CHAPTER 1 Accounting and Financial Statements 2
Enter the World of Business Former Enron CFO Talks about Accounting Fraud 3
Introduction 4
The Nature of Accounting 4
Accountants 4
Accounting or Bookkeeping？ 6
The Uses of Accounting Information 7
The Accounting Process 10
The Accounting Equation 10
Double-Entry Bookkeeping 11
The Accounting Cycle 11
Financial Statements 14
The Income Statement 14
The Balance Sheet 19
The Statement of Cash Flows 23
Ratio Analysis： Analyzing Financial Statements 25
Profitability Ratios 26
Asset Utilization Ratios 27
Liquidity Ratios 28
Debt Utilization Ratios 28
Per Share Data 29
Industry Analysis 30
Importance of Integrity in Accounting 31
So You Want a to be an Accountant 32
Review Your Understanding 33
Revisit the World of Business 33
Learn the Terms 34
Check Your Progress 34
Get Involved 34
Build Your Skills： Financial Analysis 35
Solve the Dilemma： Exploring the Secrets of Accounting 35
Build Your Business Plan： Accounting and Financial Statements 35
See for Yourself Videocase： The Accounting Function at Goodwill Industries International Inc. 36
Team Exercise 37
CHAPTER 2 Money and the Financial System 38
Enter the World of Business The Good and the Bad of a Cashless Society 39
introduction 40
Money in the Financial System 40
Functions of Money 40
Characteristics of Money 41
Types of Money 43
The American Financial System 47
The Federal Reserve System 47
Banking Institutions 50
Nonbanking Institutions 53
Electronic Banking 57
Future of Banking 58
So You’re Interested in Financial Systems or Banking 61
Review Your Understanding 61
Revisit the World of Business 62
Learn the Terms 62
Check Your Progress 62
Get Involved 63
Build Your Skills： Managing Money 63
Solve the Dilemma： Seeing the Financial Side of Business 63
Build Your Business Plan： Money and the Finacial System 64
See for Yourself Videocase： Controversy over Bank LendingPolicies 64
Team Exercise 65
CHAPTER 3 Financial Management and Securities Markets 66
Enter the World of Business Standard ＆ Poor’s Defends Ratings 67
Introduction 68
Managing Current Assets and Liabilities 68
Managing Current Assets 68
Managing Current Liabilities 73
Managing Fixed Assets 75
Capital Budgeting and Project Selection 76
Assessing Risk 76
Pricing Long-Term Money 76
Financing with Long-Term Liabilities 78
Bonds： Corporate IOUs 79
Types of Bonds 79
Financing with Owners’ Equity 80
Investment Banking 82
The Securities Markets 84
Stock Markets 85
The Over-the-Counter Market 85
Measuring Market Performance 86
So You Want to Work in Financial Management or Securities 90
Review Your Understanding 90
Revisit the World of Business 91
Learn the Terms 91
Check Your Progress 92
Get Involved 92
Build Your Skills： Choosing among Projects 92
Solve the Dilemma： Surviving Rapid Growth 93
Build Your Business Plan： Financial Management and Securities Market 93
See for Yourself Videocase： Morningstar Inc.Makes Investing Easier 94
Team Exercise 94
Appendix Personal Financial Planning 95
Notes 114
Glossary 116
Photo Credits 120