn W. Stevens, Northwest James M. Emig, Villanova University
Word Mississippi Community College James Webb, University of the Pacific
Barbara Kren, Marquette University Debbie Adkins, Remington College Jamie O’Brien, South Dakota State
Bea Chiang, The College of New Online University
Jersey Debbie Luna, El Paso Community Jan Barton, Emory University
Becky Hancock, El Paso Community College Jana Hosmer, Blue Ridge Community
College Debbie Rose, Northeast Wisconsin College
Brenda McVey, Green River Technical College Janice Akeo, Butler Community College
Community College Debora Constable, Georgia Perimeter Jeanette Milius, Iowa Western
Bruce England, Massasoit Community College Community College
College Denise Teixeira, Chemeketa Jeff Varblow, College of Lake County
Bruce L. Darling, University of Oregon Community College
Jeffrey T. Kunz, Carroll University
Bruce Leung, City College of San Don Curfman, McHenry County
Jennifer LeSure, Ivy Tech Community
Francisco College
College
Carol Dickerson, Chaffey College Dori Danko, Grand Valley State
Jennifer Mack, Lindenwood University
University
Carol Graham, The University of San Jennifer Schneider, University of
Francisco Dorothy Davis, University of
North Georgia
Louisiana, Monroe
Cassandra H. Catlett, Carson Newman Jennifer Spring Sneed, Arkansas State
University Edwin Pagan, Passaic County
University-Newport
Community College
Cecile Roberti, Community College of Jenny Resnick, Santa Monica College
Rhode Island Elizabeth Ammann, Lindenwood
University Jill Mitchell, Northern Virginia
Charles J.F. Leflar, University of Community College
Arkansas Emmanuel Danso, Palm Beach State
College Jim Shelton, Harding University
Charles Lewis, Houston Community Joel Strong, St. Cloud State University
College Ercan Sinmaz, Houston Community
College Johh G. Ahmad, Northern Virginia
Chris Kinney, Mount Wachusett Community College
Community College Eric Blazer, Millersville
University John Babich, Kankakee Community
Chris McNamara, Finger Lakes College
Community College Erik Lindquist, Lansing Community
College John Nader, Davenport
Christopher Ashley, Everest College University
Esther S. Bunn, Stephen F Austin
Christopher Demaline, Central State University John Seilo, Irvine Valley College
Arizona College John Verani, White Mountains
Felicia R. Baldwin, Richard J. Daley
Cindy Bleasdal, Hilbert College College Community College
xix

Copyright 2016 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.
xx Acknowledgements

