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Accountingwww.mhhe.com/LLPWle
Patricia A. LibbyIthaca College
Robert LibbyCornell University
Fred PhillipsUniversity of Saskatchewan
Stacey WhitecottonArizona State University
McGraw-HillIrwin
Boston Burr Ridge, IL Dubuque, IA New York San Francisco St. LouisBangkok Bogota Caracas Kuala Lumpur Lisbon London Madrid Mexico CityMilan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto
C h a p t e r
The Role of Accounting in Starting a Business 2
PIZZA AROMA 3
Business Types and Organizational Forms 4Business Types 4
Organizational Forms 4
Accounting and Business Decisions 6
Accounting Defined 6AccountingProfessionals 6 ,Users of FinancialInformation 6
Basic FinancialReports 8
The AccountingEquation 9
Pizza Aroma Illustration 10
Financial Statements 13
Professional Standards and Ethical Conduct 22Generally Accepted Accounting Principles 23
Ethical Conduct 24
Epilogue for Pizza Aroma 25
Demonstration Case 26Supplement JA: Overview of Career Choices for AccountingProfessionals 27Chapter Summary 28Key Terms 30Questions 30Multiple Choice 31Mini Exercises 31Exercises 33Problems—Set A 38Problems—Set B 42Cases and Projects 45
Establishing a Business and the Balance Sheet 48
PIZZA AROMA 49
Determine the Effects of Business Activities 50
Nature of Business Transactions 50
Balance Sheet Accounts 51
Transaction Analysis 52
Analysis of Pizza Aroma's Transactions 53
Prepare Accounting Records 57
The Accounting Cycle 57
Analyzing Business Transactions 57
Recording Transaction Effects 58
Posting Transaction Effects 60
Pizza Aroma's Accounting Records 62
Preparing a Trial Balance 64
Prepare a Balance Sheet 67
Classified Balance Sheet 67
Limitations of the Balance Sheet 68
Summary of the Accounting Cycle 70
Demonstration Case 71
Chapter Summary 74
Key Terms 75
Questions 75
Multiple Choice 76
Mini Exercises 76
Exercises 80
Problems—Set A 85
Problems—Set B 88
Cases and Projects 92
C h a p t e r '<
Operating a Business and the IncomeStatement 96
PIZZA AROMA 97
Recognizing Operating Activities 98
Income Statement Accounts 98
Operating Cycle 99
Measure Operating Activities 100
Cash-Based Measurements 100
Accrual Basis Accounting 101
Expanded Transaction Analysis Model 103
Analysis of Pizza Aroma's Transactions 106
Prepare an Income Statement 112
Unadjusted Trial Balance 112
Classified Income Statements 112
Limitations of the Income Statement 114
XXVI Contents
Demonstration Case 115
Chapter Summary 118
Key Terms 119
Questions 119
Multiple Choice 120
Mini Exercises 121
Exercises 125
Problems—Set A 133
Problems—Set B 136
Cases and Projects 139
C h a p t e r
Completing the Accounting Cycle 144
PIZZA AROMA 145
Adjusting Revenues and Expenses 146
Reasons for Adjustments 146
Types of Adjustments 147
Analysis of Adjustments 147
Preparing Financial Statements 160
Adjusted Trial Balance 160
Relationships among Financial Statements 161
Classified Income Statement 162
Statement of Owner's Equity 162
Classified Balance Sheet 163
Completing the Accounting Cycle 164Closing the Books 164
Preparing a Post-Closing Trial Balance 167
Analyzing Financial Information 169
Computing and Interpreting Key Ratios 169
Analyzing Net Profit Margin (NPM) 169
Making Comparisons to Benchmarks 170
Demonstration Case 171
Supplement 4: Using an Accounting Workshop 175
Chapter Summary 177
Key Terms 179
Questions 179
Multiple Choice 179
Mini Exercises 180
Exercises 183
Problems—Set A 191
Problems—Set B J95
Cases and Projects 199
C h a p t e r
Accounting Systems 202
THE UPS STORE 203
Manual versus Computerized AccountingInformation Systems 204
Components of an Accounting Information System 206
Accounts Receivable Subsidiary Ledger 206
Accounts Payable Subsidiary Ledger 208
Special Journals and Posting of Transactions 209
Revenue Journal 209
Cash ReceiptsJournal 212
PurchasesJournal 216
Cash PaymentsJournal 217
Use of the GeneralJournal 218
Summary of the Recording Process 219
Basic Theory of Accounting InformationSystems 221
Underlying Assumptions 221
Developmental Phases 221
Computerized Accounting Information Systems 222
Advantages and Disadvantages 222
Peachtree Complete 2008—An Illustration 223
Demonstration Case 225
Chapter Summary 228
Key Terms 228
Questions 229
Multiple Choice 229
Mini Exercises 230
Exercises 233
Problems—Set A 243
Problems—Set B 250
Cases and Projects 257
Contents xxvii
C h a p t e r .
