Learning Goal 12: Describe the Financial
Statements
   278
Review and Preview     278
Financial Statements and What They Do    279
Financial Statements Are Summaries    279
The Types of Financial Statements    279
Features of the Annual Report    280
The Qualities of Information    281
How Good Is Information in the Financial
Statements?    281
Four Important Qualities    282
Review and Vocabulary    283
Practice
   284

Learning Goal 13: Identify and Prepare an Income
Statement
   286

Overview    286
Introduction    286
What It Is and the Four Steps to Prepare It    287
Features of the Income Statement    287
Four Steps in Preparing an Income Statement    289
Review and Vocabulary    291
Practice
   292


Learning Goal 14: Identify and Prepare a
Statement of Owner’s Equity
    293
Review    293
What It Is and the Four Steps to Prepare It    294
Features of the Statement of Owner's Equity    294
Four Steps in Preparing the Statement of
Owner's Equity    295
Review and Vocabulary    298
Practice
   299

Learning Goal 15: Identify and Prepare a
Balance Sheet
    300
What It Is and the Four Steps to Prepare It    300
Features of the Balance Sheet    300
Four Steps in Preparing a Balance Sheet    302
Review and Vocabulary    305
Practice
   306

   
Learning Goal 16: Identify the Statement of
Cash Flows
   307
Overview    307
Operating Activities     307
Investing Activities    308
Financing Activities     308
Example of a Statement of Cash Flows    309
Using the Statement for Analysis     310
Combined Example of the Four
Financial Statements    311
Review and Vocabulary    312
Practice
   313

Learning Goal 17: Compare, Contrast, and Connect
All the Financial Statements
    314
Comparing the Four Financial Statements     314
Review    314
The Four General-Purpose Financial Statements 315
What Are the Connections Between
the Statements?    315
Examples of the Connections    317
Detailed Examples of Owner's Equity
Connections 324
Review    339
Practice
   340

Learning Goal 18: Describe the Conceptual
Framework of Accounting
    355
Overview    355
The Conceptual Framework and
Its Components
   356
The Conceptual Framework of Accounting    356
Objectives of Financial Reporting    357
Qualitative Characteristics    357
Elements of Financial Statements    358
Operating Guidelines    358
Components of the Operating Guidelines    359
GAAP (Generally Accepted Accounting
Principles)    359
Underlying Assumptions    361
Modifying Constraints    361
Illustration of the Conceptual Framework
of Accounting    362
Five Important Broad GAAP Rules    363
Reliability Principle    363
Cost Principle    363

 
    
  
 
Contents
  
   
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