Johnna Murray, University of Lori Johnson, Minnesota State Patricia Walczak, Lansing Community
Missouri-St. Louis University Moorhead College
Joseph M. Nicassio, Westmoreland Louann Hofheins Cummings, The Patricia Worsham, Norco College
County Community College University of Findlay Patrick Rogan, Cosumnes River
Judith A. Toland, Bucks County Lucile Faurel, University of California College
Community College Irvine Perry Sellers, Lone Star College System
Judith Zander, Grossmont College Lynn Almond, Virginia Tech Rachel Pernia, Essex County College
Judy Patrick, Minnesota State Com- Lynn K. Saubert, Radford University Rebecca Grava Davis, East Mississippi
munity and Technical College Lynn Krausse, Bakersfield College Community College
Judy Smith, Parkland College Machiavelli W. Chao, University of Rebecca Hancock, El Paso
Julia M. Camp, Providence College California, Irvine Community College
Julie Dawson, Carthage College Magan Calhoun, Austin Peay State Richard Lau, California State
Julie Miller Millmann, Chippewa University University, Los Angeles
Valley Technical College Marcela Raphael, Chippewa Valley Richard Mandau, Piedmont Technical
Karen C. Elsom, Fayetteville Technical College College
Technical Community College Marci Butterfield, University of Utah Rick Andrews, Sinclair Community
Katherine Sue Hewitrt, Klamath Marianne James, California State College
Community College University, Los Angeles Rick Rinetti, Los Angeles City College
Katy Long, Hill College Marie Saunders, Dakota County Rita Mintz, Calhoun Community
Keith Hallmark, Calhoun Community Technical College College
College Marilyn Stansbury, Calvin College Robert A. Pacheco, Massasoit
Kevin McNelis, New Mexico State Marina Grau, Houston Community Community College
University College Robert Almon, South Texas College
Kimberly Franklin, St. Louis Martin Hart, Manchester Comm College Robert E. (Reb) Beatty, Anne Arundel
Community College Mary Zenner, College of Lake County Community College
Kirk Canzano, Long Beach City College Meg Costello Lambert, Oakland Robert Foster, Los Angeles Pierce
Kristen Quinn, Northern Essex Community College College
Community College Merrily Hoffman, San Jacinto College Robert Urell, Irvine Valley College
La Vonda Ramey, Schoolcraft College Michael G. Schaefer, Blinn College Robin D’Agati, Palm Beach State
Lana Tuss, Chemeketa Community Michael Goeken, Northwest Vista College
College College Ron O’Brien, Fayetteville Technical
Larry G. Stephens, Austin Community Michael Gurevitz, Montgomery College Community College
College Michael J. Gallagher, DeSales Roy Carson, Anne Arundel Commu-
Lawrence A. Roman, Cuyahoga University nity College
Community College Michael Lawrence, Mt. Hood Ryan Smith, Columbia College
Lawrence Chui, University of St. Community College Sandra Cohen, Columbia College
Thomas Michael P. Dole, Marquette University Chicago
Leah Arrington, Northwest Mississippi Michael P. Prockton, Finger Lakes Sara Barritt, Northeast Community
Community College Community College College
Leah Russell, Holyoke Community Michele Martinez, Hillsborough Saturnino (Nino) Gonzalez, El Paso
College Community College Community College
Lee Smart, Southwest Tennessee Michelle Moshier, University at Albany Shani N. Robinson, Sam Houston
Community College State University
Ming Lu, Santa Monica College
Len Heritage, Tacoma Community Sharif Soussi, Charter Oak State
Mon Sellers, Lone Star College-North
College College
Harris
Leonard Cronin, University Center Sharon Agee, Rollins College
Nancy Emerson, North Dakota State
Rochester Sheila Ammons, Austin Community
University
Linda Christiansen, Indiana University College
Nancy L. Snow, University of Toledo
Southeast Sheila Guillot, Lamar State
Nino Gonzalez, El Paso Community
Linda H. Tarrago, Hillsborough College-Port Arthur
College
Community College Sol. Ahiarah, SUNY Buffalo State
Noel McKeon, Florida State College
Linda Miller, Northeast Community Stacy Kline, Drexel University
at Jacksonville
College Stani Kantcheva, Cincinnati State
Odessa Jordan, Calhoun Community
Linda Muren, Cuyahoga Community Technical and Community
College
College College
Pam Meyer, University of Louisiana
Linda Tarrago, Hillsborough Steven J. LaFave, Augsburg College
at Lafayette
Community College Sue Cunningham, Rowan Cabarrus
Pamela Knight, Columbus
Lisa Busto, William Rainey Harper Community College
Technical College
College Suneel Maheshwari, Marshall
Patricia Doherty, Boston University
Lisa Novak, Mott Community College University
School of Management
Lori A. Grady, Bucks County Susan Cordes, Johnson County
Community College Community College

Copyright 2016 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.
 Acknowledgements xxi

Suzanne Laudadio, Durham Technical Terri Walsh, Seminole State Timothy J. Moran, Aurora University
Community College College Timothy Swenson, Sullivan University
Sy Pearlman, California State Thane Butt, Champlain College Tony Cioffi, Lorain County
University, Long Beach Thomas Branton, Alvin Community Community College
Tara Laken, Joliet Junior College College W. Jeff Knight, Flagler College
Taylor Klett, Sam Houston State Tim Green, North Georgia Technical Wanda Wong, Chabot College
University College
Teresa Thompson, Chaffey Timothy Griffin, Hillsborough
Community College Community College