Merchandising Operations 260
WAL-MART 261
Operating Cycles and Inventory Systems 262
Operating Cycles 262
Inventory Systems 262
Recording Merchandise Purchases 265
Purchases on Account 265
Transportation Cost (Freight-In) 265
Purchase Returns and Allowances 266
Purchase Discounts 266
Summary of Purchase-Related Transactions 268
Recording Merchandise Sales 270
Cash Sales 270
Sales Returns and Allowances 271
Credit Card Sales 271
Sales on Account and Sales Discounts 272
Transportation Cost (Freight-Out) 273
Summary of Sales-Related Transactions 273
Comparison of Sales and Purchases Accounting 274
Preparing and Analyzing the IncomeStatement 276
Multistep Income Statement forMerchandisers 276
Gross Profit Percentage 277
Comparison to Benchmarks 278
Demonstration Case A 279
Demonstration Case B 280
Supplement 6A: Periodic Inventory Records 281
Supplement 6B: Closing Entries for a Merchandiser 283
Chapter Summary 283
Key Terms 283
Questions 285
Multiple Choice 285
Mini Exercises 286
Exercises 288
Problems—Set A 293
Problems—Set B 295
Cases and Projects 298
C h a p t e r
Inventories 302
AMERICAN EAGLE OUTFITTERS 303
Reporting Inventory and Cost of Goods Sold 304
Balance Sheet and Income Statement Reporting 304
Cost of Goods Sold Equation 305
Choosing Among Inventory Closing Methods 306
Cost Flow Methods under a PerpetualInventory System 308
First-In, Last Out (FIFO) 308
Last-In, First-Out (LIFO) 309
Weighted Average Cost 310
FinancialStatementEffects ofInventory CostingMethods 310
Reporting Inventoryat the Lower of Costor Market 312
Identifying theEffects of InventoryErrors 314
Income StatementEffects 314
Balance Sheet Effects 315
Evaluating Inventory Management 316
Inventory Turnover Analysis 316
Comparison to Benchmarks 317
Demonstration Case 318Supplement 7A: Cost Flow Methods under a PeriodicInventory System 320
Supplement 7B: Estimating Inventory Gross Profit Method 323
Chapter Summary 324
Key Terms 325
Questions 325
Multiple Choice 325
Mini Exercises 326
Exercises 328
Problems—Set A 333
Problems—Set B 336
Cases and Projects 339
Contents
C h a p t e r
Internal Control and Cash 342
THE HOME DEPOT 343
Internal Control 344
Definition and Purpose 344
Sarbanes-Oxley Act of 2002 344
Common Control Principles 346
Control Limitations 348
Internal Control of Cash 348
Cash Receipts 349
Cash Payments 351
Bank Procedures and Reconciliation
Financial Reporting of Cash 360
Cash and Cash Equivalents
Demonstration Case A 361
Demonstration Case B 361
Chapter Summary 362
Key Terms 363
Questions 363
Multiple Choice 364
Mini Exercises 365
Exercises 368
Problems—Set A 371
Problems—Set B 374
Cases and Projects 378
355
360
tf'^1C h a p t e r
Receivables 380
SKECHERS 381
Types of Receivables 382
Accounts Receivable 383
Accounting for BadDebts: The AllowanceMethod 383
Recording Estimated BadDebt Expense 383
Method for EstimatingBad Debts 385
Other Issues 388
Notes Receivable and Interest Revenue 390
Calculating Interest 390
Recording Notes Receivable and InterestRevenue 390
Evaluating Receivables Management 393
Receivables Turnover Analysis 393
Comparison to Benchmarks 394
Demonstration Case A 395
Demonstration Case B 397
Supplement 9A: Direct Write-Off Method 398
Chapter Summary 398
Key Terms 399
Questions 400
Multiple Choice 400
Mini Exercises 401
Exercises 403
Problems—Set A 408
Problems—Set B 410
Cases and Projects 412
C h a p t e r
Long-Lived Tangible and IntangibleAssets 416
CEDAR FAIR 417
Definition and Classification 418
Tangible Assets 418
Intangible Assets 418
Tangible Assets: Acquisition, Use,Impairment, and Disposal 419
Acquisition of Tangible Assets 419
Use of Tangible Assets 423
Impairment of Tangible Assets 430
Disposal and Exchange of Tangible Assets 431
