Corporate Financial Accounting 16Th Edition Carl S Warren Full Chapter

Corporate Financial Accounting 16th
Edition Carl S. Warren

Visit to download the full and correct content document:
https://ebookmass.com/product/corporate-financial-accounting-16th-edition-carl-s-war
ren/
Corporate Financial
Accounting 16e
Carl S. Warren
Professor Emeritus of Accounting
University of Georgia, Athens
Jefferson P. Jones
Associate Professor of Accounting
Auburn University
Australia • Brazil • Mexico • Singapore • United Kingdom • United States
Copyright 2022 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.
This is an electronic version of the print textbook. Due to electronic rights restrictions,
some third party content may be suppressed. Editorial review has deemed that any suppressed
content does not materially affect the overall learning experience. The publisher reserves the right
to remove content from this title at any time if subsequent rights restrictions require it. For
valuable information on pricing, previous editions, changes to current editions, and alternate
formats, please visit www.cengage.com/highered to search by ISBN#, author, title, or keyword for
materials in your areas of interest.
Important Notice: Media content referenced within the product description or the product
text may not be available in the eBook version.
Corporate Financial Accounting, 16th edition © 2022, 2019 Cengage Learning, Inc.
Carl S. Warren WCN: 02-300
Jefferson P. Jones
Unless otherwise noted, all content is © Cengage
ALL RIGHTS RESERVED. No part of this work covered by the copyright herein
SVP, Higher Education & Skills Product:
may be reproduced or distributed in any form or by any means, except as
Erin Joyner
permitted by U.S. copyright law, without the prior written permission of the
VP, Higher Education & Skills Product: copyright owner.
Michael Schenk
Product Director: Jason Fremder

For product information and technology assistance, contact us at
Product Manager: Melody Sorkhabi Cengage Customer & Sales Support, 1-800-354-9706
or support.cengage.com.
Product Assistant: Matt Schiesl
For permission to use material from this text or product, submit all
Learning Designer: Kristen Meere
requests online at www.cengage.com/permissions.
Sr. Content Manager: Diane Bowdler
In House SME: Eileen Byron Library of Congress Control Number: 2020921393
Sr. Digital Delivery Lead: Jessica Robbe ISBN: 978-0-357-51038-4
Loose-leaf Edition ISBN: 978-0-357-51039-1

Sr. Director, Marketing: Kristen Hurd
Executive Marketing Manager: Nathan Anderson Cengage

200 Pier 4 Boulevard
IP Analyst: Ashley Maynard
Boston, MA 02210
IP Project Manager: Integra USA
—Kumaresan Chandrakumar
Cengage is a leading provider of customized learning solutions
Production Service: Lumina Datamatics with employees residing in nearly 40 different countries and sales in more
Designer: Chris Doughman than 125 countries around the world. Find your local representative at
www.cengage.com.
Text Designer: Ke Design/Trish Knapke
Cover Designer: Liz Harasymczuk To learn more about Cengage platforms and services, register or access
your online learning solution, or purchase materials for your course,
Cover Image Source: cybrain/ShutterStock.com visit www.cengage.com.
Throughout this text, real-world companies are used in the narrative, illustrations, and end-of-chapter assignments. These companies
are identified in boldface color type, and any data presented was adapted from or based upon annual reports, Securities and Exchange
Commission filings, or other publicly available sources. Any other individuals or companies used in illustrations and homework are
fictional, and any resemblance to actual persons, living or dead, businesses or companies is entirely coincidental.
Printed in the United States of America

Print Number: 01 Print Year: 2020
Preface
Roadmap for Success

Warren/Jones Corporate Financial Accounting, 16e, provides a sound pedagogy for giving s tudents
a solid foundation in business and accounting. Warren/Jones covers the fundamentals in an inclu-
sive manner that motivates students to learn by showing how accounting is important to their
careers and business.
Inclusivity
A major objective of Warren/Jones Corporate Financial Accounting, 16e, is to create an inclusive
learning experience for all students that recognizes the wide diversity in student demographics,
abilities, and experiences. This edition has been revised with a learner-centric approach that
understands and acknowledges that a student’s learning experience may be influenced by a vari-
ety of mental, sensory, and physical factors. As a result, this edition and its ancillaries have been
designed to create an accessible learning experience for all students.
This edition also recognizes that students have unique backgrounds and perspectives. As a result,
chapter content, illustrations, and homework are designed to be respectful and inclusive of differ-
ences in student race, ethnicity, sexual orientation, gender, religion, age, and culture. The authors
welcome suggestions and comments on how to be even more inclusive in future editions.
New Features
This revision includes a range of new features that help Warren/Jones provide students with the
context to see how accounting is valuable to their careers and business. These new features include:
▪▪ Using Data Analytics
▪▪ Take It Further data analytic cases
▪▪ Journal entries with T accounts
▪▪ Illustration of why accrual accounting is required by GAAP
iii
Customer Refunds Payable is a liability account
for estimated refunds and allowances.
The account receivable was paid in cash

iv Preface within the 30-day credit period.
c. Jan. 6 Cash 9,000
The remaining account receivable
Data Analytics
Accounts Receivable—Wall Company 9,000
($12,000 – $3,000) is paid in cash.
Using Data Analytics examples have been added to each chapter, which describe an application
Check Up Corner
of data analytics to each chapter’s content.
Using Data Analytics

Sales
Retail businesses, such as Target Corporation (TGT), use data analytics to answer questions such
as the following:
l What are our best-selling products?
l What products are generating returns?
l What percent of our customers are using self-checkouts? USING DATA
l What time of the day do we have the most sales? ANALYTICS
l What percent of our customers use credit cards?
l What percent of our customers use debit cards?
Target has used data (predictive) analytics to improve the retail experience of its customers as well
as to increase its sales. For example, Target uses data analytics to decide which products should
earn shelf space in its brick-and-mortar stores and which are best serviced with its online sales app.
See TIF 5-8 for a homework assignment using data analytics.
Source: Dina Gerdeman, “On Target: Rethinking the Retail Website,” Forbes, December 4, 2018, www.forbes.com/sites/
hbsworkingknowledge/2018/12/04/on-target-rethinking-the-retail-website/#2690a20916fb.
Take It Further Data Analytic Cases

Chapter 5 Accounting for Retail Businesses 307
Take It Further data analytic cases have been added to several chapters. These TIF cases use
a dataset related to the chapter content that requires a student to analyze and develop reports
Mark: Krista, I don’t know what to do about buying my new stereo.
using Excel and Tableau. The chapters with TIF data analytic cases are as follows:
Krista: What’s the problem?
Mark: Well,5:
Chapter I can buy it locally
Accounting foratRetail
Tru-Sound Systems for $1,175.00. However, Wholesale Stereo
Businesses
has the same system listed for $1,200.00.
TIF 5-8 “Sales analysis” (Excel application)
Krista: What’s the big deal? Buy it from Tru-Sound Systems.
Chapter 6: quite
Mark: It’s not Inventories
that simple. Wholesale Stereo charges $49.99 for shipping and handling.
If I have Wholesale Stereo senditems”
TIF 6-5 “Out-of-stock it next-day
(Excelair, it’ll cost $89.99 for shipping and handling.
application)
Krista: So?
Chapter 7: Internal Control and Cash
Mark: But, that’s not all. Tru-Sound Systems will give an additional 2% discount if I pay cash.
TIF 7-6
Otherwise, they“Inventory
will let me losses
use myandVisa,potential
or I can controls” (Tableau
pay it off in application)
three monthly installments. In
addition, if I buy it from Tru-Sound Systems, I have to pay 9% sales tax. I won’t have to pay
Chapter 8: Receivables
sales tax if I buy it from Wholesale Stereo, since they are out of state.
TIF
Krista: 8-6 “Collectability
Anything else??? of receivables by customer type” (Excel application)
Mark: Well 9:
Chapter . . . Wholesale
Long-TermStereo saysFixed
Assets: I haveand
to charge it on my Visa. They don’t accept checks.
Intangible
Krista: I am not surprised. Many online stores don’t accept checks.
TIF 9-5 “Equipment maintenance, downtime, and costs” (Excel and Tableau applications)
Mark: I give up. What would you do?
Chapter 10: Liabilities: Current, Installment Notes, and Contingencies”
1. Assuming that Wholesale Stereo doesn’t charge sales tax on the sale to Mark, which
TIF 10-6is offering
company “Supplier the(vendor)
best buy?analyses” (Excel application)
2. What might be
The following is the data analytic some considerations other than
case for Chapter 5. price that influence Mark’s decision
on where to buy the stereo system?
TIF 5-8 Data Analytics: Sales analysis

Michelle Horowitz is the manager of AAAA Office Supplies, a locally owned office supply store
for schools and businesses. Michelle is concerned about the large variety of products the store
USING DATA carries, which ties up storage space and working capital. Michelle has asked you to analyze the
ANALYTICS
store’s inventory and sales to determine if there are products that may be worth discontinuing.
Michelle has asked you for the following:
1. A list of the quantity of each product sold for a recent month.
2. Recommendations for any products that should be discontinued.
Go to CengageNOWv2 to complete this assignment.
Pathways Challenge
Preface v
Journal Entries with T Accounts

T accounts with debit and credit postings are included with journal entries throughout
Corporate Financial Accounting, 16e. The accounting equation and T accounts are shown in a
smaller font so that the presentation is still focused on the journal entry. That is, the presentation
is designed to subtly reinforce student learning without detracting from a journal entry focus.
Examples of this new presentation follow:
Purchase of $9,250 of inventory on account.
Inventory 9,250
Accounts Payable—Thomas Corporation 9,250
Purchased inventory on account.
Assets 5 Liabilities 1 Stockholders’ Equity

Inventory Accounts Payable
9,250 9,250
Discarding of fully depreciated equipment.
Accumulated Depreciation—Equipment 4,800

Loss on Disposal of Equipment 1,200
Equipment 6,000
To write off equipment discarded.

Accumulated Loss on Disposal of
Equipment Depreciation Equipment
6,000 4,800 1,200
Issuance of preferred stock and common stock at par value for cash.
Cash 1,500,000
Preferred Stock 500,000
Common Stock 1,000,000
Issued preferred stock and common
stock at par for cash.
Cash Preferred Stock Common Stock
1,500,000 500,000 1,000,000
The preceding presentation has the following pedagogical advantages:

▪▪ Students can see the impact of the journal entry on the elements of the accounting equation.
▪▪ Students can see the impact of the journal entry on the financial statements.
The impact on the balance sheet is shown by the accounting equation.
The impact on the income statement is shown by revenue and expense T accounts under
Stockholders’ Equity.
The impact on the statement of stockholders’ equity is shown by common stock, retained
earnings, and dividend T accounts under Stockholders’ Equity.
The impact on the statement of cash flows is shown by the cash T account under Assets.
▪▪ The presentation reinforces the rules of debit and credit.
▪▪ The accounting equation is illustrated as the foundation (framework) for all financial account-
ing systems.
▪▪ The presentation is consistent with today’s accounting systems where posting to accounts is
often done at the same time journal entries are recorded.
vi Preface
Why Accrual Accounting is Required

Why the accrual basis of accounting is required by GAAP has been added to Chapter 4. This
192 section uses the NetSolutions illustrations from Chapters 1–4 as a basis for the following exhibit.
Chapter 4 The Accounting Cycle
Exhibit 20
Accrual versus Cash Accrual Basis of Accounting
Basis of Accounting Increase (Decrease) Interpretation
for NetSolutions December November Amount Percent
Revenues $9,460 $7,500 $1,960 26.1%
NetSolutions is profitable and rapidly
Expenses (5,405) (4,450) 955 21.5%
expanding.
Net income (loss) $4,055 $3,050 1,005 33.0%
Cash Basis of Accounting

Increase (Decrease) Interpretation
December November Amount Percent NetSolutions is in trouble with declining
Revenues $6,980 $7,500 $ (520) (6.9)% revenues and increasing expenses, which
generated a net loss. This suggests that
Expenses (7,915) (4,600) 3,315 72.1%
NetSolutions may not be able to continue
Net income (loss) $ (935) $2,900 (3,835) (132.2)% as a viable company without significant
operational changes.
Under the accrual basis of accounting, revenues increased by 26.1% in December, while
This exhibit illustrates that accrual
expenses increased accounting
by only 21.5%. As aisresult,
required by GAAP
net income because
increased it These
by 33.0%. betterresults
matches
sug-
revenues and expenses and, thus, is a better indicator of a company’s
gest that NetSolutions is a profitable, rapidly expanding company. profitability.
Under the cash basis of accounting, revenues decreased by (6.9)%, while expenses increased
by 72.1%. As a result, NetSolutions reported a net loss of $(935) or a decrease of (132.2)% from
Existing Features
November’s net income of $2,900. These results suggest that NetSolutions is in trouble and may
not be able to continue as a viable company.
As shown in Exhibit 20, accrual accounting better reports the underlying operating perfor-
Some existing features
mance offrom previous
NetSolutions. editions
It does include:
this by better matching revenues and expenses. This is why accrual
accountingto
▪▪ Stepwise approach is accounting
required by generally
cycle accepted accounting principles (GAAP).
▪▪ Presentation style designed around the way students learn
▪▪ A Schema, or roadmap, at the start of each chapter.
▪▪ Links to theAnalysis
Opening Company for Decision Making
▪▪ Pathway Challenges
Objective
Describe ▪and
Working Capital and Current Ratio
▪▪ 7Check Up Corners
illustrate for Decision Making
▪ Analysis
the use of working The ability to convert assets into cash is called liquidity, while the ability of a business to
▪▪the
capital and Make a Decision
current pay its debts is called solvency. Two financial measures for evaluating a business’s short-term
ratio in evaluating a liquidity and solvency are working capital and the current ratio.
company’s financial
Working capital is the excess of the current assets of a business over its current liabilities:
condition.
Schema Working Capital = Current Assets – Current Liabilities
Each chapter begins with a schema that shows students what they are going to learn and how
Current assets are more liquid than long-term assets, because they can be more readily
it is connected turned
to theintolarger
cash picture. In the early
to meet short-term chapters,
obligations. Thus,the schemainillustrates
an increase a company’show theassets
current steps
in the accounting cycle or
increases areimproves
interrelated. In later
its liquidity chapters,
because the are
these assets schema shows
available how
for uses each
other thanchapter’s
paying
current to
topics are connected liabilities.
the financial statements. The following are examples of the schema for
Chapters 4, 5, and A9.positive working capital implies that the business is able to pay its current liabilities and
is solvent. Thus, an increase in working capital increases or improves a company’s short-term
solvency.
To illustrate, NetSolutions’ working capital at the end of 20Y3 is $6,355, computed as fol-
lows from Exhibit 1:
Working Capital = Current Assets – Current Liabilities
= $7,745 – $1,390
= $6,355
This amount of working capital implies that NetSolutions is able to pay its current liabilities.
Preface vii
Chapter
4 The Accounting Cycle
Chapter 1 Chapter 3
Transactions
ADJUSTING ENTRIES
Unadjusted Adjusting Adjusted