Students: Diana Contreras, Joliet Junior College Marah Jammal, Henry Ford
Allison Seaman, University of Findlay Dolores Velasquez, Ivy Tech Community College
Amber Bostick, Joliet Junior College Community College Marshall Miller, Valparaiso University
Amelia Lupis, Community College of Eleticia Feliciano, Henry Ford Matthew Vizzaccaro, Henry Ford
Rhode Island Community College Community College
Andrew Buckley, Community Eli Coulton, Sinclair Community Mayra Vargas, Austin Community
College of Rhode Island College College
Andrew Mancini, Valparaiso Emilie Ferdelman, Sinclair Meghan Traster, Ivy Tech Community
University Community College College
Anita Jordan, Henry Ford Community Geoffrey Hlavach, Joliet Junior College M. Lallier, Community College of
College Jayme Thornley, Community Rhode Island
Billie Ma, Middlesex County College College of Rhode Island Michael L. Bardey, Sinclair
Blair Ericksen, The University of Jessie Laberge, Community College of Community College
Findlay Rhode Island Min Dou, Valparaiso University
Bonnie Eme, Ivy Tech Community Joel Mondragon, Austin Community Nicholas Johnson, Ivy Tech
College College Community College
Bradley “The Snowman” Koepke, Jonathan Balsavich, Joliet Junior Nick L., Holyoke
Valparaiso University College Community College
Briana E Garrity, Community College Jose Nieto, Austin Community Nicholas Oliveira, Community College
of Rhode Island College of Rhode island
Brittany Smothers, Ivy Tech J. Stoll, The University of Findlay Rachel Brown, Sinclair Community
Community College Karolina Tovpenec, The University of College
Carly Butler, Sinclair Community Findlay Ramona Hawkins, Ivy Tech
College Kathryn Shaw, Ivy Tech Community Community College
Carmen Macvicar, Henry Ford College Ryan Dvorak, Joliet Junior College
Community College Kaylene Slayton, The University of Ryan Truschke, Grand Valley State
Cassie Skal, University of Findlay Findlay University
Charlene Resch, Ivy Tech Kevin McMaster, Community College S.J. Cross, Ivy Tech Community College
Community College of Rhode island Scott Nicol, Joliet Junior College
Cheila Soares, Community College of Khadija Brikate, Erie Community Sean Bingham, The University of
Rhode Island College Findlay
Christopher W. Gregory, Fayetteville Kimberlee Serrano, Middlesex County Sheila Diodonet, Holyoke Community
Technical Community College College College
Colby Zachary, Austin Community Kimberly Arruda, Community College Stephanie Theresa Plante, Community
College of Rhode Island College of Rhode Island
Courtney Murphy, Sinclair Krista Jalette, Community College of Tasha Finley, Ivy Tech Community
Community College Rhode Island College
Daniel Hart, Ivy Tech Community Leslie Bryant, Henry Ford Community Trang Thi Vu, The University of
College College Findlay
David Camargo, Fayetteville Luke Fleming, Ivy Tech Community Tyler Philbin, Community College of
Technical Community College College Rhode Island
Debborah Gideon, Ivy Tech Malorie Masek, Valparaiso William Carter, The University of
Community College University Findlay

Copyright 2016 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.
 About the Authors

Carl S. Warren
Dr. Carl S. Warren is Professor Emeritus of Accounting at the University of Georgia, Athens.
Terry R. Spray InHisImage Studios

Dr. Warren has taught classes at the University of Georgia, University of Iowa, Michigan
State University, and University of Chicago. Professor Warren focused his teaching efforts
on principles of accounting and auditing. He received his Ph.D. from Michigan State
University and his B.B.A. and M.A. from the University of Iowa. During his career,
Dr. Warren published numerous articles in professional journals, including The Accounting
Review, Journal of Accounting Research, Journal of Accountancy, The CPA Journal, and
Auditing: A Journal of Practice & Theory. Dr. Warren has served on numerous commit-
tees of the American Accounting Association, the American Institute of Certified Public
Accountants, and the Institute of Internal Auditors. He has also consulted with numerous
companies and public accounting firms. Professor Warren is an avid handball player and
has played in the World Handball Championships in Portland, Oregon, and Dublin, Ireland.
He enjoys backpacking and recently took an eleven-day, ten-night trip in the Thorofare area
of Yellowstone National Park. He has rafted the Grand Canyon and backpacked rim-to-rim.
Professor Warren also enjoys fly fishing, skiing, golfing, and motorcycling.