Intangible Assets: Types, Acquisition,Use, and Disposal 433
Types of Intangible Assets 433
Acquisition, Use, and Disposal of IntangibleAssets 434
Evaluation of Long-Lived Asset Use 436
Turnover Analysis 436
Impact of Differences in Depreciation 437
Demonstration Case 439
Supplement 10A: Natural Resources 442
Supplement 10B: Changes in Depreciation 443
Contents xxix
Supplement IOC: Exchanging Assets
Chapter Summary 444
Key Terms 445
Questions 446
Multiple Choice 446
Mini Exercises 447
Exercises 450
Problems—Set A 456
Problems—Set B 457
Cases and Projects 459
443
C h a p t e r•'/•I
CheeriosToasted Whole Grain Oat Cereal *
Current Liabilities and Payroll 466
GENERAL MILLS, INC. 467
Reporting Liabilities 468
Measuring Liabilities 468
Classifying Liabilities 468
Calculating and Interpreting the Current Ratio 469
Accounting for CurrentLiabilities 470
Accounts Payable 470Notes Payable 470Current Portion ofLong-Term Debt 472Other CurrentLiabilities 473
Payroll Accounting 473Calculating thePayroll 478Recording thePayroll 480ApplyingInternal ControlPrinciples 484
Demonstration Case A 485
Demonstration Case B 486
Demonstration Case C 487
Supplement 11 A: Employee Benefits 488
Chapter Summary 489
Key Terms 490
Questions 490
Multiple Choice 491
Mini Exercises 492
Exercises 494
Problems—Set A 497
Problems—Set B 499
Cases and Projects 501 '
C h a p t e r
Partnerships 504
BLOOM'N FLOWERS 505
Partnerships Compared to Similar Organizations 506
Characteristics of Partnerships 506
Similar Forms of Business 507
Accounting for Partnerships 509
Formation: Recording Cash and NoncashContributions 509
Division of Income (or Loss): Four Methods 511
Preparation of Financial Statements 516
Changes of Ownerships in a Partnership 517
Admission of a Partner 517
Withdrawal of a Partner 521
Death of Partner 525
Liquidation of a Partnership 526
No Capital Deficiency 527
Capital Deficiency 529
Ratio Analysis 533Partner Return on Equity 533
Demonstration Case A 534
Demonstration Case B 536
Demonstration Case C 538
DemonstrationCase D 539
ChapterSummary 539
Key Terms 541
Questions 541
Multiple Choice 541
Mini Exercises 542
Exercises 545
Problems—Set A 549
Problems—Set B 552
Cases and Projects 555
C h a p t e r
Accounting for Corporations 558
SONIC CORP. 559
Characteristics of the Corporate Form 560
Ownership 560
Laws and Taxes 560
xxx Contents
Formation 561
Financing 562
Accounting for Stock Transactions 562
Common and Preferred Stock 563
Treasury Stock 565
FinancialStatementReporting 567
Accounting forDividends andSplits 568
Cash Dividends onCommon Stock 568
Cash Dividends on Preferred Stock 570
Stock Dividends 572
Stock Splits 573
Statement of Retained Earnings 574
Financial Ratio Analysis 575
Earnings per Share (EPS) 576
Price/Earnings (P/E) Ratio 577
Demonstration Case A 577
Demonstration Case B 579
Chapter Summary 580
Ke;y Terms 580
Questions 581
Multiple Choice 581
Mini Exercises 582
Exercises 584
Problems—Set A 590
Problems—Set B 593
Cases and Projects 595
C h a p t e r
Long-Term Liabilities 598
GENERAL MILLS, INC. 599
Long-Term Liabilities 600
Making Financing Decisions 600
Measuring Liabilities 600
Accounting for Long-Term Liabilities 601
Discounted Notes 601
Bonds Payable 604
Lease Liabilities 610
Analyzing Long-Term Liabilities 611
Debt-to-Assets Ratio 611
Times Interest Earned Ratio 612
Demonstration Case A 613
Demonstration Case B 614
Demonstration Case C 615
Supplement 14A: Discounting Future Payments 616Supplement 14B: Effective-Interest Methodof Amortization 619
Supplement 14C: Straight-Line Method of Amortization 622
Chapter Summary 623
Ke;y Terms 624
Questions 625
Multiple Choice 625
Mini Exercises 626
Exercises 628
Problems—Set A 631