Accounts Journal Entries Accounts
XXX XXX Accrued Revenues Unadj. Balances XXX XXX
Accrued Expenses Adjustments XXX XXX
Unearned Revenues Adj. Balances XXX XXX
ACCOUNTING SYSTEM Unadjusted Prepaid Expenses
Accounting Equation Trial Balance Depreciation
Adjusted Trial Balance
Assets = Liabilities + Equity
Total Debit Total Credit
Balances
= Balances
Chapter 2 Account
Debits Credits
Chapter 4 Adjusted Accounts
RULES OF DEBIT AND CREDIT XXX XXX
Balance Sheet Accounts
Adjusted Balances
AS S ETS = L IABIL ITIES + STOCKHOL DER S ' E Q U IT Y

Asset Accounts Liability Accounts Common Stock + Retained Earnings
FINANCIAL STATEMENTS
Debit for Credit for Debit for Credit for Debit for Credit for Debit for Credit for Income Statement Statement of Stockholders’ Equity Balance Sheet
increases decreases decreases increases decreases increases decreases increases
(+) (–) (–) (+) (–) (+) (–) (+)
Balance Balance Balance Balance CLOSING ENTRIES
Adjusted Closing Income Statement
Accounts Journal Entries and Dividend Accounts
Income Statement
XXX XXX 0 0
Accounts
Dividends Revenue Accounts
Adjusted Zero Balances
Debit for Credit for Debit for Credit for Balances
increases decreases decreases increases
(+) (–) (–) (+) Balance Sheet
Balance Accounts
Balance
XXX XXX
Expense Accounts
Debit for Credit for
increases decreases Post-Closing
(+) (–) Trial Balance
Balance
Unadjusted Trial Balance

160 Tota l De bit Ba la nc e s = Tota l Cre dit Ba la nces 161
5 Accounting for
9 Long-Term Assets:
Chapter
Chapter
Retail Businesses Fixed and Intangible
STATEMENT OF STATEMENT OF CASH FLOWS

STOCKHOLDERS’ EQUITY For the Year Ended December 31, 20Y5
STATEMENT OF STATEMENT OF CASH FLOWS For the Year Ended December 31, 20Y5
Cash flows from (used for)
STOCKHOLDERS’ EQUITY For the Year Ended December 31, 20Y5
Common Retained operating activities $XXX
For the Year Ended December 31, 20Y5
Cash flows from (used for) Stock Earnings Total Cash flows from (used for)
operating activities $XXX Balances, Jan. 1, 20Y5 $XXX $ XXX $ XXX investing activities XXX
Common Retained
Cash flows from (used for) Issued common stock XXX XXX Cash flows from (used for)
Stock Earnings Total
investing activities XXX Net income XXX XXX financing activities XXX
Balances, Jan. 1, 20Y5 $XXX $ XXX $ XXX
Cash flows from (used for) Dividends (XXX) (XXX) Net increase (decrease) in cash $XXX
Issued common stock XXX XXX
financing activities XXX Balances, Dec. 31, 20Y5 $XXX $ XXX $ XXX Cash balance, January 1, 20Y5 XXX
Net income XXX XXX
Net increase (decrease) in cash $XXX Cash balance, December 31, 20Y5 $XXX
Dividends (XXX) (XXX)
Balances, Dec. 31, 20Y5 $XXX $ XXX $ XXX Cash balance, January 1, 20Y5 XXX
Cash balance, December 31, 20Y5 $XXX
INCOME STATEMENT BALANCE SHEET
For the Year Ended December 31, 20Y5 December 31, 20Y5
INCOME STATEMENT
For the Year Ended December 31, 20Y5 BALANCE SHEET Sales $ XXX Assets
December 31, 20Y5 Cost of goods sold (XXX) Current assets:
Sales $ XXX Gross profit $ XXX Cash $XXX
Assets Operating expenses: Accounts receivable XXX
Cost of goods sold (XXX)
Current assets: Wages expense $XXX Inventory XXX
Gross profit $ XXX
Cash $XXX Advertising expense XXX Total current assets $XXX
Operating expenses:
Accounts receivable XXX Utilities expense XXX Long-term assets:
Wages expense $XXX
Inventory XXX Depreciation expense XXX Property, plant, and equipment $ XXX
Advertising expense XXX
Total current assets $XXX Amortization expense XXX Accumulated depreciation (XXX)
Utilities expense XXX
Property, plant, and equipment XXX Depletion expense XXX Book value $XXX
Depreciation expense XXX
Total assets $XXX … XXX Natural resources $ XXX
… XXX Liabilities
Total operating expenses (XXX) Total operating expenses (XXX) Accumulated depletion (XXX)
Current liabilities $XXX
Operating income $ XXX Operating income $ XXX Net natural resources XXX
Long-term liabilities XXX
Other revenue and expense XXX Other revenue and expense XXX Intangible assets XXX
Total liabilities $XXX
Net income $ XXX Net income $ XXX Total long-term assets XXX
Stockholders’ Equity
Total assets $XXX
Common stock $XXX
Liabilities
Retained earnings XXX
Current liabilities $XXX
Total stockholders’ equity XXX
Long-term liabilities XXX
Total liabilities and stockholders’ equity $XXX
Total liabilities $XXX
Stockholders’ Equity
Common stock $XXX
Retained earnings XXX
Total stockholders’ equity XXX
Total liabilities and stockholders’ equity $XXX
236
454
Link to Opening Company

Links to the “opening company” of each chapter calls out examples of how the concepts intro-
duced in the chapter are connected to the opening company. This shows how accounting is used
in the real world by companies. When a real-world public company is first mentioned, its stock
(ticker) symbol is shown in parentheses. Doing so facilitates students’ ability to access additional
information about the company, including its stock price and website.
Assets expenses 5
LiabilitiesCost of goods
(XXX)
Operating 1 sold Stockholders’
(XXX)Equity
Cash Sales
$ XXX
Operating income Gross profit $ XXX
1,800 1,800
Operating expenses (XXX)
Using the perpetual inventory system, the cost Operating income
of goods sold and the$ XXX
decrease in inventory
The also
are revenue activitiesInofthis
recorded. a service
way, business involveaccount
the inventory providing services to
indicates thecustomers.
amount On the incomeon
of inventory state-
hand
mentsold).
(not for a service business, the revenues from services are reported as fees earned. The operating expenses
viii Preface incurred in providing
To illustrate, assumethe services
that theare subtracted
cost of goodsfrom soldthe onfees earned
March 3 isto$1,200.
arrive atTheoperating
entry to income.
record the
costInofcontrast, the revenue
goods sold and theactivities
decrease ofin
a retail business involve
the inventory the buying and selling of merchandise.
is as follows:
A retail business first purchases merchandise to sell to its customers. When this merchandise is sold, the
revenue is reported as sales, and its cost is recognized as an expense. This expense is called the cost of
goods soldMar.or cost
3 ofCost
merchandise sold. The cost of goods sold is subtracted from
of Goods Sold 1,200sales to arrive at gross
254 profit.Chapter
This amount Inventory
is called
5 Accounting gross
for Retailprofit because it is the profit before deducting operating
Businesses 1,200 expenses.
The operating expenses areTosubtracted
record the from
cost ofgross
goods sold. to arrive at operating income.
Dollar Tree, Inc. profit
Merchandise on hand (not sold) at the end of an accounting period is called inventory or
Assets
SalesLiabilities Stockholders’ Equity
W
Exhibit 7 Journal Entries 5
for Customer Returns, Refunds,1 and Allowances
hen you are low on cash but need to pick up party supplies, must design its accounting system to not only record the receipt merchandise inventory. Inventory
Inventory
is reported as a current asset on the balance sheet.
Cost of Goods Sold
housewares, or other consumer items, where do you go? Many of goods for resale, but also to keep track of what merchandise is
1,200 1,200
shoppers are turning to Dollar Tree, Inc. (DLTR), a leading available for sale as well as where the merchandise is located. In
operator of discount variety stores with more than 15,000 stores in addition, Dollar Tree must record the sales and cost of the goods
SalesSales
may . .be
End-of-Period
On a recent income statement, Dollar Tree reported
be made to customers
Adjusting
the following Entries
(in billions):
using debit cards, sometimes XXX called bank cards. When
Link to
. . . . . . . . . . . . . . . . . . . . .Sales
North America. Its stores operate under the brand names Dollar Tree
and Family Dollar. All merchandise is $1 at Dollar Tree stores, while
sold for each of its stores. Finally, Dollar Tree must record such
data as delivery costs, merchandise discounts, and merchandise a customerCost uses
of goods a debit sold .card, . . . . . . the
$ 22 .8
money Refunds
. . Customer
(15 .9) required Payable by the purchase is deductedXXX instantly from the Dollar Tree
Family Dollar offers merchandise for $10 or less. The stores typically returns. customer’s bank
Gross profitaccount. . . . . . . . . .For
. . . . .this $reason,
. .Estimated debitInventory
6 .9 Returns card sales are recorded XXXas cash sales.
carry more than 7,000 items, consisting of basic, everyday items as This chapter focuses on the accounting principles and SalesOperating
may also expenses be made . . . . to
. . . customers
(7 .9)
Cost of Goods using Sold credit cards such as Mastercard XXX or Visa. Credit
well as seasonal, closeout, and promotional items. concepts for a retail business. ln doing so, the basic differences card salesOperating
are normally income (loss) processed . . . $ by(1 .0)a clearinghouse that contacts the bank that issued the card.
The accounting for a retailer, like Dollar Tree, is more between retail and service company activities are highlighted. Cash Refund Paid to the retailer’s bank account. Credit Memorandum Issued
TheOnissuing bank
its balance sheet, then electronically
it reported inventorytransfers
of $3 .5 billion . cash directly 4
Since
complex than for a service company. This is because a service The financial statements of a retail business and accounting for
company sells only services and has no inventory. Dollar Tree merchandise transactions are also described and illustrated. the retailer normally
Customer returns receives cashCustomer within Refunds
a few days Payable of making the sale, credit
. . . . . XXX card sales
Customer arePayable
Refunds also . . . . . XXX
recordedmerchandise
as cash sales. Cash . . . . . . . . . . . . . . . . . . . . . . . . XXX Accounts Receivable . . . . . . . . . . XXX
Business Insight Inventory . Estimated