James M. Reeve
Dr. James M. Reeve is Professor Emeritus of Accounting and Information Management
Charles J. Garvey III / Garvey Photography

at the University of Tennessee. Professor Reeve taught on the accounting faculty for
25 years, after graduating with his Ph.D. from Oklahoma State University. His teaching
efforts focused on undergraduate accounting principles and graduate education in the
Master of Accountancy and Senior Executive MBA programs. Beyond this, Professor
Reeve is also very active in the Supply Chain Certification program, which is a major
executive education and research effort of the College. His research interests are varied
and include work in managerial accounting, supply chain management, lean manufac-
turing, and information management. He has published over 40 articles in academic
and professional journals, including the Journal of Cost Management, Journal of Man-
agement Accounting Research, Accounting Review, Management Accounting Quarterly,
Supply Chain Management Review, and Accounting Horizons. He has consulted or
provided training around the world for a wide variety of organizations, including Boe-
ing, Procter & Gamble, Norfolk Southern, Hershey Foods, Coca-Cola, and Sony. When
not writing books, Professor Reeve plays golf and is involved in faith-based activities.

Jonathan Duchac
Dr. Jonathan Duchac is the Merrill Lynch and Co. Professor of Accounting and Director
of International Programs at Wake Forest University. He holds a joint appointment at the
Vienna University of Business and Economics in Vienna, Austria. Dr. Duchac currently
teaches introductory and advanced courses in financial accounting and has received a num-
ber of awards during his career, including the Wake Forest University Outstanding Graduate
Professor Award, the T.B. Rose Award for Instructional Innovation, and the University of
Georgia Outstanding Teaching Assistant Award. In addition to his teaching responsibilities,
Dr. Duchac has served as Accounting Advisor to Merrill Lynch Equity Research, where he
© Ken Bennett

worked with research analysts in reviewing and evaluating the financial reporting prac-
tices of public companies. He has testified before the U.S. House of Representatives, the
Financial Accounting Standards Board, and the Securities and Exchange Commission and
has worked with a number of major public companies on financial reporting and account-
ing policy issues. In addition to his professional interests, Dr. Duchac has served on the
Board of Directors of The Special Children’s School of Winston-Salem, a private, nonprofit
developmental day school serving children with special needs. Dr. Duchac is an avid long-
distance runner, mountain biker, and snow skier. His recent events include the Grandfather
Mountain Marathon, the Black Mountain Marathon, the Shut-In Ridge Trail run, and NO
MAAM (Nocturnal Overnight Mountain Bike Assault on Mount Mitchell).
xxii

Copyright 2016 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.
 Brief Contents

Chapter 1 Introduction to Accounting and Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Chapter 2 Analyzing Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Chapter 3 The Adjusting Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Chapter 4 Completing the Accounting Cycle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Chapter 5 Accounting Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
Chapter 6 Accounting for Merchandising Businesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263
Chapter 7 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
Chapter 8 Sarbanes-Oxley, Internal Control, and Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369
Chapter 9 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415
Chapter 10 Fixed Assets and Intangible Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459
Chapter 11 Current Liabilities and Payroll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
Chapter 12 Accounting for Partnerships and Limited Liability Companies. . . . . . . . . . . . . . . . . . . . . 551
Chapter 13 Corporations: Organization, Stock Transactions, and Dividends. . . . . . . . . . . . . . . . . . . . 595
Chapter 14 Long-Term Liabilities: Bonds and Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 641
Chapter 15 Investments and Fair Value Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 683
Chapter 16 Statement of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739
Chapter 17 Financial Statement Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 795
Chapter 18 Managerial Accounting Concepts and Principles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 849
Chapter 19 Job Order Costing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 887
Chapter 20 Process Cost Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 929
Chapter 21 Cost Behavior and Cost-Volume-Profit Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 979
Chapter 22 Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1029
Chapter 23 Performance Evaluation Using Variances from Standard Costs. . . . . . . . . . . . . . . . . . . . . 1077
Chapter 24 Performance Evaluation for Decentralized Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1123
Chapter 25 Differential Analysis, Product Pricing, and Activity-Based Costing. . . . . . . . . . . . . . . . . . 1165
Chapter 26 Capital Investment Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1217
Appendix A Interest Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2
Appendix B Reversing Entries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Appendix C Nike Inc., Form 10-K For the Fiscal Year Ended May 31, 2013. . . . . . . . . . . . . . . . . . . . . . C-1
Appendix D International Financial Reporting Standards (IFRS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
Appendix E Revenue Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