Problems—Set B 634Cases and Projects 637
C h a p t e r
Accounting for Investments 640
THE WASHINGTON POST COMPANY 641
An Overview 642
Reasons Companies Invest 642
Identifying Investment Types and AccountingMethods 643
Accounting for Passive Investments 644Debt Investments Held to Maturity: AmortizedCost Method 644Investments in Stock of Significant Influence 645Investments in Stock forControl 645Securities Available for Sale:Market Value Method 646Comparison ofAvailable-for-Sale andTrading Securities 650
Accounting for InfluentialInvestments 654
Investments for SignificantInfluence: EquityMethod 654
Investments with ControllingInterests: ConsolidatedStatements 658
\
Contents xxxi
Evaluating Total Invested Capital 660
Return on Assets (ROA) 660
Comparison to Benchmarks 660
Demonstration Case A 661
Demonstration Case B 662
Demonstration Case C 663
Chapter Summary 664
Key Terms 665
Questions 665
Multiple Choice 666
Mini Exercises 667
Exercises 668
Problems—Set A 671
Problems—Set B 674
Cases and Projects 677
C h a p t e r
Reporting and Interpreting the Statementof Cash Flows 680
NAUTILUS INC. 681
Classifications of the Statement of Cash Flows 682
The Relationship between Business Activitiesand Cash Flows 682
Cash Flows from Operating Activities 683
Cash Flows from Investing Activities 684
Cash Flows from Financing Activities 684
Net Increase (Decrease) in Cash 684
Relationships to the Balance Sheet and IncomeStatement 685
Reporting Cash Flowsfrom OperatingActivities—IndirectMethod 687
Depreciation andGains and Losses onSale of Long-TermAssets 689
Changes in Current Assetsand Current Liabilities 689
Reporting Cash Flows fromInvesting Activities 693
Plant and Equipment 693
Land and Investments 694
Reporting Cash Flows from Financing Activities 694
Long-Term Debt 694
Contributed Capital 694
Retained Earnings 694
Preparing and Evaluating the Statementof Cash Flows 696
Format for the Statement of Cash Flows 696
Noncash Investing and Financing Activities 696
Supplemental Cash Flow Information 698
Free Cash Flow 698
Quality of Income Ratio 698
Demonstration Case A: Indirect Method 699
Supplement 16A: Reporting Cash Flows fromOperating Activities—Direct Method 700
Demonstration Case B: Direct Method (Supplement A) 704
Supplement 16B: Spreadsheet Approach:
Indirect Method 705
Chapter Summary 707
Key Terms 707
Questions 708
Multiple Choice 708
Mini Exercises 709
Exercises 712
Problems—Set A 719
Problems—Set B 721
Cases and Projects 723
C h a p t e r 7/
Financial Statement Analysis 728
LOWE'S 729
Release of Financial Information 730
Preliminary Press Release 730
Quarterly and Annual Reports 730
Securities and Exchange Commission (SEC)Filings 731
Investor Information Web Sites 731
Horizontal (Trend) Analysis 732Preparing Comparative Balance Sheets andComparative Income Statements 732Revealing Changes through Trend Analyses 732
Vertical (Common Size) Analysis 734
Preparing a Common Size Balance Sheetand Income Statement 735
Interpreting Common Size Statements 735
XXXII Contents
Financial Ratios 736
Profitability Ratios 736
Liquidity Ratios 740Solvency Ratios 742Accounting Decisions and Ratio Analysis 744
Demonstration Case 745
Supplement 17A: Nonrecurring and Other Special Items 746Chapter Summary 747
Key Terms 747
Questions 747
Multiple Choice 747
Mini Exercises 748
Exercises 749
Problems—Set A 755
Problems—Set B 758
Cases and Projects 761
C h a p t e r
Managerial Accounting 764
TOMBSTONE PIZZA 765
Role of Managerial Accounting in Organizations 766Decision-Making Orientation 766
Comparison of Financial and ManagerialAccounting 766
Functions of Management 767
Cost Classifications and Definitions 769Definition of Cost 769
Out-of-Pocketversus OpportunityCosts 770