Dollar Tree normally receives cash
. . . . . . . . . . . . . . . . . . . . . XXX
Returns
from credit card Inventory sales within . . . threeXXX
Inventory . . . . . . . . . . . . . . . . . . . . . . XXX
Estimated
business days, and Returns
thus records InventoryLink . . . to XXX
credit card Versus
Comcast sales as cash
Customer does not
sales.
Lowe’s
return Customer Refunds Payable . . . . . XXX Customer Refunds Payable . . . . . XXX Dollar Tree
C
merchandise Cash . is
. . a . .service
. . . . . . .business
. . . . . . . . . . . . XXX Lowe’s Companies,
Accounts Receivable . Inc. . . . . . . . . . XXX
omcast Corporation (CMCSA)
If a that offersallows
retailer cable communications,
customers to use broadcast debit or televisioncredit cards to pay for purchases, Condensed Income the retailer Statement
may be(NBC television),
charged filmed entertainment
processing fees by the (Universal
clearinghouse Pictures), or issuing bank. Such fees are (in periodically
millions)
and themeasparks
recorded (UniversalTo
an expense. Parks) to its customers .
illustrate, assume that Lowe’s a companySales pays . . .credit
. . . . . . . card
. . . . . .processing
. . . . . . . . . . . . . fees
. . . . . .of . . . . . . . . . . . $ 71,309
Companies, Inc. (LOW) is a large
fees home
wouldimprovement retailer . Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48,401)
$4,150
Link to
on October 31. These
Although
The differences in the operations all sales
of a service andare
be recorded
retailfinal, business Dollar
as follows:
are Tree Grosswill
profit “exchange”
. . . . . . . . . . .any
. . . . .unopened
. . . . . . . . . . . .item
. . . . . .with
. . . . . the original
. $ 22,908
Dollar Tree receipt .
illustrated in their recent income statements, as follows: Selling, general, and administrative expenses . . . . . . . . . . . . (17,413)
Oct. 31 Comcast
Credit Card Expense
Corporation Depreciation expense
4,150 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,477)
CashIncome Statement
Condensed Operating income . . . . . . 4,150
. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,018
(inTo record service charges on credit
millions) Source: Lowe's Companies, Inc ., Form 10-K for a Recent Fiscal Year Ended February 1.
Revenue . . . . . . . . . . . . . . . . . . . . .card
. . . . sales
. . . . . for
. . . the
. . . .month.
. . . . . . . $108,942
Assets Ethics in Action
Programming and production expenses . . . . . . . . . . . . . . . (34,440)
5 Liabilities 1 As a retail company,
Stockholders’Lowe’s
Equity subtracts cost of goods sold from sales to
©KIT LEONG/SHUTTERSTOCK.COM
Selling and administrative Cashexpenses . . . . . . . . . . . . . . . . . . . (40,424) disclose gross profit .
Credit As a service company, Comcast does not show
Card Expense
ETHICS
The Case
Depreciation and amortization of the 4,150 Fraudulent
expenses . . . . . . . . Price Tags
. . . . . . (12,953) merchandise
cost of goods sold, nor abought
4,150 or obtained
gross profit elsewhere .
line . Rather, The couple then
service expenses
Chapter 9 Long-Term Assets: Fixed and Intangible
Operating
One of 467
incomethe challenges . . . . . . . . . . . .for
. . . .a . .retailer
. . . . . . . . is . . . . . . $ its
. . .policing 21,125
sales return returned
are subtracted the cheaper
from revenue goods
straight and received
to operating income . the substantially
Instead of using Mastercard or Visa, a customer may use a credit card that is not issued by a bank.
Source:policy .
ComcastThere areForm
Corporation, many
10-K ways in Fiscal
for a Recent which Yearcustomers
Ended Decembercan
31 . unethi- higher refund amount . Company security officials discovered
Exhibit 13 summarizes the characteristics of intangible assets. For example, a customer might use an American Express card. If the seller uses a clearinghouse, the
cally or illegally abuse such policies . In one case, a couple was the fraud and had the couple arrested after they had allegedly
clearinghouse will collect the receivable and transfer the cash to the retailer’s bank account, similar
accused of attaching a company’s store price tags to cheaper bilked the company for more than $1 million .
to the way it would have if the customer had used Mastercard or Visa. Large businesses, however,
Source: Jack L . Hayes International, Inc ., 28th Annual Retail Theft Survey, 2016 .
Exhibit 13
Intangible CyberSource is one of the major credit card clearinghouses. For a more detailed description of how credit card sales are processed, see the
4
Comparisonfollowing
of CyberSource web page: www.cybersource.com, click on Products, and under Payment Processing, click on Payment Cards, and then on
Asset Description Amortization Period Periodic Expense
Link to Dollar Tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Pages 239, 241, 247, 248, 251, 254, 265, 268 Intangible Assets
How it Works.
Patent Exclusive right to benefit Estimated useful life not Amortization expense
Analysis for Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 269–270
from an innovation to exceed legal life Check Up Corner 5-2 Sales Transactions
Make a Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 304
Copyright Exclusive right to benefit Estimated useful life not Amortization expense
On December 30, Burrows Inc . sold $12,000 of merchandise to Wall Company on account, with terms n/30 . The
from a literary, artistic, or to exceed legal life merchandise cost Burrows $8,000 . On January 3, Wall determines that a portion of the merchandise received does
musical composition not operate properly, and Burrows issues a credit memo for the returned items . The invoice amount of the returned
merchandise is $3,000, which cost Burrows $2,000 . Journalize the entries by Burrows to record (a) the December 30 sale,
Trademark Exclusive use of a name, None Impairment loss if fair 237 (b) the January 3 return, and (c) the receipt of the amount due from Wall on January 6 .
term, or symbol value less than carrying
value (impaired)
Goodwill Excess of purchase price of None Impairment loss if fair
a business over the fair value less than carrying
value of its net assets
(assets ] liabilities) Pathways Challenges value (impaired)
Pathways Challenge encourages students’ interest in accounting and emphasizes the critical
thinking aspect of accounting. A suggested answer to the Pathways Challenge is provided at
the end of the chapter.
Pathways Challenge
This is Accounting!
Economic Activity
Verizon Communications Inc. (VZ) is the largest wireless service provider in the United States
with over 114 million retail subscribers. To deliver its products and services, Verizon must have access to
spectrum—the radio frequencies that carry sound, data, and video to wireless devices. However, spectrum
is a limited resource that the Federal Communications Commission (FCC) licenses to businesses for a period
of 10 years, subject to renewal. In a recent year, Verizon acquired almost $10 billion in wireless licenses.
Critical Thinking/Judgment
How should Verizon account for its acquisition of wireless licenses?
What is the useful life of a wireless license?
Should Verizon expense (amortize) the cost of its wireless licenses?
Suggested answer at end of chapter.
Chapter 9 Long-Term Assets: Fixed and Intangible 493
Pathways Challenge
This is Accounting!
Information/Consequences
Because a wireless license does not exist physically, Verizon’s (VZ) wireless licenses are intangible assets.
All of the costs of acquiring a wireless license should be recorded as an asset. In a recent year, Verizon report-
ed almost $87 billion of wireless licenses, representing 35% of its total assets.
Even though the FCC license is granted for a 10-year period, Verizon considers this license to have an indef-
inite useful life. This is because the license is subject to renewal at a low cost and, historically, the FCC has
renewed Verizon’s licenses.
Verizon does not expense (amortize) the cost of its wireless licenses. Instead, the licenses are reviewed for
any impaired value.
25/09/17 5:38 PM
Suggested Answer
Preface ix
Check Up Corners
Throughout each chapter, Check Up Corners provide students with step-by-step guidance on
how
462 to Chapter
solve problems. Problem-solving
9 Long-Term Assets: Fixed and Intangibletips help students avoid common errors.
Check Up Corner 9-2 Selling Fixed Assets

On the first day of the year, Firefall Company purchased equipment at a cost of $340,000. The equipment
was expected to have a useful life of four years, a residual value of $20,000, and is depreciated at a straight-
line rate of 25%. Firefall sold the equipment at the beginning of the fourth year when the balance in the
accumulated depreciation account was $240,000. Journalize the entry to record the sale if the equipment
was sold for:
a. $95,000
b. $105,000
Solution:
a. Equipment sold for $95,000:
Cash 95,000
Accumulated Depreciation—Equipment 240,000
Loss on Sale of Equipment 5,000 Long-Term Assets: Fixed and Intangible
Equipment 340,000
McDonald’s Corporation
Balance Sheet
Selling Price – Book Value = Link to
Accumulated
December 31
$95,000 – $100,000
McDonald’s
Depreciation at
the End of Year 3
b. Equipment sold for $105,000: (in millions)
Assets
Cash 105,000
Accumulated
Property Depreciation—Equipment
and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,000
$ 39,050.9
Equipment
Accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,890.9)340,000
Gain
Net on Saleand
property of equipment.
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
$24,160.0 Selling Price – Book Value =
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,677.4 $105,000 – $100,000
Note to Financial Statements:

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,026.4
Check Up Corner
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,609.6
Equipment and other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,414.9
Total cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $39,050.9
Analysis for Decision Making
Source: McDonald’s Corporation, Form 10-K for a Recent Year Ended December 31 (adapted).
Analysis for Decision Making highlights how businesses use accounting information to make
The4cost and relatedNatural
the health Resources
Objective accumulated depletion
decisions
Describe
and evaluate ofofamineral rights are normally shown as part of the
business. This provides students with context of why
theassets” section of the balance sheet. The mineral rights may be shown net of depletion on
“Fixed
accounting
accounting is
forof
the face important
natural
the to
balance sheet. In a business.
such cases, a supporting note discloses
Some businesses own natural resources such the accumulated
as timber,depletion.
minerals, or oil. The characteristics of
resources, including natural resources are as follows:
the journal entry for
depletion. Analysis for Decision
▪▪ Naturally Making
Occurring: An asset that is created through natural growth or naturally through
the passage of time. For example, timber is a natural resource that naturally grows over time.
▪▪ Removed for Sale: The asset is consumed by removing it from its land source. For
Fixed Asset Turnover example, timberRatio is removed for use when it is harvested, and minerals Objective 7
are removed when
Describe and illustrate
The fixed asset turnover they are measures
ratio mined. the number of sales dollars earned per dollar of the fixed asset
▪▪ Removed
fixed assets. The higher and
the ratio, the Sold
more over More
efficiently Than isOne
a company Year:
using Theassets
its fixed natural
in resource
turnoverisratio
removed
to and sold
generating sales. The ratio is computed
over a period asof follows:
more than one year. assess the efficiency
of a company’s use of
Sales
FixedNatural resources
Asset Turnover Ratio = are classified as a type of fixed asset. The cost ofits
a fixed
natural resource includes
assets.
the cost of obtaining Average Book Value of
and preparing itFixed
for Assets
use. For example, legal fees incurred in purchasing a
To illustrate, the natural
followingresource are included
data (in millions) were as part
taken of its
from cost. financial statement
a recent
of McDonald’s Corporation As natural resources
(MCD) : are harvested or mined and then sold, a portion of their cost is debited to an
e account called depletion$21,076.5
expensSales expense.
Fixed assets (net):
Beginning of year 22,842.7
End of year 24.160.0
McDonald’s fixed asset turnover ratio for the year is computed as follows (rounded to one
decimal place):
Sales
Fixed Asset Turnover Ratio =
Average Book Value of Fixed Assets
$21,076.5
=
($22,842.7 + $24,160.0) ÷ 2
$21,076.5
= = 0.9
98169_ch09_rev02_442-493.indd 462 $23,501.4 16/08/17 5:12 pm
Is 0.9 efficient? To answer this question, McDonald’s fixed asset turnover ratio can be com-
pared to other quick-service restaurant companies, as shown in Exhibit 13. Yum! Brands (YUM)
operates KFC, Pizza Hut, and Taco Bell quick-service restaurants. The other restaurants are likely
familiar by name.
x Preface
Make a Decision
Make a Decision in the end-of-chapter material gives students a chance to analyze and compare
real 502
companies.
Chapter 9 Long-Term Assets: Fixed and Intangible
Make a Decision
Fixed Asset Turnover Ratio
MAD 9-1 Analyze and compare Amazon.com and Netflix Obj. 7

REAL Amazon.com, Inc. (AMZN) is the world’s leading Internet retailer of merchandise and
WORLD
media. Amazon also designs and sells electronic products, such as e-readers. Netflix, Inc.
(NFLX) is one of the world’s leading Internet television networks. Both companies compete
in the digital media and streaming space. However, Netflix is more narrowly focused in the
digital streaming business than is Amazon.
Sales and average book value of fixed assets information (in millions) are provided for
Amazon and Netflix for a recent year as follows:
Amazon.com Netflix
Sales $177,866 $20,156
Average book value of fixed assets 67,251 492
a. Compute the fixed asset turnover ratio for each company. Round to one decimal place.
b. Which company is more efficient in generating sales from fixed assets?
c. Interpret your results.
MAD 9-2 Analyze and compare Alaska Air, Delta Air Lines, and Southwest Airlines Obj. 7
REAL Alaska Air Group (ALK), Delta Air Lines (DAL), and Southwest Airlines (LUV) reported
WORLD
the following financial information (in millions) in a recent year:
Alaska Air Group Delta Air Lines Southwest Airlines

Sales $8,781 $47,007 $22,428
Average book value of fixed assets 6,842 29,823 18,275
a. Determine the fixed asset turnover ratio for each airline. Round to one decimal place.
b. Based on the fixed asset turnover ratio, which airline appears to be the most ef-
ficient in the use of its fixed assets?
c. The most important fixed asset to an airline is the aircraft. Given this, what factors
might influence the efficient use of fixed assets for an airline?
MAD 9-3 Analyze Verizon Obj. 7

REAL Verizon Communications Inc. (VZ) is a major telecommunications company in the
WORLD
United States. Two recent balance sheets for Verizon disclosed the following information
Student Learning Aids regarding fixed assets:
End of Year
Beginning of
Year
(in millions) (in millions)
This edition includes a variety of Property,
student learning
plant, and equipment aids in $ 265,734
addition $to the Check Up Corners,
252,835
Accumulated depreciation (173,819) (163,549)
including the following: Property, plant, and equipment (net) $ 91,915 $ 89,286
▪▪ At the end of each chapter,

Verizon’s Let’s
revenueReview
for the yeariswas
a $131,868
new chapter summary
million. Assume and
the fixed assetself-assessment
turnover ratio for feature
the telecommunications industry averages approximately 1.1.
that is designed to help busy students prepare for an exam. It includes a summary of each
a. Determine Verizon’s fixed asset turnover ratio. Round to one decimal place.
learning objective’s key
b. points, key this
Interpret terms, multiple-choice
ratio with questions,
respect to the industry average. exercises, and a sample
problem that students may use to practice.
▪▪ Sample multiple-choice questions allow students to practice with the type of assessments they
are likely to see on an exam.
▪▪ Short exercises and a longer problem allow students to apply their knowledge.
▪▪ Answers provided at the end of the Let’s Review section let students check their knowledge
immediately.
Instructor and Student Resources

Additional instructor and student resources for this product are available online. Instructor assets
include an Educator’s Guide, PowerPoint® slides, and a test bank powered by Cognero®. Student
assets include data sets and online appendices. Sign up or sign in at www.cengage.com to search
for and access this product and its online resources.
Preface xi
New Appendixes
Two new end-of-text appendixes have been added to this Each topic is designed as a self-contained learning module
edition. with its own assignment materials. The modules have been
written so that instructors have the flexibility of covering one
Appendix B: Selected Topics. This appendix allows instruc-
or more of the modules at a variety of different places in
tors the flexibility to cover a variety of topics that might be
their course depending upon their students’ needs.
relevant to their students. The topics include the following:
Topic 1: Investments Appendix C: Nike Annual Report (10-K). This appendix
Topic 2: Foreign Currency Transactions includes excerpts from a recent Nike annual report (10-K).
Topic 3: Corporate Taxes New to this appendix are student assignments for each
Topic 4: Reporting Unusual Items and Comprehensive chapter. An instructor could use all of the chapter assignments
Income as an “annual report” project. The annual report assignments
Topic 5: Revenue Recognition are referenced at the end of each chapter following the Take
Topic 6: International Accounting Standards It Further section.
Chapter Changes and Improvements