xxiii

Copyright 2016 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.
Another random document with
no related content on Scribd:
as in the original. Some translations are poor or incorrect but have been retained as in the
original, except as noted in the list below.
The corrections listed in the Errata have been made except where the Errata entry is itself
incorrect. Other obvious printer or spelling errors have been corrected without note.
Archaic English and Scottish spellings have been retained as in the original.
The following substantive errors have been retained as in the original:
p. 13, maxim 7 - "not valid" should be "valid."
p. 18, maxim 5 - "Catella" should be "Catalla"; "A little whelp, (perhaps cattle)" should be
"Chattels."
p. 21, maxim 7 - "Condictio" should be "Conditio"; "The appointment of an action for a
certain day" should be "A condition."
p. 22, maxim 2 - "Condictio præcedens" should be "Conditio præcedens"; "The
appointment of an action preceding" should be "The fulfillment of a condition precedent."
p. 29, maxim 8 - "lex volentes" should be "lex nolentes"; "law draws those who are willing"
should be "law draws those who are unwilling."
p. 54, maxim 5 - The Errata indicate that "three witnesses may be brought" should be in
the translation, but that is not supported by the Latin, which is correct as is and says
nothing about witnesses.
p. 62, maxim 7 - "est alleganda" should be "non est allegenda"; "to be alleged" should be
"not to be alleged."
p. 80, maxim 3 - "casis" should be "cassis"; the translation should be "Law is the safest
helmet."
p. 139, maxim 2 - The Latin maxim should read, "Quemadmodum ad quæstionem facti
non respondent judices, ita ad quæstionem juris non respondent juratores"; the
translation should read, "As judges do not answer to questions of fact, jurors do not
answer to questions of law."
p. 151, maxim 3 - The Errata entry, "consensus," does not appear in the text of this
maxim.
*** END OF THE PROJECT GUTENBERG EBOOK A COLLECTION
OF LATIN MAXIMS & RULES, IN LAW AND EQUITY ***

Updated editions will replace the previous one—the old editions will
be renamed.

Creating the works from print editions not protected by U.S.

copyright law means that no one owns a United States copyright in
these works, so the Foundation (and you!) can copy and distribute it
in the United States without permission and without paying copyright
royalties. Special rules, set forth in the General Terms of Use part of
this license, apply to copying and distributing Project Gutenberg™
electronic works to protect the PROJECT GUTENBERG™ concept
and trademark. Project Gutenberg is a registered trademark, and
may not be used if you charge for an eBook, except by following the
terms of the trademark license, including paying royalties for use of
the Project Gutenberg trademark. If you do not charge anything for
copies of this eBook, complying with the trademark license is very
easy. You may use this eBook for nearly any purpose such as
creation of derivative works, reports, performances and research.
Project Gutenberg eBooks may be modified and printed and given
away—you may do practically ANYTHING in the United States with
eBooks not protected by U.S. copyright law. Redistribution is subject
to the trademark license, especially commercial redistribution.

START: FULL LICENSE

THE FULL PROJECT GUTENBERG LICENSE
 PLEASE READ THIS BEFORE YOU DISTRIBUTE OR USE THIS WORK

To protect the Project Gutenberg™ mission of promoting the free

distribution of electronic works, by using or distributing this work (or
any other work associated in any way with the phrase “Project
Gutenberg”), you agree to comply with all the terms of the Full
Project Gutenberg™ License available with this file or online at
www.gutenberg.org/license.

Section 1. General Terms of Use and

Redistributing Project Gutenberg™
electronic works
1.A. By reading or using any part of this Project Gutenberg™
electronic work, you indicate that you have read, understand, agree
to and accept all the terms of this license and intellectual property
(trademark/copyright) agreement. If you do not agree to abide by all
the terms of this agreement, you must cease using and return or
destroy all copies of Project Gutenberg™ electronic works in your
possession. If you paid a fee for obtaining a copy of or access to a
Project Gutenberg™ electronic work and you do not agree to be
bound by the terms of this agreement, you may obtain a refund from
the person or entity to whom you paid the fee as set forth in
paragraph 1.E.8.