Direct versusIndirect Costs 770Variable versusFixed Costs 771Relevant versusIrrelevant Costs 772Manufacturing versusNonmanufacturing Costs 772
Product versus Period Costs 773
Costs in Manufacturing versus NonmanufacturingFirms 773
Balance Sheets of Merchandising versus ManufacturingFirms 775
Cost of Goods Manufactured Report 775
Income Statements of Merchandising versusManufacturing Firms 776
Demonstration Case 778
Chapter Summary 781
Key Terms 782
Questions , 782
Multiple Choice 783
Mini Exercises 784
Exercises 789
Problems—Set A 791
Problems—Set B 793
Cases and Projects 796
VC h a p t e r
Job Order Costing 798
TOLL BROTHERS INC. 799
Job Order versus Process Costing 800
Process Costing 800
Job Order Costing 801
Assignment of Manufacturing Costs to Jobs 801
Manufacturing Cost Categories 801
Materials Requisition Form 802
Direct Labor Time Tickets 803
Job Cost Sheet 803
Predetermined Overhead Rates 804
Journal Entries for Job Order Costing 806
Recording the Purchase and Issue of Materials 807
Recording Labor Costs 808
Recording Actual Manufacturing Overhead 809
Recording Applied Manufacturing Overhead 809Transferring Costs to Finished Goods Inventoryand Cost of Goods Sold 811
Recording Nonmanufacturing Costs 812
Overapplied or Underapplied ManufacturingOverhead 812
Calculating Overapplied and UnderappliedOverhead 812
Disposing of Overapplied or UnderappliedOverhead 813
Calculating Cost of Goods Manufactured and Costof Goods Sold 815
Demonstration Case 816
Chapter Summary 818
Key Terms 819
Questions 819
Contents xxxiii
Multiple Choice 820
Mini Exercises 821
Exercises 823
Problems—Set A 828
Problems—Set B 832
Cases and Projects 835
C h a p t e r
Process Costing and Activity Based Costing 840
CK MONDAVI FAMILY VINYARDS 841
Basic Concepts in Process Costing 842Job Order versus Process Costing 842Flow of Costs in Process Costing 843Journal Entries for Process Costing 844
Process Costing Production Report 849Step 1: Reconcile the Number of Physical Units 850Step 2: Translate Physical Units into EquivalentUnits 851Step 3: Calculate Cost per Equivalent Unit 853Step 4: Reconcile the Total Costof Work in Process 854
Step 5: Prepare a Production Report - 855
Additional Factors in Process Costing 855
Activity Based Costing (ABC) 856Step 1: Identify and Classify Activities 858Step 2: Form Activity Cost Pools and Assign IndirectCost to Each Pool 858Step 3: Select an Activity Cost Driver and Calculatean Activity Rate for Each Cost Pool 859Step 4: Assign Costs to Products or Services Based onTheir Activity Demands 860
Demonstration Case A (Process Costing) 862
Demonstration Case B (Activity Based Costing) 863
Supplement 20A: Weighted Average Method 865
Chapter Summary 869
Key Terms 870
Questions 870
Multiple Choice 871
Mini Exercises 872
Exercises 873
Problems—Set A 876
Problems—Set B 878
Cases and Projects 880
C h a p t e r
Cost Behavior and Cost-Volume-ProfitAnalysis 882
STARBUCKS COFFEE 883
Cost Behavior Patterns 884
Relevant Range 884
Variable Costs 884 ^
Fixed Costs 884 SkStep Costs 885 | K lMixed Costs 886 • H
Estimating Cost ^ BBehavior 887 i b S
Preparing a &flHScattergraph 887 H H
Linear Approaches H H lto Analyzing Mixed ^ ^ ^ |Costs 889 1 _
>
Contribution Margin 892
Contribution Margin Income Statement
Contribution Margin Formula 893
Unit Contribution Margin 893
Contribution Margin Ratio 893
Cost-Volume-Profit Analysis 894
Assumption of Cost-Volume-Profit 894
Break-Even Analysis 895
Margin of Safety 896
Target Profit Analysis 897
Cost-Volume-Profit Relationshipsin Graphic Form 898
Multiproduct Cost-Volume-Profit Analysis
Demonstration Case 900
Supplement 21A 901
Chapter Summary 904
Key Terms 905
Questions 906
Multiple Choice 906
Mini Exercises 907