The following chapter changes and improvements have been Chapter 5
made in this edition:
▪▪ The discussion of the Nature of Retail Businesses has
been changed to reference business-to-business (B2B)
Chapter 1 and business-to-customer (B2C) transactions.
▪▪ Why It Matters boxes from prior edition have been rela- ▪▪ The accounting for purchase discounts has been changed
beled as Business Insight boxes. to use the gross method of accounting for purchase dis-
▪▪ New section on Business Activities has been added, counts.
including a related exhibit. ▪▪ The accounting for sales to customers using debit cards
▪▪ Exhibit 3 has been updated with new and more current has been added to this edition.
examples of accounting and business frauds. ▪▪ The accounting for sales coupons and rebates has been
▪▪ New Business Insight box on “Business Strategies” has added to the chapter. This discussion replaces the prior
been added. edition’s discussion of the accounting for sales discounts,
▪▪ Exhibit 11 is new and illustrates the interrelationships which has been moved to an end-of-chapter appendix.
of the financial statements with the balance sheet as the ▪▪ The end-of-chapter Appendix 1 illustrates the account-
connecting link. ing for sales discounts for gross and net methods. This
discussion has been simplified so that adjusting entries
Chapter 3 are not required.
▪▪ The opening company has been changed from Pandora ▪▪ The discussion of sales returns, refunds, and allowances
Media, Inc., which is now a subsidiary of Sirius XM, to has been revised so that the end-of-period adjusting
Netflix, Inc. entry is illustrated before examples illustrating customer
▪▪ The chapter Links have been changed to relate to Netflix. returns, refunds, and allowances.
▪▪ A new exhibit (Exhibit 7) has been added that summarizes
Chapter 4 the journal entries for customer sales returns, refunds,
▪▪ The discussion of NetSolutons’ financial statements has and allowances.
been changed to include a brief discussion of the state-
ment of cash flows, which is shown in a new appendix Chapter 6
to the chapter. This provides instructors the flexibility to ▪▪ New Business Insight box on radio frequency identifica-
cover all four of NetSolutions’ financial statements if they tion (RFID) has been added.
choose to do so. ▪▪ Revised section on the effect of inventory errors on finan-
▪▪ A new section and learning objective have been added cial statements.
to the end of the chapter on why the accrual basis of
accounting is required by GAAP.
▪▪ The appendix on reversing entries has been moved to an
online appendix.
xii Preface
Chapter 7 Chapter 12
▪▪ Updated Ethics in Action box on employee fraud. ▪▪ New exhibit on the effects of dividends and stock splits
▪▪ Updated Business Insight box to include remote deposits. has been added.
Chapter 8 Chapter 14
▪▪ Updated discussion of the allowance method for uncol- ▪▪ The opening company has been changed from Nike to
lectible accounts to reflect the new standard on current The Walt Disney Company.
expected credit losses. ▪▪ Appendix on the reporting of unusual items was moved
to Appendix B: Special Topics.
Chapter 10 ▪▪ Appendix on the concepts of fair value and comprehen-
▪▪ Updated W-4 Form to reflect recent changes. sive income was moved to Appendix B: Special Topics.
CengageNOWv2
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, such as algorithmic activities, a test bank, course management tools, reporting and
assessment options, and much more.
Cengage Mobile App

The Cengage Mobile App lets students study wherever and whenever the mood strikes. Now
available with CengageNOWv2, it features a full interactive eBook—readable online or off—with
24/7 course access and study tools to power on-the-go learning. Plus, the app allows you to
engage your students with instant in-class polling and take attendance with a tap. Find details at
www.cengage.com/mobile-app/.
Excel Online
Cengage and Microsoft have partnered in CengageNOWv2 to provide students with a uniform, authentic
EXCEL Excel experience. It provides instant feedback, built-in video tips, and easily accessible spreadsheet
ONLINE
work. These features allow you to spend more time teaching accounting applications and less time
troubleshooting Excel.
These new algorithmic activities offer pre-populated data directly in Microsoft Excel Online. Each
student receives his or her own version of the problem to perform the necessary data calculations
in Excel Online. Their work is constantly saved in Cengage cloud storage as a part of homework
assignments in CengageNOWv2. It’s easily retrievable so students can review their answers without
cumbersome file management and numerous downloads/uploads.
MindTap eReader
The MindTap eReader for Warren/Jones Corporate Financial 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.
▪▪ 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.
About the Authors
Carl S. Warren
Dr. Carl S. Warren is Professor Emeritus of Accounting at the University of Georgia, Athens. Dr.
©TERRY R. SPRAY INHISIMAGE STUDIOS

Warren has taught classes at the University of Georgia, University of Iowa, Michigan State Univer-
sity, and University of Chicago. He has focused his teaching efforts on principles of accounting
and auditing. Dr. Warren received his PhD from Michigan State University and his BBA and MA
from the University of Iowa. During his career, Dr. Warren published numerous articles in pro-
fessional journals, including The Accounting Review, Journal of Accounting Research, Journal of
Accountancy, The CPA Journal, and Auditing: A Journal of Practice and Theory. Dr. Warren has
served on numerous committees of the American Accounting Association, the American Institute of
Certified Public Accountants, and the Institute of Internal Auditors. He has consulted with numer-
ous companies and public accounting firms. His outside interests include handball, golfing, skiing,
backpacking, motorcycling, and fly-fishing. He also enjoys interacting with his five grandchildren,
Bella and Mila (twins), Jeremy, and Brooke and Robbie (twins).
Jefferson P. Jones
©THOMAS BOUTWELL, T2PHOTOGRAPHY

Dr. Jefferson P. Jones is an Associate Professor of Accounting in the School of Accountancy at
Auburn University where he teaches financial accounting and applied financial research. He
received his Bachelor’s in Accounting and Master of Accountancy degrees from Auburn Univer-
sity and his PhD from Florida State University. Dr. Jones has received numerous teaching awards,
including the Auburn University Beta Alpha Psi Outstanding Teaching Award (eight times); the
Auburn University Outstanding Master of Accountancy Professor Teaching Award (five times); the
Auburn University Outstanding Distance Master of Accountancy Teaching Award (three times);
and the Auburn University College of Business McCartney Teaching Award. In addition, he has
made numerous presentations around the country on research and pedagogical issues. Dr. Jones
has public accounting experience as an auditor with Deloitte and Touche, holds a CPA certificate
in the state of Alabama (inactive), and is a member of the American Accounting Association, the
American Institute of Certified Public Accountants (AICPA), and the Alabama Society of CPAs
(ASCPA). His research interests focus on financial accounting, specifically investigating the quality
of reported accounting information, and accounting education. He has published articles in numer-
ous journals, including Advances in Accounting, Review of Quantitative Finance and Accounting,
Issues in Accounting Education, International Journal of Forecasting, and The CPA Journal. When
not at work, Dr. Jones enjoys playing golf and watching college football.
xiii
Brief Contents
1 Introduction to Accounting and Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2 Analyzing Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3 The Adjusting Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
4 The Accounting Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
5 Accounting for Retail Businesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
6 Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308
7 Internal Control and Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 360
8 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408
9 Long-Term Assets: Fixed and Intangible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454
10 Liabilities: Current, Installment Notes, and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506
11 Liabilities: Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556
12 Corporations: Organization, Stock Transactions, and Dividends . . . . . . . . . . . . . . . . . . . . . . . . 596
13 Statement of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 644
14 Financial Statement Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
Appendix A Interest Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Appendix B Selected Topics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Appendix C Nike Inc., Form 10-K for the Fiscal Year Ended May 31, 2020 Selected Excerpts. . . . C-1
Appendix D Reversing Entries (online). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
Appendix E Special Journals and Subsidiary Ledgers (online) . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
xiv
Contents
1 Introduction to Accounting
and Business 2
Analysis for Decision Making 82
Horizontal Analysis 82
Continuing Problem 105

Nature of Business and Accounting 4 Make a Decision 106
Types of Businesses 4 Take It Further 108
Business Activities 5
Role of Accounting in Business 5 Pathways Challenge 77, 109
Role of Ethics in Accounting and Business 7
3
Opportunities for Accountants 8
Generally Accepted Accounting

Principles (GAAP) 10 The Adjusting Process 110
Characteristics of Financial Information 11
Assumptions 12
Principles 14 Nature of the Adjusting Process 113
Accrual and Cash Bases of Accounting 113
The Accounting Equation 14 Revenue and Expense Recognition 114
Business Transactions and the Accounting Equation 15 The Adjusting Process 114
Summary 19 Types of Accounts Requiring Adjustment 115
Classifications of Stockholders’ Equity 20 Adjusting Entries for Accruals 116
Financial Statements 21 Accrued Revenues 116
Income Statement 23 Accrued Expenses 117
Statement of Stockholders’ Equity 23 Adjusting Entries for Deferrals 120
Balance Sheet 24 Unearned Revenues 120
Statement of Cash Flows 25 Prepaid Expenses 121
Interrelationships Among Financial Statements 26
Adjusting Entries for Depreciation 124
Ratio of Liabilities to Stockholders’ Equity 29 Summary of Adjusting Process 126
Continuing Problem 54 Adjusted Trial Balance 130
Make a Decision 55 Analysis for Decision Making 132
Vertical Analysis 132
Take It Further 56
Pathways Challenge 13, 57
Make a Decision 155
2
Take It Further 157
Analyzing Pathways Challenge 131, 159
Transactions 58
Using Accounts to Record Transactions 61
Chart of Accounts 62
Double-Entry Accounting System 64

4 The Accounting Cycle 160
Balance Sheet Accounts 64 Flow of Accounting Information 163
Income Statement Accounts 64
Statement of Stockholders’ Equity Accounts (Dividends) 65 Financial Statements 165
Normal Balances 65 Income Statement 165
Journalizing 66 Statement of Stockholders’ Equity 165
Balance Sheet 167
Posting Journal Entries to Accounts 70 Statement of Cash Flows 168
Trial Balance 80 Closing Entries 170
Errors Affecting the Trial Balance 80 Journalizing and Posting Closing Entries 171
Errors Not Affecting the Trial Balance 81 Post-Closing Trial Balance 176
xv
xvi Contents
Accounting Cycle 177 The Adjusting Process 261

Inventory Shrinkage 261
Illustration of the Accounting Cycle 180 Customer Returns, Refunds, and Allowances 262
Step 1. Analyzing and Recording Transactions
Adjusted Trial Balance 263
in the Journal 180
Step 2. Posting Transactions to the Ledger 181 Financial Statements and Closing Entries for
Step 3. Preparing an Unadjusted Trial Balance 181 a Retail Business 264
Step 4. Assembling and Analyzing Adjustment Data 181 Multiple-Step Income Statement 264
Step 5. Preparing an Optional End-of-Period Spreadsheet 183 Single-Step Income Statement 266
Step 6. Journalizing and Posting Adjusting Entries 184 Statement of Stockholders’ Equity 266
Step 7. Preparing an Adjusted Trial Balance 184 Balance Sheet 267
Step 8. Preparing the Financial Statements 184 The Closing Process 268
Step 9. Journalizing and Posting Closing Entries 187
Step 10. Preparing a Post-Closing Trial Balance 187 Analysis for Decision Making 269
Asset Turnover Ratio 269
Why Is the Accrual Basis of Accounting Required by
GAAP? 190 Appendix 1 Sales Discounts 270
Gross Method 270
Analysis for Decision Making 192 Net Method 272
Working Capital and Current Ratio 192 Comparison of Gross and Net Methods 273
Appendix 1 End-of-Period Spreadsheet 194 Appendix 2 The Periodic Inventory System 273
Step 1. Enter the Title 194 Chart of Accounts Under the Periodic Inventory System 273
Step 2. Enter the Unadjusted Trial Balance 194 Recording Merchandise Transactions Under the Periodic
Step 3. Enter the Adjustments 195 Inventory System 274
Step 4. Enter the Adjusted Trial Balance 196 Adjusting Process Under the Periodic Inventory System 275
Step 5. Extend the Accounts to the Income Financial Statements Under the Periodic Inventory System 276
Statement and Balance Sheet Columns 197 Closing Entries Under the Periodic Inventory System 276
Step 6. Total the Income Statement and Balance Sheet
Columns, Compute the Net Income or Net Loss, and Comprehensive Problem 2 302
Complete the Spreadsheet 198 Make a Decision 303
Preparing the Financial Statements
from the Spreadsheet 199 Take It Further 305
Appendix 2 Statement of Cash Flows Pathways Challenge 246, 307
for NetSolutions 199
6
Comprehensive Problem 1 229
Inventories 308
Make a Decision 231
Take It Further 233 Control of Inventory 310
Pathways Challenge 177, 235 Safeguarding Inventory 310
Reporting Inventory 311
5
Inventory Cost Flow Assumptions 311
Accounting for Retail Inventory Costing Methods Under
Businesses 236 a Perpetual Inventory System 313
First-In, First-Out Method 313
Last-In, First-Out Method 315
Nature of Retail Businesses 238 Weighted Average Cost Method 317
Operating Cycle 238
Financial Statements 239 Inventory Costing Methods Under
Merchandise Transactions 240 a Periodic Inventory System 319
First-In, First-Out Method 319
Chart of Accounts for Retail Business 240
Last-In, First-Out Method 319
Subsidiary Ledgers 241
Weighted Average Cost Method 320
Purchases Transactions 241
Sales Transactions 246 Comparing Inventory Costing Methods 323
Freight 256
Summary: Recording Inventory Transactions 258 Reporting Inventory in the Financial
Dual Nature of Merchandise Transactions 259 Statements 324
Sales Taxes and Trade Discounts 259 Valuation at Lower of Cost or Market 324
Contents xvii
Inventory on the Balance Sheet 326 Direct Write-Off Method for Uncollectible
Effects of Inventory Errors on the Financial Statements 327 Accounts 412
Analysis for Decision Making 330 Allowance Method for Uncollectible Accounts 413
Inventory Turnover and Days’ Sales in Inventory 330 Write-Offs to the Allowance Account 413
Appendix Estimating Inventory Cost 332 Estimating Uncollectibles 415
Retail Method of Inventory Costing 332 Comparing Direct Write-Off and Allowance Methods 422
Gross Profit Method of Inventory Costing 333
Notes Receivable 423
Make a Decision 355 Characteristics of Notes Receivable 423
Take It Further 356 Accounting for Notes Receivable 424
Pathways Challenge 327, 358 Reporting Receivables on the Balance Sheet 427
7
Accounts Receivable Turnover and Days’ Sales in Receivables 428
Make a Decision 450