1.B. “Project Gutenberg” is a registered trademark. It may only be

used on or associated in any way with an electronic work by people
who agree to be bound by the terms of this agreement. There are a
few things that you can do with most Project Gutenberg™ electronic
works even without complying with the full terms of this agreement.
See paragraph 1.C below. There are a lot of things you can do with
Project Gutenberg™ electronic works if you follow the terms of this
agreement and help preserve free future access to Project
Gutenberg™ electronic works. See paragraph 1.E below.
1.C. The Project Gutenberg Literary Archive Foundation (“the
Foundation” or PGLAF), owns a compilation copyright in the
collection of Project Gutenberg™ electronic works. Nearly all the
individual works in the collection are in the public domain in the
United States. If an individual work is unprotected by copyright law in
the United States and you are located in the United States, we do
not claim a right to prevent you from copying, distributing,
performing, displaying or creating derivative works based on the
work as long as all references to Project Gutenberg are removed. Of
course, we hope that you will support the Project Gutenberg™
mission of promoting free access to electronic works by freely
sharing Project Gutenberg™ works in compliance with the terms of
this agreement for keeping the Project Gutenberg™ name
associated with the work. You can easily comply with the terms of
this agreement by keeping this work in the same format with its
attached full Project Gutenberg™ License when you share it without
charge with others.

1.D. The copyright laws of the place where you are located also
govern what you can do with this work. Copyright laws in most
countries are in a constant state of change. If you are outside the
United States, check the laws of your country in addition to the terms
of this agreement before downloading, copying, displaying,
performing, distributing or creating derivative works based on this
work or any other Project Gutenberg™ work. The Foundation makes
no representations concerning the copyright status of any work in
any country other than the United States.

1.E. Unless you have removed all references to Project Gutenberg:

1.E.1. The following sentence, with active links to, or other

immediate access to, the full Project Gutenberg™ License must
appear prominently whenever any copy of a Project Gutenberg™
work (any work on which the phrase “Project Gutenberg” appears, or
with which the phrase “Project Gutenberg” is associated) is
accessed, displayed, performed, viewed, copied or distributed:
 This eBook is for the use of anyone anywhere in the United
States and most other parts of the world at no cost and with
almost no restrictions whatsoever. You may copy it, give it away
or re-use it under the terms of the Project Gutenberg License
included with this eBook or online at www.gutenberg.org. If you
are not located in the United States, you will have to check the
laws of the country where you are located before using this
eBook.

1.E.2. If an individual Project Gutenberg™ electronic work is derived

from texts not protected by U.S. copyright law (does not contain a
notice indicating that it is posted with permission of the copyright
holder), the work can be copied and distributed to anyone in the
United States without paying any fees or charges. If you are
redistributing or providing access to a work with the phrase “Project
Gutenberg” associated with or appearing on the work, you must
comply either with the requirements of paragraphs 1.E.1 through
1.E.7 or obtain permission for the use of the work and the Project
Gutenberg™ trademark as set forth in paragraphs 1.E.8 or 1.E.9.

1.E.3. If an individual Project Gutenberg™ electronic work is posted

with the permission of the copyright holder, your use and distribution
must comply with both paragraphs 1.E.1 through 1.E.7 and any
additional terms imposed by the copyright holder. Additional terms
will be linked to the Project Gutenberg™ License for all works posted
with the permission of the copyright holder found at the beginning of
this work.

1.E.4. Do not unlink or detach or remove the full Project

Gutenberg™ License terms from this work, or any files containing a
part of this work or any other work associated with Project
Gutenberg™.

1.E.5. Do not copy, display, perform, distribute or redistribute this

electronic work, or any part of this electronic work, without
prominently displaying the sentence set forth in paragraph 1.E.1 with
active links or immediate access to the full terms of the Project
Gutenberg™ License.
1.E.6. You may convert to and distribute this work in any binary,
compressed, marked up, nonproprietary or proprietary form,
including any word processing or hypertext form. However, if you
provide access to or distribute copies of a Project Gutenberg™ work
in a format other than “Plain Vanilla ASCII” or other format used in
the official version posted on the official Project Gutenberg™ website
(www.gutenberg.org), you must, at no additional cost, fee or expense
to the user, provide a copy, a means of exporting a copy, or a means
of obtaining a copy upon request, of the work in its original “Plain
Vanilla ASCII” or other form. Any alternate format must include the
full Project Gutenberg™ License as specified in paragraph 1.E.1.

1.E.7. Do not charge a fee for access to, viewing, displaying,

performing, copying or distributing any Project Gutenberg™ works
unless you comply with paragraph 1.E.8 or 1.E.9.