Exercises 909
Problems—Set A 911
Problems—Set B 9J3
Cases and Projects 915
892
899
xxxiv Contents
C h a p t e r 22Incremental Analysis and Capital Budgeting 918
MATTEL TOYS 919
Managerial Decision Making Process 920
Step 1: Identify the Decision to Be Made 920
Step 2: Determine the Decision Alternatives 920
Step 3: Evaluate the Costs and Benefitsof the Alternatives 921
Step 4: Make the Decision 921
Step 5: Review the Results of the Decision-Making
Process 922
Relevant versus Irrelevant Costs and Benefits 922
Relevant Costs 922
Irrelevant Costs 922
Incremental Analysis of Short-Term Decisions 923
Special-Order Decisions 923
Make-or-Buy Decisions 925
Keep-or-Drop Decisions 928
Sell-or-Process Further Decisions 930
Capital Budgeting for Long-Term InvestmentDecisions 931
Nondiscounting Methods 932
Discounted Cash Flow Methods 934
Demonstration Case A 937
Demonstration Case B 938
Chapter Summary 939
Key Terms 940
Questions 940
Multiple Choice 941
Mini Exercises 942
Exercises 944
Problems—Set A 948
Problems—Set B 950Cases and Projects 953
C h a p t e r 23Budgetary Planning 956
COLD STONE CREAMERY 957
Role of Budgets in the Planning and ControlCycles 958
Planning Process 959
Benefits of Budgeting 959
Behavioral Effects of Budgets 960
Components of the Master Budget 962
Preparation of the Operating Budget 964
Sales Budget 964
Production Budget 964
Raw Materials PurchasesBudget 965
Direct Labor Budget 966
Manufacturing OverheadBudget 967
Budgeted Cost of GoodsSold 967
Selling and AdministrativeExpense Budget 968
Budgeted IncomeStatement 968
Preparation of the FinancialBudgets 970
Cash Budget 970
Budgeted Balance Sheet 971
Budgeting in a MerchandisingCompany 972
Demonstration Case A 973
Demonstration Case B 975
Chapter Summary 976
Key Terms 977
Questions 978
Multiple Choice 978
Mini Exercises 979
Exercises 980
Problems—Set A 982
Problems—Set B 983
Cases and Projects 985
C h a p t e r
Budgetary Control 986
COLD STONE CREAMERY 987
Standard Cost Systems 988
Ideal versus Attainable Standards 988
Types of Standard 988
Standard Cost Card 989
Favorable versus Unfavorable Variances 989
Use of Flexible Budgets to Calculate CostVariances 990
Master Budgets versus Flexible Budgets 990
Flexible Budget as a Benchmark 992
Volume Variance versus Spending Variance 992
Direct Material and Direct Labor Variances 993Variance Framework 993
Direct Materials Variances 994
Direct Labor Variances 996
Manufacturing Overhead Cost Variances 998Variable Manufacturing Overhead Variances 998
Fixed Manufacturing Overhead Variances 1001
Summary of Variances 1003
Demonstration Case 1005
Supplement 24A: Recording Standard Costsand Variances in a Standard Cost System 1008
Chapter Summary 1012
Key Terms 1013
Questions 1013
Multiple Choice 1013
Mini Exercises 1014
Exercises 1015
Problems—Set A 1018
Problems—Set B 1021
Cases and Projects 1023
C h a p t e r
Decentralized Performance Evaluation 1026
BLOCKBUSTER 1027
Decentralization of Responsibility
Responsibility Centers 1030
Cost Centers 1030
1028
Revenue Centers 1031
Profit Centers 1031
Investment Centers 1032
Evaluation of Investment Center Performance 1034
Return on Investment (ROI) 1034
Residual Income 1036
Return on Investment versus Residual Income 1038
Limitations of Financial Performance Measures 1038
Balanced Scorecard 1039
Transfer Pricing 1040
Market-Price Method 1041
Cost-Based Method 1042
Negotiation 1042
Demonstration Case 1043
Chapter Summary 1044
Key Terms 1045
Questions 1046
Multiple Choice 1046
Mini Exercises 1047
Exercises 1048
Problems—Set A 1050
Problems—Set B J052
Cases and Projects 1054
Appendix A A-l
Appendix B B-l
Appendix C C-J
Appendix D D-l
Glossary G-l
Credits PC-1
Business Index 1-1
Subject Index 1-4