Internal Control and Cash 360 Take It Further 452
Sarbanes-Oxley Act 362
9
Internal Control 364
Objectives of Internal Control 364
Long-Term Assets:
Elements of Internal Control 364 Fixed and Intangible 454
Control Environment 365
Risk Assessment 366
Control Procedures 366
Nature of Fixed Assets 456
Classifying Costs 456
Monitoring 368
The Cost of Fixed Assets 458
Information and Communication 368
Leasing Fixed Assets 459
Limitations of Internal Control 369
Cash Controls over Receipts and Payments 370 Accounting for Depreciation 460
Factors in Computing Depreciation Expense 460
Control of Cash Receipts 370
Straight-Line Method 461
Control of Cash Payments 373
Units-of-Activity Method 463
Bank Accounts 374 Double-Declining-Balance Method 465
Bank Statement 374 Comparing Depreciation Methods 466
Using the Bank Statement as a Control over Cash 376 Partial-Year Depreciation 469
Revising Depreciation Estimates 470
Bank Reconciliation 377
Repair and Improvements 471
Special-Purpose Cash Funds 381
Disposal of Fixed Assets 473
Financial Statement Reporting of Cash 382 Discarding Fixed Assets 473
Selling Fixed Assets 474
Days’ Cash on Hand 383 Natural Resources 475
Make a Decision 403 Intangible Assets 477
Patents 477
Take It Further 404 Copyrights and Trademarks 478
Pathways Challenge 383, 406 Goodwill 478
Financial Reporting for Long-Term Assets:
8
Fixed and Intangible 480
Receivables 408 Fixed Asset Turnover Ratio 481
Appendix Exchanging Similar Fixed Assets 483

Classification of Receivables 410 Gain on Exchange 483
Accounts Receivable 410 Loss on Exchange 484
Notes Receivable 410
Make a Decision 502
Other Receivables 411
Take It Further 503
Uncollectible Receivables 411
xviii Contents
10 Liabilities: Current, Reporting Bonds Payable 569

Installment Notes, and Analysis for Decision Making 570
Times Interest Earned 570
Contingencies 506
Appendix 1 Present Value Concepts and
Pricing Bonds Payable 572
Current Liabilities 508 Present Value Concepts 572
Accounts Payable and Accruals 508 Pricing Bonds 575
Short-Term Notes Payable 509 Computing Present Values 576
Current Portion of Long-Term Debt 511
Appendix 2 Effective Interest Rate Method
Payroll Liabilities 511
of Amortization 576
Liability for Employee Earnings 512
Amortization of Discount by the Interest Method 577
Deductions from Employee Earnings 512
Amortization of Premium by the Interest Method 578
Computing Employee Net Pay 513
Employer’s Payroll Taxes 514 Make a Decision 593
Recording Payroll 515
Paying Payroll 517
Take It Further 594
Internal Controls for Payroll 517 Pathways Challenge 568, 595
Employees’ Fringe Benefits 517
12 Corporations: Organization,
Vacation Pay 517
Pensions 518
Postretirement Benefits Other than Pensions 520 Stock Transactions, and
Installment Notes 520 Dividends 596
Issuance 520
Periodic Payments 520
Nature of a Corporation 598
Contingent Liabilities 523 Characteristics of a Corporation 598
Probable and Estimable 523 Forming a Corporation 599
Probable and Not Estimable 523
Reasonably Possible 524 Paid-In Capital from Stock 601
Remote 524 Characteristics of Stock 601
Types of Stock 602
Reporting Liabilities 526 Issuing Stock 604
Analysis for Decision Making 527 Premium on Stock 605
Short-Term Liquidity Analysis 527 No-Par Stock 606
Comprehensive Problem 3 547 Accounting for Dividends 607

Cash Dividends 608
Make a Decision 549 Stock Dividends 609
Take It Further 552 Stock Splits 611
Pathways Challenge 525, 554 Treasury Stock Transactions 612
11
Reporting Stockholders’ Equity 614
Liabilities: Bonds Stockholders’ Equity on the Balance Sheet 614
Payable 556 Reporting Retained Earnings 615
Statement of Stockholders’ Equity 617
Reporting Stockholders’ Equity for Alphabet 618
Nature of Bonds Payable 558 Analysis for Decision Making 619
Bond Characteristics and Terminology 558
Earnings per Share 619
Proceeds from Issuing Bonds 559
Comprehensive Problem 4 637
Accounting for Bonds Payable 561
Bonds Issued at Face Amount 561 Make a Decision 639
Bonds Issued at a Discount 562
Take It Further 640
Amortizing a Bond Discount 562
Bonds Issued at a Premium 564 Pathways Challenge 604, 643
Amortizing a Bond Premium 565
Bond Redemption 567
Contents xix
13 Statement of Cash Analyzing Liquidity 713

Current Position Analysis 713
Flows 644 Accounts Receivable Analysis 714
Inventory Analysis 715
Reporting Cash Flows 646 Analyzing Solvency 718
Cash Flows: Operating Activities 647 Ratio of Fixed Assets to Long-Term Liabilities 718
Cash Flows: Investing Activities 649 Ratio of Liabilities to Stockholders’ Equity 718
Cash Flows: Financing Activities 649 Times Interest Earned 719
Noncash Investing and Financing Activities 650
Format of the Statement of Cash Flows 650
Analyzing Profitability 720
Asset Turnover 721
No Cash Flow per Share 651
Return on Total Assets 721
Cash Flows: Operating Activities 651 Return on Stockholders’ Equity 722
Net Income 653 Return on Common Stockholders’ Equity 723
Adjustments to Net Income 653 Earnings per Share on Common Stock 724
Price-Earnings Ratio 725
Cash Flows: Investing Activities 657
Dividends per Share 726
Land 657
Dividend Yield 726
Building and Accumulated Depreciation—Building 658
Summary of Analytical Measures 728
Cash Flows: Financing Activities 659
Corporate Annual Reports 729
Bonds Payable 659
Management Discussion and Analysis 729
Common Stock 659
Report on Internal Control 730
Dividends and Dividends Payable 660
Report on Fairness of the Financial Statements 730
Preparing the Statement of Cash Flows 661
Make a Decision 757
Take It Further 758
Free Cash Flow 663
Appendix 1 Spreadsheet (Work Sheet) for Statement
of Cash Flows—The Indirect Method 664
Analyzing Accounts 665 Appendix A: Interest Tables A-2
Retained Earnings 666
Appendix B: Selected Topics B-1
Other Accounts 666
Topic 1: Investments
Preparing the Statement of Cash Flows 667
Topic 2: Foreign Currency Transactions
Appendix 2 Preparing the Statement Topic 3: Corporate Taxes
of Cash Flows—The Direct Method 667 Topic 4: Reporting Unusual Items and Comprehensive Income
Cash Received from Customers 668 Topic 5: Revenue Recognition
Cash Payments for Merchandise 668 Topic 6: International Accounting Standards
Cash Payments for Operating Expenses 669 Appendix C: Nike Inc., Form 10-K for the Fiscal Year
Gain on Sale of Land 669
Ended May 31, 2020 Selected Excerpts C-1
Interest Expense 670
Cash Payments for Income Taxes 670 Appendix D: Reversing Entries (online) D-1
Reporting Cash Flows from (Used for) Operating
Activities—Direct Method 670 Appendix E: Special Journals and Subsidiary
Ledgers (online) E-1
Make a Decision 698
Glossary G-1
Take It Further 701
Index I-1
14 Financial Statement
Analysis 704
Analyzing and Interpreting Financial Statements 706
The Value of Financial Statement Information 706
Techniques for Analyzing Financial Statements 707
Analytical Methods 707

Horizontal Analysis 707
Vertical Analysis 709
Common-Sized Statements 711
Corporate Financial
Accounting 16e
1 Introduction to
Chapter
Accounting and Business
Chapter 1
Transactions
ACCOUNTING SYSTEM
Accounting Equation
Assets = Liabilities + Equity
Chapter 2
ANALYZING TRANSACTIONS
Chapter 3
THE ADJUSTING PROCESS
Chapter 4
THE ACCOUNTING CYCLE
Twitter, Inc.
W hen two teams pair up for a game of f ootball, there is often a lot
of noise. The band plays, the fans cheer, and fireworks light up
the scoreboard. Obviously, the fans are committed and care about the
Twitter, Inc. (TWTR) is one of the most visible com-
panies on the Internet. It provides a real-time information net-
work where members can post messages, called tweets, for free.
outcome of the game. Just like fans at a football game, the owners of Millions post tweets every day throughout the world.
a business want their business to “win” against their competitors in the Do you think Twitter is a successful company? Does it make
marketplace. While having your football team win can be a source of money? How would you know? Accounting helps to answer these
pride, winning in the marketplace goes beyond pride and has many questions.
tangible benefits. Companies that are winners are better able to serve This textbook introduces you to accounting, the language of
customers, provide good jobs for employees, and make money for business. Chapter 1 begins by discussing what a business is, how it
their owners. operates, and the role that accounting plays.
©CJG – TECHNOLOGY/ALAMY STOCK PHOTO

Link to Twitter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 4, 6, 7, 8, 12, 13, 15, 23, 25
Analysis for Decision Making. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 29
4 Chapter 1 Introduction to Accounting and Business
What's Covered
Introduction to Accounting and Business
Nature of Business Nature of Accounting Analyzing Business Financial Statements
▪▪ Types of Business (Obj. 1) ▪▪ Managerial and Financial Transactions ▪▪ Income Statement (Obj. 5)
▪▪ Role of Accounting (Obj. 1) Accounting (Obj. 1) ▪▪ Generally Accepted Accounting ▪▪ Statement of Stockholders’
▪▪ Ethics (Obj. 1) ▪▪ Career Opportunities (Obj. 1) Principles (Obj. 2) Equity (Obj. 5)
▪▪ Accounting Equation (Obj. 3) ▪▪ Balance Sheet (Obj. 5)
▪▪ Transactions (Obj. 4) ▪▪ Statement of Cash Flows
(Obj. 5)
Learning Objectives
Obj. 1 Describe the nature of business and the role of Obj. 4 Describe and illustrate how business transactions can be
accounting and ethics in business. recorded in terms of the resulting change in the elements
Obj. 2 Describe generally accepted accounting principles, of the accounting equation.
including the underlying assumptions and principles. Obj. 5 Describe the financial statements of a corporation and
Obj. 3 State the accounting equation and define each explain how they interrelate.
element of the equation.
Analysis for Decision Making

Obj. 6 Describe and illustrate the use of the ratio of liabilities to stockholders’ equity in evaluating a company’s financial condition.
Objective 1 Nature of Business and Accounting

Describe the nature of
business and the role of A business1 is an organization in which basic resources (inputs), such as materials and labor, are
accounting and ethics assembled and processed to provide goods or services (outputs) to customers. Businesses come in
in business. all sizes, from a local coffee house to Starbucks (SBUX), which sells over $15 billion of coffee
and related products each year.
The objective of most businesses is to earn a profit. Profit is the difference between the amounts
received from customers for goods or services and the amounts paid for the inputs used to provide
the goods or services. This text focuses on businesses operating to earn a profit. However, many
of the same concepts and principles also apply to not-for-profit organizations such as hospitals,
churches, and government agencies.
Types of Businesses
Three types of businesses operating for profit include service, retail, and manufacturing businesses.
Some examples of each type of business follow:
▪▪ Service businesses provide services rather than products to customers.
Delta Air Lines (DAL) (transportation services)
The Walt Disney Company (DIS) (entertainment services)
▪▪ Retail businesses sell products they purchase from other businesses to customers.
Walmart Inc. (WMT) (general merchandise)
Target Corporation (TGT) (general merchandise)
▪▪ Manufacturing businesses change basic inputs into products that are sold to customers.
Ford Motor Company (F) (cars, trucks, vans)
Merck & Co., Inc. (MRK) (pharmaceutical drugs)
Link to Twitter Twitter is a service company that provides a platform for individuals to send text messages called tweets.
1
A complete glossary of terms appears at the end of the text.
Chapter 1 Introduction to Accounting and Business 5
Business Activities
Businesses engage in the following three types of activities:
▪▪ Operating activities
▪▪ Investing activities
▪▪ Financing activities
Operating activities are those activities by which the company generates revenues from cus-
tomers. Operating activities include producing, marketing, and distributing a product or service to
customers. For example, operating activities of Dell Technologies Inc. (DVMT) include product
development, acquiring component parts, assembly, marketing, and distribution of its products.
Investing activities are those activities by which a company acquires long-term assets for
use in the operating activities of the company. For example, the acquisition by Delta Air
Lines, Inc. (DAL) of Boeing 787 and Airbus 321 airplanes is an investing activity. Likewise,
the purchase of land and the construction of buildings to use for training, maintenance, flight
monitoring, and corporate offices are investing activities.
Financing activities include activities by which the company obtains funds to start and op-
erate the company. Funds are normally obtained from creditors and owners. For example, com-
panies can obtain funds by issuing stock to the public. The payments to creditors and owners
are also classified as financing activities.
The preceding business activities are summarized in Exhibit 1.
Exhibit 1
Business Activities
Business
Activities
Financing Investing
Activities Activities
Operating
Activities
Creditors and/or Owners Building and

Equipment Contractors
Customers and Suppliers
note:
Accounting is an information
Role of Accounting in Business system that provides reports
The role of accounting in business is to provide information for managers to use in operating the to users about the economic
business. In addition, accounting provides information to other users in assessing the economic activities and condition of a
performance and condition of the business. business.
6 Chapter 1 Introduction to Accounting and Business
Thus, accounting can be defined as an information system that provides reports to users about
the economic activities and condition of a business. You could think of accounting as the “language
of business.” This is because accounting is the means by which businesses’ financial information is
communicated to users.
Link to Twitter Twitter communicates to investors in an annual report that includes accounting information.
The process by which accounting provides information to users is as follows:

1. Identify users.
2. Assess users’ information needs.
3. Design the accounting information system to meet users’ needs.
4. Record economic data about business activities and events.
5. Prepare accounting reports for users.
As illustrated in Exhibit 2, users of accounting information can be divided into two groups:
internal users and external users.
Exhibit 2
Accounting as an
Information System 1
Identify
Users
Internal External
Company Company
2
Assess
Users’
Information
Managers, Needs Investors, Creditors,
Employees Customers, Government
3 4
Design Record
Accounting Economic
System Data
5
Prepare
Accounting
Reports
Managerial Accounting Internal users of accounting information include managers and

employees. These users are directly involved in managing and operating the business. The area
Chapter 1 Introduction to Accounting and Business 7
of accounting that provides internal users with information is called managerial accounting, or
management accounting.
The objective of managerial accounting is to provide relevant and timely information for m
anagers’
and employees’ decision-making needs. Often, such information is sensitive and is not distributed out-
side the business. Examples of sensitive information might include information about customers, prices,
and plans to expand the business. Managerial accountants employed by a business are employed in
private accounting.
Financial Accounting External users of accounting information include investors, creditors,

customers, and the government. These users are not directly involved in managing and operat-
ing the business. The area of accounting that provides external users with information is called
financial accounting.
The objective of financial accounting is to provide relevant and timely information for the
decision-making needs of users outside of the business. For example, financial reports on the
operations and condition of the business are useful for banks and other creditors in deciding
whether to lend money to the business. General-purpose financial statements are one type of
financial accounting report that is distributed to external users. The term general-purpose refers
to the wide range of decision-making needs that these reports are designed to serve. Later in this
chapter, general-purpose financial statements are described and illustrated.
Twitter uses financial accounting to prepare and distribute general-purpose financial statements. Link to Twitter
Role of Ethics in Accounting and Business

The objective of accounting is to provide relevant, timely information for user decision making.
Accountants must behave in an ethical manner so that the information they provide users will be ETHICS
trustworthy and, thus, useful for decision making. Managers and employees must also behave in an
ethical manner in managing and operating a business. Otherwise, no one will be willing to invest
in or loan money to the business.
Ethics are moral principles that guide the conduct of individuals. Unfortunately, business man-
agers and accountants sometimes behave in an unethical manner. Many of the managers of the
companies listed in Exhibit 3 engaged in accounting or business fraud. These ethical violations led
to fines, firings, and lawsuits. In some cases, managers were criminally prosecuted, convicted, and
sent to prison.
Business Insight Using a low-cost strategy, a company offers product(s) to custom-

ers at a lower cost (price) than its competitors. The low-cost strategy
is normally used for products that are uniform in nature, and thus the
Business Strategies company cannot use a product-differentiation strategy. For example,
B
usinesses normally use a (1) product-differentiation or (2) low-cost Southwest Airlines Co. (LUV) uses a low-cost strategy in pro-
strategy to gain a competitive advantage and maximize their profits. viding airline services to passengers.
Using a product-differentiation strategy, a company distin- Risks of a product-differentiation strategy are that customers may
guishes its product(s) in such a way that it is desirable to customers and not value the uniqueness of the company’s product, competitors may
uniquely different from its competitor’s. Using this strategy, a company duplicate the product’s uniqueness, or that competitors may develop
tries to win over customers to its product(s) and establish customer loy- even more desirable attributes for their products. Risks of the low-cost
alty. If successful, the company can charge premium prices for its prod- strategy are that competitors may duplicate the company’s low-cost
ucts. For example, Apple Inc. (AAPL) uses a product-differentiation processes or that competitors may develop new processes for achiev-
strategy in developing and marketing its products. ing even lower costs.
Another random document with
no related content on Scribd:
[20] Édit. A. Barbier, in-8, t. I, p. 363.
Le même acteur, tout brave qu’il fût de sa personne, eut à souffrir

et à dévorer en silence maint affront plus cruel encore. Un jour, entre
autres, qu’il jouait lui-même dans son Opéra de village (1691), le
marquis de Sablé s’en vint, à peu près ivre, prendre place sur une
des banquettes de la scène. Comme il s’asseyait, il entendit
chanter :
En parterre il boutra nos blés,

Choux et poireaux seront sablés.
Il crut qu’on l’insultait, et, se levant avec la gravité d’un ivrogne qui
veut faire une action d’éclat, il marcha droit à l’auteur et le souffleta
en plein théâtre.
Juste retour des choses d’ici-bas ! la même année, Dancourt
avait tiré parti, dans une de ses pièces [21] , du malheur arrivé
récemment au frère cadet de M. Delosme de Monchesnay, un des
fournisseurs du Théâtre-Italien. Ce frère, procureur au Parlement,
avait été confondu mal à propos avec son aîné, par un brutal
personnage qui, croyant avoir à se plaindre des malignes allusions
de celui-ci, s’en était vengé sur les épaules de celui-là, tant il est
dangereux d’avoir des écrivains satiriques dans sa famille ! Mais
hâtons-nous de dire que la réparation de l’outrage fut
rigoureusement poursuivie, et que le plaignant obtint satisfaction
entière.
[21] La Gazette, sc. 18.
Cette méprise, assez peu plaisante, qui avait fourni une scène de
comédie à notre auteur, toujours à la piste des petits scandales du
jour, paraît avoir eu alors quelque retentissement, et chacun s’en
égaya à l’envi. Gacon, l’auteur méprisable et méprisé du Poëte sans
fard, qui attaquait tout le monde, les petits aussi bien que les grands,
est revenu plusieurs fois à cet obscur personnage : ici, dans une
épigramme, il badine sur les coups de gaule que lui attira sa
comédie du Phœnix ; là, dans une satire, il le nomme encore, en se
prédisant le même sort à lui-même :
Un soir, comme à Delosme, on viendra sur mon dos

Payer tout à la fois le prix de vos bons mots.
Je me retire tard, et souvent sans escorte ;
En vain l’on crie au guet pour demander main-forte :
On est roué de coups quand les gens sont venus.
Ce sinistre présage obscurcit souvent l’enjouement de sa verve :

Heureux, s’écrie-t-il un peu plus loin,
Heureux si pour mon dos j’étais en sûreté !
Gacon était bon prophète en s’exprimant ainsi ; heureux encore

eût-il pu se dire, s’il n’avait été battu que par procuration, comme
Delosme, et sur le dos d’un autre !
Le poëte sans fard ne cache pas le respect salutaire qu’il a pour
cet argument particulier à l’adresse des poëtes satiriques : il en parle
toujours avec la considération séante, même quand il veut faire le
brave. Un partisan de son ennemi La Motte avait lancé cette
épigramme contre lui :
Jadis un âne, au lieu de braire,

Parla sous les coups de bâton,
Mais un bâton te fera taire
Ou parler sur un autre ton.
Gacon reconnaît la valeur de cette apostrophe, et il répond avec

une soumission plaisante :
Eh bien, vous le voulez, je vais changer de ton :

L’opéra de La Motte est une pièce exquise.
J’aime mieux dire une sottise
Que d’avoir des coups de bâton.
Comment, après tout cela, serait-on disposé à trouver par trop
bizarre cette singulière pièce d’un recueil non moins singulier : le
Missodrie (de μισος et de δρυς, dans les Jeux de l’inconnu), où nous
lisons l’instructive histoire d’un poëte satirique et mauvaise langue,
tellement battu, tellement roué de coups, qu’il en est venu à haïr
toute image du bâton et à fuir, jusque dans sa maison et dans ses
meubles, ce qui pourrait lui rappeler, de près ou de loin, ce bois
odieux dont il a été si souvent la victime ?
Les artistes non plus, et entre tous les artistes les musiciens,
n’eurent pas grand’chose à envier aux littérateurs. Il est vrai que
c’étaient, pour la plupart, d’étranges personnages, qui n’avaient
point une idée fort élevée de l’art, et dont le genre de vie, à défaut de
la profession, était peu propre à leur concilier le respect. Maugars,
l’excellent joueur de viole, et le chanteur Lambert, qu’on se disputait
partout, qui promettait à tout le monde et ne tenait parole à
personne, eurent maintes fois des démêlés avec le tricot : les
Historiettes de Tallemant nous en apprennent quelque chose. Il est
très-probable, bien que le fait ne soit établi par aucun document
positif, à ma connaissance, qu’il en fut de même pour Lully, dont le
cynisme égalait, ou plutôt dépassait de beaucoup le talent.
IV
Mais, comme si les coups de canne des gentilshommes, les

coups de hallebarde des suisses, les coups de bâton des valets, ne
leur eussent pas suffi, les gens de lettres se traitaient souvent entre
eux de la même façon. On eût dit qu’ils voulaient autoriser et
perpétuer cet usage infamant, en donnant eux-mêmes un exemple
dont ils n’avaient plus le droit de se plaindre qu’on abusât contre
eux. Les discussions littéraires se vidaient presque toujours d’une
façon plus ou moins analogue à celle que Boileau nous a dépeinte à
la fin de sa deuxième satire sur un repas ridicule. Les faits que je
pourrais citer ici ne sont guère moins nombreux que ceux du
précédent chapitre, et la plupart offrent également une leçon de
dignité littéraire, en montrant ces excès, d’une part presque toujours
provoqués par des fautes dont ils sont le châtiment, d’autre part
presque toujours punis eux-mêmes sur leurs auteurs par cette
grande loi morale du talion, qui n’est que l’application pratique des
paroles de l’Écriture : « Quiconque se sert de l’épée périra par
l’épée. »
Nous trouvons, dans une ode burlesque réimprimée quelquefois
à la suite des œuvres de Régnier, le récit d’un combat acharné qui
eut lieu entre ce poëte et Berthelot, l’un des honteux ouvriers de
l’égoût littéraire nommé le Cabinet satirique. Ce fragment d’épopée
ne s’explique pas bien nettement sur les causes de la lutte ; mais sur
la lutte elle-même, il est très-explicite. Régnier rencontre Berthelot
dans le quartier des Quinze-Vingts :
Vers lui desdaigneux il s’avance

Ainsi qu’un paon vers un oyson,
Avant beaucoup plus de fiance
En sa valeur qu’en sa raison,
Et d’abord luy dit plus d’injures
Qu’un greffier ne fait d’escritures.
Berthelot, avecq’ patience

Souffre ce discours effronté,
Soit qu’il le fist par confiance,
Ou qu’il craignist d’être frotté ;
Mais à la fin Regnier se joue
D’approcher sa main de sa joue.
Aussitost, de colère blesme,

Berthelot le charge en ce lieu,
D’aussi bon cœur que, le caresme,
Sortant du service de Dieu,
Un petit cordelier se rue
Sur une pièce de morue.
Berthelot, de qui la carcasse

Pèse moins qu’un pied de poullet,
Prend soudain Régnier en la face,
Et, se jetant sur son collet,
Dessus ce grand corps il s’accroche,
Ainsi qu’une anguille sur roche.
De fureur son âme bouillonne,

Ses yeux sont de feu tout ardens ;
A chaque gourmade qu’il donne,
De despit il grince les dents,
Comme un magot à qui l’on jette
Un charbon pour une noisette.
Il poursuit tousjours et le presse,
Luy donnant du poing sur le nez,
Et ceux qui voyent la faiblesse
De ce géant sont estonnez,
Pensant voir, en ceste défaite,
Un corbeau souz une alouette.
Phœbus, dont les grâces infuses

Honorent ces divins cerveaux,
Comment permets-tu que les muses
Gourmandent ainsi leurs museaux,
Et qu’un peuple ignorant se raille
De voir tes enfants en bataille ?
Régnier, pour toute sa deffense,

Mordit Berthelot en la main,
Et l’eust mangé, comme l’on pense,
Si le bedeau de Saint-Germain,
Qui revenait des Tuilleries,
N’eût mis fin à leurs batteries.
Régnier porta de tant de façons la peine de cette algarade, que

nous n’essayerons même pas de les énumérer. Quant à son
adversaire, qui s’était si cruellement défendu, ce fut Malherbe, un
des plus rudes et des plus cyniques héros de notre histoire littéraire,
le chef de cette réforme poétique dont Berthelot était l’ennemi
déterminé, qui se chargea de son expiation. Piqué au vif par la
parodie que celui-ci avait faite de l’une de ses pièces, Malherbe s’en
fut chercher un gentilhomme de Caen, du nom de La Boulardière, lui
mit un cotret noueux dans les mains, et le chargea de sa réponse,
dont l’ami s’acquitta en courrier fidèle et zélé.
C’est encore avec le bâton que le même rappelait au sentiment
des convenances les confrères assez osés pour effleurer de leurs
épigrammes la vicomtesse d’Auchy, sa favorite, qu’il voulait se
réserver le privilége de tracasser et de battre à lui seul.
Et tout ceci ne l’empêchait pas, bien entendu, de se plaindre
amèrement dans une de ses lettres à Peiresc (4 octobre 1627), des
misérables qui l’avaient assassiné lui-même, c’est-à-dire moulu de
coups, dans une circonstance sur laquelle il ne s’est pas expliqué
clairement : on peut conjecturer, sans jugement téméraire, que
c’était en retour de quelqu’une de ces méchantes boutades dont il
était coutumier.
En parlant plus haut de Balzac, le prince des écrivains français,
nous l’avons montré battu à plusieurs reprises, ou peu s’en faut.
C’est qu’il avait battu lui-même. Rencontrant un jour par les rues
d’Angoulême un avocat qui avait plaidé contre lui, il lui donna un
coup de houssine, qu’il eût payé cher si les grands seigneurs de la
ville n’eussent pris son parti.
On connaît sa querelle avec dom Goulu, général des Feuillants :
la république des lettres se partagea en deux à cette occasion, et
prit parti pour ou contre chacun des adversaires. Ce fut une véritable
bataille rangée. Un jeune avocat provincial, du nom de Javersac,
voulut profiter de la circonstance pour entrer lui-même en lice, et se
faire connaître par un coup d’éclat : en conséquence, il se transporta
à Paris avec un livre où il attaquait à la fois les deux ennemis,
frappant à droite et à gauche avec plus de décision que de talent. Il
s’était flatté de gagner la renommée par ce vaillant début, mais il y
gagna tout autre chose qu’il n’attendait pas. Le 11 août 1628, à neuf
heures du matin, il dormait encore dans le lit de sa chambre
d’auberge, quand il se sentit réveillé en sursaut : c’étaient trois
hommes qui le bâtonnaient à tour de bras.
Si l’on en croit Javersac, qui publia une relation de l’événement,
et Charles Sorel, dans sa Bibliothèque françoise [22] , l’écrivain
outragé s’élança de son lit, l’épée en main, et poursuivit ses
agresseurs jusque dans la rue, où cinquante personnes, ayant vu
son arme ployer jusqu’aux gardes, à un grand coup qu’il donna dans
la poitrine d’un de ces coquins, connurent qu’ils étaient revêtus de
cottes de mailles. Mais Tallemant des Réaux, que nous trouvons
toujours sur notre chemin pour ces aventures scandaleuses, ne
raconte pas les faits d’une manière si honorable pour le jeune
écrivain. Rien n’est plus contradictoire que les nombreux écrits
suscités par cette affaire, et dont la plupart ont aujourd’hui disparu.
[22] Des Lettres de M. de Balzac, p. 133.
Dès le lendemain, on criait sur le pont Neuf, la Défaite du paladin