1.E.8. You may charge a reasonable fee for copies of or providing

access to or distributing Project Gutenberg™ electronic works
provided that:

• You pay a royalty fee of 20% of the gross profits you derive from
the use of Project Gutenberg™ works calculated using the
method you already use to calculate your applicable taxes. The
fee is owed to the owner of the Project Gutenberg™ trademark,
but he has agreed to donate royalties under this paragraph to
the Project Gutenberg Literary Archive Foundation. Royalty
payments must be paid within 60 days following each date on
which you prepare (or are legally required to prepare) your
periodic tax returns. Royalty payments should be clearly marked
as such and sent to the Project Gutenberg Literary Archive
Foundation at the address specified in Section 4, “Information
about donations to the Project Gutenberg Literary Archive
Foundation.”

• You provide a full refund of any money paid by a user who

notifies you in writing (or by e-mail) within 30 days of receipt that
s/he does not agree to the terms of the full Project Gutenberg™
License. You must require such a user to return or destroy all
 copies of the works possessed in a physical medium and
discontinue all use of and all access to other copies of Project
Gutenberg™ works.

• You provide, in accordance with paragraph 1.F.3, a full refund of

any money paid for a work or a replacement copy, if a defect in
the electronic work is discovered and reported to you within 90
days of receipt of the work.

• You comply with all other terms of this agreement for free
distribution of Project Gutenberg™ works.

1.E.9. If you wish to charge a fee or distribute a Project Gutenberg™

electronic work or group of works on different terms than are set
forth in this agreement, you must obtain permission in writing from
the Project Gutenberg Literary Archive Foundation, the manager of
the Project Gutenberg™ trademark. Contact the Foundation as set
forth in Section 3 below.

1.F.

1.F.1. Project Gutenberg volunteers and employees expend

considerable effort to identify, do copyright research on, transcribe
and proofread works not protected by U.S. copyright law in creating
the Project Gutenberg™ collection. Despite these efforts, Project
Gutenberg™ electronic works, and the medium on which they may
be stored, may contain “Defects,” such as, but not limited to,
incomplete, inaccurate or corrupt data, transcription errors, a
copyright or other intellectual property infringement, a defective or
damaged disk or other medium, a computer virus, or computer
codes that damage or cannot be read by your equipment.

1.F.2. LIMITED WARRANTY, DISCLAIMER OF DAMAGES - Except

for the “Right of Replacement or Refund” described in paragraph
1.F.3, the Project Gutenberg Literary Archive Foundation, the owner
of the Project Gutenberg™ trademark, and any other party
distributing a Project Gutenberg™ electronic work under this
agreement, disclaim all liability to you for damages, costs and
expenses, including legal fees. YOU AGREE THAT YOU HAVE NO
REMEDIES FOR NEGLIGENCE, STRICT LIABILITY, BREACH OF
WARRANTY OR BREACH OF CONTRACT EXCEPT THOSE
PROVIDED IN PARAGRAPH 1.F.3. YOU AGREE THAT THE
FOUNDATION, THE TRADEMARK OWNER, AND ANY
DISTRIBUTOR UNDER THIS AGREEMENT WILL NOT BE LIABLE
TO YOU FOR ACTUAL, DIRECT, INDIRECT, CONSEQUENTIAL,
PUNITIVE OR INCIDENTAL DAMAGES EVEN IF YOU GIVE
NOTICE OF THE POSSIBILITY OF SUCH DAMAGE.

1.F.3. LIMITED RIGHT OF REPLACEMENT OR REFUND - If you

discover a defect in this electronic work within 90 days of receiving it,
you can receive a refund of the money (if any) you paid for it by
sending a written explanation to the person you received the work
from. If you received the work on a physical medium, you must
return the medium with your written explanation. The person or entity
that provided you with the defective work may elect to provide a
replacement copy in lieu of a refund. If you received the work
electronically, the person or entity providing it to you may choose to
give you a second opportunity to receive the work electronically in
lieu of a refund. If the second copy is also defective, you may
demand a refund in writing without further opportunities to fix the
problem.

1.F.4. Except for the limited right of replacement or refund set forth in
paragraph 1.F.3, this work is provided to you ‘AS-IS’, WITH NO
OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PURPOSE.