Javersac ; et le titre ajoutait, pour donner le change sur le véritable
auteur de l’attentat : par les alliés et confédérés du Prince des
Feuilles [23] . Personne ne s’y trompa, et Javersac moins que
personne, s’il est vrai surtout, comme il le rapporte, qu’un des
satellites lui eût dit en le frappant : « On vous avait défendu d’écrire
contre M. de Balzac. » On nomme même le gentilhomme (Moulin-
Robert) que celui-ci chargea du soin de sa vengeance. Le lecteur
voit que les écrivains, comme les grands seigneurs, avaient leurs
séides pour ces opérations délicates.
[23] Dom Goulu, général des Feuillants, que Javersac
avait attaqué, dans son livre, sous le nom de Phyllarque.
Cette facétie satirique, dont le récit concorde avec celui de

l’auteur des Historiettes, se termine en disant que les amis de
Phyllarque, « joints en ceci avec ceux du parti contraire, ont juré
d’exterminer autant de Javersacs qu’il s’en présentera, et de faire
voir aux mauvais poëtes qu’outre le siècle d’or, le siècle d’airain et
celui de fer, qui sont si célèbres dans les fables, il y a encore à venir
un siècle de bois, dont l’ancienne poésie n’a point parlé, et aux
misères et calamités duquel ils auront beaucoup plus de part que les
autres hommes. »
Le ton du libelle, le rôle qu’il faisait jouer à Javersac dans la
querelle, le soin qu’il prenait de faire retomber l’exécution de l’acte
sur le parti de dom Goulu, tout, jusqu’à cet empressement
extraordinaire de publier la mésaventure de ce petit auteur inconnu,
en a fait attribuer la composition à Balzac lui-même, quoiqu’il s’en
soit toujours défendu. Il paraît à peu près certain que l’ouvrage est
de lui. Ce serait là une vengeance après coup, encore plus cruelle
que la première, et de ces deux actes de mauvais goût, l’un ne ferait
certes pas plus honneur que l’autre à sa mémoire. Je l’aime mieux
lorsque, sur son lit de mort, il fait prier M. de Javersac, par un de ses
amis, de venir le voir, et scelle de ses embrassements et de ses
larmes sa réconciliation avec lui [24] .
[24] Moriscet, Relat. de la mort de Balzac, à la suite
de ses œuvres.
A quelques années de là, nous rencontrons Ménage en démêlé

avec Bussy-Rabutin, démêlé non d’homme de lettres à grand
seigneur, mais d’écrivain à écrivain. Celui-ci, dans son Histoire
amoureuse des Gaules, avait plaisanté sur la passion platonique du
savant homme pour madame de Sévigné. Ménage, piqué au vif,
tailla sa meilleure plume, la trempa dans sa meilleure encre, et, par
une réminiscence de ces agréables discussions du seizième siècle
où les érudits échangeaient, dans la langue de Cicéron, de si
agréables injures, se mit à composer et à polir, ab irato, une
épigramme latine qui, faisant allusion au livre de Bussy et à son
emprisonnement, concluait par ce foudroyant distique :
Sic nebulo, gladiis quos formidabat Iberis ;

Quos meruit, Francis fustibus eripitur.
« Ainsi ce drôle est enlevé aux coups d’épée espagnols, qu’il

craignait ; aux coups de bâton français, qu’il a mérités. »
Un homme capable de faire sonner de la sorte le bâton dans ses
vers ne devait pas reculer devant la réalité. Aussi voulut-il un jour
user lui-même de cette arme sur le dos d’un intendant : il est vrai
que celui-ci lui avait donné un soufflet ; mais, si c’était une raison
suffisante pour autoriser le bâton, en était-ce une pour se vanter de
pouvoir le faire assassiner, en payant un spadassin cent pistoles ?
Tallemant nous a raconté cette bravade, mais nous aimons à croire,
ou que Tallemant a exagéré, ou que Ménage, qui n’avait pas eu le
temps de digérer sa colère en l’exprimant en latin, se repentit bien
vite de cette boutade inconsidérée ; ou enfin que le mot assassiner
avait, dans la bouche du docte personnage, la signification
particulière que nous lui avons déjà vue tout à l’heure dans une lettre
de Malherbe, ce qui serait encore fort joli. Pourtant, il n’est guère
possible d’admettre ici cette dernière explication, car il avait
commencé par supplier le cardinal de Retz de lui permettre, en un
billet signé de sa main, de donner cent coups de bâton à son
intendant, et ce ne fut qu’au refus du maître que, dans sa fureur, il
s’emporta jusqu’à l’autre menace.
Ménage s’était borné aux paroles, sans mettre réellement, que
nous sachions, la main à l’œuvre : il obtint en retour mesure pour
mesure. Lorsque, dans sa Requête des Dictionnaires (1649), qui lui
ferma les portes de l’Académie, il eut médit de Boisrobert,
Cet admirable Patelin

Aimant le genre masculin,
un des neveux de l’abbé, dépêché peut-être par son oncle, s’en fut
l’attendre un jour, pendant trois heures, avec une gaule choisie
parmi les plus solides, à un endroit où il devait passer. Ménage eut
la chance de sortir par une autre porte. Il n’avait point frappé, il ne fut
point frappé lui-même, mais il s’en fallut d’assez peu pour le rendre
plus sage à l’avenir.
Quant à M. de Boisrobert, qui donnait de semblables
procurations à ses neveux, nous avons déjà vu, par avance, qu’il fut
payé de la même monnaie, et nous n’avons pas à y revenir ici.
Encore s’il s’en fût tenu au bâton, on eût pu, jusqu’à un certain point,
y trouver une excuse, en se rejetant sur la force de l’habitude. Mais
croira-t-on que, dans une discussion littéraire, il alla jusqu’à menacer
d’un régiment des gardes Baudeau de Somaize, le futur auteur du
Dictionnaire des précieuses, qui, sans se laisser intimider par cette
formidable argumentation, lui répondit avec une dignité hautaine ?
Il semble, du reste, que ce dernier genre de discussion, tout
étrange qu’il puisse paraître au premier abord, eût alors quelque
tendance à se mettre à la mode parmi les auteurs ; car, à la même
époque, nous en trouvons un autre exemple, encore plus
caractérisé, dans la petite guerre de gros in-quarto qui s’engagea
entre Costar et Girac, vers 1655, sur la tombe de Voiture. Les deux
tenants commencèrent par s’accabler d’injures réciproques : c’était
la règle ; mais bientôt Costar, non content d’avoir employé tout son
crédit pour obtenir des magistrats que la parole fût interdite à son
adversaire, n’hésita pas à invoquer, sous une forme transparente,
l’intervention de la force armée, en le menaçant de lui faire expier
ses attaques contre Voiture par les mains des officiers qui
passeraient dans l’Angoumois, où résidait le vaillant champion de
Balzac. Ce passage, où l’on appelait, en quelque sorte, les
dragonnades à l’appui d’une thèse littéraire, mérite d’être transcrit in
extenso.
« Sans mentir, dit Costar en parlant de son antagoniste, un
homme de cette humeur est bien sujet à se faire battre : j’entends à
coups de langue et à coups de plume, car nous ne vivons pas en un
siècle si licencieux que l’étoit celui de ces jeunes Romains de
condition, qui se promenoient par les rues tout le long du jour,
cachant sous leurs robes de longs fouets pour châtier l’insolence de
ceux qui n’approuvoient pas le poëte Lucilius, s’ils étoient si
malheureux que de se rencontrer en leur chemin. »
Costar a beau prendre, par pudeur, quelques précautions
oratoires, on voit bien, et on le verra encore mieux tout à l’heure,
que, tout en battant Girac à coups de plume, il trouverait quelque
satisfaction à le battre d’une façon plus solide. Il a peine à dissimuler
l’admiration qu’il éprouve pour ces jeunes Romains de condition, et
l’envie qu’il aurait de les imiter, en châtiant l’insolence d’un homme
qui osait ne pas approuver entièrement le dieu Voiture, ni M. de
Costar, son prophète :
« Néanmoins, poursuit-il en enflant sa voix, M. de Girac pourroit
bien s’attirer quelque logement de gendarmes, s’il passoit des
troupes par l’Angoumois ; et je m’étonne que lui, qui ne néglige pas
trop ses intérêts, et qui songe à ses affaires, ne se souvienne plus
du capitaine qui lui dit, il y a deux ou trois ans : « En considération
de M. le marquis de Montausier, j’empêcherai ma compagnie d’aller
chez vous, mais c’est à la charge qu’à l’avenir il ne vous arrivera
plus d’écrire contre M. de Voiture. »
Que dites-vous de ce capitaine bel-esprit, qui menace d’un
logement de soldats ceux qui n’admireront point M. de Voiture, et de
Costar qui triomphe en rappelant ce beau fait ? Ce n’est donc point
d’aujourd’hui, quoi qu’on en ait prétendu, que certains écrivains
appellent les gendarmes à l’aide pour vider leurs discussions
littéraires. Qu’on veuille bien en croire ces quelques pages, et qu’on
ne nous offre plus trop légèrement pour modèle la bienséance et la
dignité des polémiques du grand siècle. On se souvient de ce valet
qui dit à Javersac, en le battant dans son lit : « C’est pour vous
apprendre à écrire contre M. de Balzac. » Aujourd’hui voilà la même
phrase retournée contre un partisan de Balzac. Toujours, on le voit,
la loi du talion, et la justification du proverbe de l’Évangile !
« J’ai de la peine, continue encore ce rude jouteur, à deviner ce
qui a pu rassurer si fort M. de Girac contre ces menaces, si ce n’est
qu’il se soit imaginé qu’en devenant un auteur célèbre il n’auroit plus
que faire de recommandation étrangère, et que son livre tout seul lui
tiendroit lieu de sauvegarde inviolable aux gens de guerre… Si M.
de Girac était mon ami, je lui conseillerais de prendre d’autres
sûretés contre le capitaine partisan et vengeur des beaux
esprits [25] . »
[25] Suite de la défense, p. 40-41.
D’autres écrivains se gourmaient entre eux et vidaient leurs

différends à la force du poignet, comme ce sieur de Haute-Fontaine
qui, dans un accès de colère et de dépit, pour se venger d’avoir été
vaincu par le ministre Du Moulin dans leurs communes prétentions à
une chaire de philosophie, lui écorcha à coups de poing tout le
visage, si bien que ce dernier fut obligé de se faire mettre de la
peinture couleur de chair sur les endroits lésés. Ce Haute-Fontaine
était un rude gaillard, et Tallemant nous raconte encore qu’il donna
un soufflet à un capitaine anglais qui médisait du roi de France, et
que, dans une hôtellerie, il battit cinq ou six recors qui voulaient
emmener quelqu’un en prison.
Les querelles entre gens de lettres avaient donc aussi leurs côtés
dangereux, et ce n’est pas sans quelques réserves qu’on peut
accepter ce mot du premier président, qui disait à Gilles Boileau, en
l’excitant contre l’auteur de Christine, Ægidius Ménage : « Il y auroit
du péril entre gens d’épée ; mais les auteurs ne versent que de
l’encre. » S’il voulait dire simplement qu’une affaire d’honneur n’était
point à craindre, cela était parfaitement vrai, et les écrivains les plus
susceptibles d’alors semblent n’avoir pas soupçonné, au moins dans
leurs disputes littéraires, ce mode de satisfaction pourtant si
répandu : ils se bornaient à des vengeances plus humiliantes pour
eux comme pour leurs adversaires. Le mot du premier président ne
donne pas une haute idée de la grandeur d’âme et de la dignité de
celui qui pouvait avoir besoin d’un tel encouragement.
En passant de la vie privée des auteurs à leurs livres, non pour y
découvrir des renseignements particuliers sur tel ou tel fait, mais
pour y chercher, dans le ton général et le caractère habituel de la
polémique, la trace des mœurs, des usages, des tendances du
temps, nous y retrouverons encore l’influence et la souveraineté du
bâton. La même conclusion ressort avec la même évidence des faits
et des écrits : les uns et les autres suivent une ligne parallèle ; ils se
reflètent, pour ainsi dire, en se complétant, et ceux-ci sont comme le
commentaire justificatif et l’appendice naturel de ceux-là. Le bâton
se dessine à chaque page, dans toutes les attitudes : c’est le
vengeur qui apparaît toujours aux moments solennels ; c’est le nec
plus ultrà de l’argumentation dans les querelles entre écrivains. Les
gladiateurs de plume, ainsi que les appelait Balzac, n’y allaient pas
de main morte dans ces duels journaliers où l’on ne s’arrêtait point
au premier sang ; et vraiment, à lire les aménités dont, à l’instar des
Scaliger et des Scioppius, des Vadius et des Trissotins, le père
Garasse et dom Goulu, Girac et Costar, voire Furetière et Scarron,
etc., remplissent leurs ouvrages, à l’adresse de leurs adversaires, on
se prend à trouver anodines et douceâtres les plus grandes
violences de nos escarmouches littéraires ou politiques
d’aujourd’hui. Scudéry, Cyrano de Bergerac et le romancier Vital
d’Audiguier se vantaient d’écrire avec leurs épées : on dirait que
leurs confrères écrivent avec un bâton taillé en guise de plume.
Le bâton était chose tellement dans les mœurs, qu’on l’employait
comme un des ressorts de l’action, non-seulement dans les tragi-
comédies, mais quelquefois même dans les tragédies de la première
moitié du siècle. C’est ainsi que, dans la Rodomontade de
Méliglosse (1605), le vieil Aymon, irrité, menace d’appuyer ses
représentations de la même manière que le comte de Sault avait
appuyé les siennes, et de frotter d’importance ses contradicteurs.
J’aurais trop beau jeu de recueillir le même air partout où il se
présente, dans les épigrammes, les romans, et surtout les comédies,
où les coups de bâton forment, pour ainsi dire, la base même de
l’intrigue : c’est là un des cachets de la littérature du temps, comme
plus tard le seront tour à tour les tirades sur la tolérance, les
descriptions de souterrains et de fantômes, les bonnes lames de
Tolède, et les dames aux camellias. Je veux seulement rapporter
quelques exemples, qui suffiront pour indiquer le ton général.
Voici d’abord le d’Artagnan littéraire, le matamore périgourdin :
Cyrano, qui a l’épiderme très-irritable et qui ne peut souffrir la
contradiction, ne rêve que d’assommer ceux qui lui déplaisent. C’est
lui qui disait au comédien Montfleury, son ennemi intime : « Penses-
tu donc, à cause qu’un homme ne te sauroit battre tout entier en
vingt-quatre heures, et qu’il ne sauroit en un jour échigner qu’une de
tes omoplates, que je me veuille reposer de ta mort sur le
bourreau ? » Les coups de bâton pleuvent comme grêle dans ses
Lettres, au point même que cet éternel refrain, qui ne manquait pas
d’abord d’un certain agrément, finit par devenir des plus monotones,
— comme je crains qu’il ne le devienne dans ce livre, sans qu’il y ait
de ma faute. L’exemple suivant est assez caractéristique pour me
dispenser de tous les autres : « On vous coupe du bois… car je vous
proteste que, si les coups de bâton pouvoient s’envoyer par écrit,
vous liriez ma lettre des épaules, et que vous y verriez un homme
armé d’un tricot sortir visiblement de la place où j’ai accoutumé de
mettre, monsieur, votre très-humble serviteur. » (A un comte de bas
aloi.) [26] .
[26] Voir encore Lettr. satiriq., II, 19, etc. ; édit. P.
Lacroix, chez Delahays.
Saint-Amant réserve une correction semblable à l’imprimeur qui a
donné une édition subreptice et fautive de ses œuvres :
Pour moi, je lui promets tant de coups de bâton,