1.F.5. Some states do not allow disclaimers of certain implied

warranties or the exclusion or limitation of certain types of damages.
If any disclaimer or limitation set forth in this agreement violates the
law of the state applicable to this agreement, the agreement shall be
interpreted to make the maximum disclaimer or limitation permitted
by the applicable state law. The invalidity or unenforceability of any
provision of this agreement shall not void the remaining provisions.
1.F.6. INDEMNITY - You agree to indemnify and hold the
Foundation, the trademark owner, any agent or employee of the
Foundation, anyone providing copies of Project Gutenberg™
electronic works in accordance with this agreement, and any
volunteers associated with the production, promotion and distribution
of Project Gutenberg™ electronic works, harmless from all liability,
costs and expenses, including legal fees, that arise directly or
indirectly from any of the following which you do or cause to occur:
(a) distribution of this or any Project Gutenberg™ work, (b)
alteration, modification, or additions or deletions to any Project
Gutenberg™ work, and (c) any Defect you cause.

Section 2. Information about the Mission of

Project Gutenberg™
Project Gutenberg™ is synonymous with the free distribution of
electronic works in formats readable by the widest variety of
computers including obsolete, old, middle-aged and new computers.
It exists because of the efforts of hundreds of volunteers and
donations from people in all walks of life.

Volunteers and financial support to provide volunteers with the

assistance they need are critical to reaching Project Gutenberg™’s
goals and ensuring that the Project Gutenberg™ collection will
remain freely available for generations to come. In 2001, the Project
Gutenberg Literary Archive Foundation was created to provide a
secure and permanent future for Project Gutenberg™ and future
generations. To learn more about the Project Gutenberg Literary
Archive Foundation and how your efforts and donations can help,
see Sections 3 and 4 and the Foundation information page at
www.gutenberg.org.

Section 3. Information about the Project

Gutenberg Literary Archive Foundation
The Project Gutenberg Literary Archive Foundation is a non-profit
501(c)(3) educational corporation organized under the laws of the
state of Mississippi and granted tax exempt status by the Internal
Revenue Service. The Foundation’s EIN or federal tax identification
number is 64-6221541. Contributions to the Project Gutenberg
Literary Archive Foundation are tax deductible to the full extent
permitted by U.S. federal laws and your state’s laws.

The Foundation’s business office is located at 809 North 1500 West,

Salt Lake City, UT 84116, (801) 596-1887. Email contact links and up
to date contact information can be found at the Foundation’s website
and official page at www.gutenberg.org/contact

Section 4. Information about Donations to

the Project Gutenberg Literary Archive
Foundation
Project Gutenberg™ depends upon and cannot survive without
widespread public support and donations to carry out its mission of
increasing the number of public domain and licensed works that can
be freely distributed in machine-readable form accessible by the
widest array of equipment including outdated equipment. Many small
donations ($1 to $5,000) are particularly important to maintaining tax
exempt status with the IRS.

The Foundation is committed to complying with the laws regulating

charities and charitable donations in all 50 states of the United
States. Compliance requirements are not uniform and it takes a
considerable effort, much paperwork and many fees to meet and
keep up with these requirements. We do not solicit donations in
locations where we have not received written confirmation of
compliance. To SEND DONATIONS or determine the status of
compliance for any particular state visit www.gutenberg.org/donate.

While we cannot and do not solicit contributions from states where

we have not met the solicitation requirements, we know of no
prohibition against accepting unsolicited donations from donors in
such states who approach us with offers to donate.

International donations are gratefully accepted, but we cannot make

any statements concerning tax treatment of donations received from
outside the United States. U.S. laws alone swamp our small staff.

Please check the Project Gutenberg web pages for current donation
methods and addresses. Donations are accepted in a number of
other ways including checks, online payments and credit card
donations. To donate, please visit: www.gutenberg.org/donate.

Section 5. General Information About Project

Gutenberg™ electronic works
Professor Michael S. Hart was the originator of the Project
Gutenberg™ concept of a library of electronic works that could be
freely shared with anyone. For forty years, he produced and
distributed Project Gutenberg™ eBooks with only a loose network of
volunteer support.

Project Gutenberg™ eBooks are often created from several printed

editions, all of which are confirmed as not protected by copyright in
the U.S. unless a copyright notice is included. Thus, we do not
necessarily keep eBooks in compliance with any particular paper
edition.

Most people start at our website which has the main PG search
facility: www.gutenberg.org.

This website includes information about Project Gutenberg™,

including how to make donations to the Project Gutenberg Literary
Archive Foundation, how to help produce our new eBooks, and how
to subscribe to our email newsletter to hear about new eBooks.