Si jamais sur son dos je puis prendre le ton,
Qu’il croira que du ciel, qu’à sa perte j’oblige,
Il pleuvra des cotrets par un nouveau prodige [27] .
[27] Élégie au duc de Retz.
Ne dirait-on pas, sauf les rimes, que ces vers sont sortis du
même moule que la prose de Cyrano ?
Dans son Poëte crotté, où il a eu Maillet spécialement en vue,
Saint-Amant a tracé aussi, avec son entrain habituel, un tableau un
peu chargé peut-être, mais très-vrai au fond, de la condition
ordinaire de certains écrivains en sous-ordre, et de l’aimable façon
dont ils étaient traités, même par les valets de leurs protecteurs :
A la fin, saoul de chiquenaudes,

De taloches, de gringuenaudes,
D’ardentes mouches sur l’orteil,
De camouflets dans le sommeil,
De pets en coque à la moustache,
De papiers qu’au dos on attache,
D’enfler même pour les laquais,
De bernements, de sobriquets,
De coups d’épingle dans les fesses,
Et de plusieurs autres caresses
Que dans le Louvre on lui faisoit
Quand son diable l’y conduisoit,
Il lui prit, quoique tard, envie
D’aller ailleurs passer sa vie.
Plus loin, le poëte crotté prend la parole :

L’aventure du paladin [28]
Me fait tressaillir de l’épaule :
Je redoute en diable la gaule,
Et m’est avis que sur mon dos
Je ne sens déjà que fagots.
[28] Javersac.
Écoutez cet agréable vaudeville, qui donne la note des

plaisanteries du temps :
Saint-Ruth, Calais, Larry, Boufflers,

Ce ne sont point des ducs et pairs
Et ne prétendent point de l’être
Par plus d’une bonne raison ;
Car ils servent si bien leur maître,
Qu’ils mériteraient le bâton, etc.
Puis, c’est une autre muse anonyme qui chante à son tour, sur
l’air connu :
Quoi ! Nogaret se mêle

De faire des chansons ?
Ne craint-il point la grêle
De cent coups de bâtons ?
Ici, c’est Scudéry, dont on parodie la superbe épigraphe en deux

vers burlesquement menaçants :
Et, poëte et Gascon,

Il aura du bâton.
Là, c’est l’abbé de Pure, qui, dans son roman de la Précieuse,

s’adresse en ces termes, par l’intermédiaire d’un de ses
personnages, à un méchant poëte provincial :
Tes vers sont tout ton bien, terre, prés et garenne ;
Mais encor que peux-tu, d’une semblable graine,
Ni semer, ni cueillir que des coups de bâton ?
Enfin, puisqu’il faut se borner dans cette revue, que je pourrais

prolonger à l’infini, Scarron, le moins cruel des hommes pourtant, a
joint sa voix à ce concert, en maint et maint endroit de ses œuvres.
Écoutez-le, dans sa chanson contre Gilles Boileau, s’écrier sur le
mode lyrique :
Taisez-vous, Boileau le critique :

On fait, pour votre hiver, grand amas de fagots ;
On veut qu’un bras fort vous applique
Cent coups de bâton sur le dos.
Ailleurs, dans ses burlesques Imprécations contre celui qui lui a

pris son Juvénal, il souhaite de voir le voleur fustigé à tour de bras,
et de l’entendre crier sous les étrivières. Il termine sa satire contre
ceux qui font passer leurs libelles diffamatoires sous le nom d’autrui,
en leur disant : « Vous savez
… Qu’outre les fléaux, famine, guerre, peste,

Il en est encore un, fatal aux rimailleurs,
Fort connu de tout temps, en France comme ailleurs :
C’est un mal qui se prend d’ordinaire aux épaules,
Causé par des bâtons, quelquefois par des gaules.
Mais, loin de lui en vouloir de ces intempérances de langage, il faut

plutôt lui savoir gré de n’avoir pas été plus loin, quand on songe que,
dans sa Baronade, il va jusqu’à souhaiter que Baron soit pendu, et
que, dans sa Mazarinade (si toutefois cette pièce est bien de lui), il
dit, en parlant du cardinal, qu’il espère voir le jour où
Sa carcasse désentraillée,
Par la canaille tiraillée,
Ensanglantera le pavé.
Voilà qui est peu plaisant pour un poëte burlesque. Restons-en
sur ce beau trait : tout ce que nous pourrions découvrir encore serait
pâle à côté d’une période aussi haute en couleurs.
Il nous semble que ces citations ont bien leur éloquence, et que
nous ne pouvions mieux achever de démontrer à quel point les
coups de bâton étaient passés dans la langue, dans les mœurs et
dans les actions du temps.
V
On ne s’arrêtait même pas toujours au bâton dans la réalité, non

plus que dans les écrits : nous l’avons déjà vu pour l’Arétin, que le
cynisme de son impudence devait, il est vrai, placer en dehors de la
loi commune. Archiloque avait péri par le poignard. Quand l’abbé
Cotin disait des poëtes satiriques qu’ils ont pour destin de mourir le
cou cassé, il exagérait de bien peu, à supposer qu’il exagérât. A la
manière dont on en usait souvent, le bâton eût pu suffire à lui seul
pour justifier le vers de l’abbé Cotin et l’avertissement de Pradon à
Boileau, tant il savait coucher son homme jusqu’au lendemain sur la
place en lui rompant les membres, si bien que le mot d’assassinat,
même dans son sens moderne, n’était guère trop fort pour des
exécutions semblables. Mais, tout meurtrier qu’il fût, il ne le
paraissait pas toujours assez à la colère vengeresse des grands
seigneurs, qui avaient parfois recours à des armes plus sanglantes
encore.
En 1651, le marquis de Vardes fit trancher le nez au
pamphlétaire Matthieu Dubos, qui l’avait maltraité dans un de ses
manifestes. Les laquais du marquis le saisirent, et, dit le facétieux
Loret,
Coupèrent à coups de cizeau

Son très-infortuné nazeau,
Ce qui fait qu’après cet outrage
On peut dire de son ouvrage :
« Ce sont des discours mal tournez
D’un auteur qui n’a point de nez [29] . »
[29] Muse histor., l. II, lett. 29, 23 juillet 1651.
C’est par erreur que les mémoires du cardinal de Retz [30] , en

racontant cette catastrophe, vingt ans plus tard, l’appliquent à un
autre libelliste du même temps, Dubosc-Montandré, celui qui,
suivant la légende, aurait rudement expié, par la main du prince de
Condé ou de ses lieutenants, les attaques qu’il avait dirigées contre
lui, avant de lui avoir vendu sa plume.
[30] Livre III.
Sarrasin était le protégé et le domestique du prince de Conti :

celui-ci, dans un moment de colère, le frappa, dit-on, à la tempe, et
si malheureusement, qu’il en résulta une fièvre violente dont le poëte
mourut. Il est vrai que Tallemant conteste l’anecdote, mais son
opinion n’a pas prévalu. Il prétend que le prince ne le maltraita qu’en
paroles, et raconte que souvent, après avoir menacé de le jeter par
les fenêtres, il se laissait apaiser par ses bouffonneries.
Louis Racine donne à entendre, dans ses Mémoires sur son
père, que le fameux voyageur Bernier serait mort par suite d’une
plaisanterie que lui fit à sa table le président de Harlai. J’ignore
quelle peut être cette plaisanterie délicate ; mais l’histoire de
Santeuil éclairera le lecteur, et lui fera voir qu’il n’y a rien
d’impossible ni même d’invraisemblable dans une assertion qui
paraît d’abord singulière.
Santeuil, malgré son titre et son habit, qui eussent dû le faire
respecter, n’en était pas moins traité par ses Mécènes en poëte,
c’est-à-dire de la plus cavalière façon du monde. La duchesse de
Bourbon ne se faisait nul scrupule de le souffleter, puis, sur ses
réclamations, de l’inonder d’un verre d’eau en plein visage, pour le
punir de ne l’avoir pas encore célébrée dans ses vers. Jusque-là,
rien à dire : c’était l’ordinaire de tout auteur protégé. Mais voici qui
dépasse les bornes. Un soir, à dîner, la société du duc de Bourbon,

Corporate Financial Accounting 16Th Edition Carl S Warren Full Chapter

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Corporate Financial Accounting 16Th Edition Carl S Warren Full Chapter

Uploaded by

Copyright:

Available Formats

Corporate Financial Accounting 16th

Edition Carl S. Warren

Australia • Brazil • Mexico • Singapore • United Kingdom • United States

Product Director: Jason Fremder

In House SME: Eileen Byron Library of Congress Control Number: 2020921393

Sr. Digital Delivery Lead: Jessica Robbe ISBN: 978-0-357-51038-4

Loose-leaf Edition ISBN: 978-0-357-51039-1

Executive Marketing Manager: Nathan Anderson Cengage

Printed in the United States of America

Roadmap for Success

The account receivable was paid in cash

Using Data Analytics

Take It Further Data Analytic Cases

TIF 5-8 Data Analytics: Sales analysis

Journal Entries with T Accounts

Assets 5 Liabilities 1 Stockholders’ Equity

Discarding of fully depreciated equipment.

Accumulated Depreciation—Equipment 4,800

Assets 5 Liabilities 1 Stockholders’ Equity

The preceding presentation has the following pedagogical advantages:

Why Accrual Accounting is Required

Cash Basis of Accounting

Unadjusted Adjusting Adjusted

AS S ETS = L IABIL ITIES + STOCKHOL DER S ' E Q U IT Y

Unadjusted Trial Balance

Retail Businesses Fixed and Intangible

STATEMENT OF STATEMENT OF CASH FLOWS

Link to Opening Company

Business Insight Inventory . Estimated

Chapter 9 Long-Term Assets: Fixed and Intangible 493

Check Up Corner 9-2 Selling Fixed Assets

Note to Financial Statements:

MAD 9-1 Analyze and compare Amazon.com and Netflix Obj. 7

Alaska Air Group Delta Air Lines Southwest Airlines

MAD 9-3 Analyze Verizon Obj. 7

Student Learning Aids regarding fixed assets:

▪▪ At the end of each chapter,

Instructor and Student Resources

Chapter Changes and Improvements

Cengage Mobile App

©TERRY R. SPRAY INHISIMAGE STUDIOS

©THOMAS BOUTWELL, T2PHOTOGRAPHY

1 Introduction to Accounting and Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Appendix A Interest Tables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Continuing Problem 105

Generally Accepted Accounting

Double-Entry Accounting System 64

Accounting Cycle 177 The Adjusting Process 261

Make a Decision 450

Financial Reporting for Long-Term Assets:

Appendix Exchanging Similar Fixed Assets 483

10 Liabilities: Current, Reporting Bonds Payable 569

Comprehensive Problem 3 547 Accounting for Dividends 607

13 Statement of Cash Analyzing Liquidity 713

Analytical Methods 707

Accounting and Business

©CJG – TECHNOLOGY/ALAMY STOCK PHOTO

Analysis for Decision Making

Objective 1 Nature of Business and Accounting

Creditors and/or Owners Building and

Customers and Suppliers

The process by which accounting provides information to users is as follows:

Managerial Accounting Internal users of accounting information include managers and

10 Liabilities: Current, Reporting Bonds Payable 569

13 Statement of Cash Analyzing Liquidity 713