Chapter 20: Accounting for Pensions and Postretirement Benefits
General Definitions of Pensions:
- Pension plan: arrangement whereby an employer provides benefits (payments) to retired employees for
services they provided in their working years.
Chapter 15: Stockholders Equity
1. The most common form of business organization in the US is partnerships. The business form that controls the
largest amount of assets is corporations.
o Corporations (C-Corp, S-Corp): Form 1120, 1120 S
o Partnerships: Fo
Chapter 14: Long-term LiabilitiesBonds and Notes
1. Long-term debt consists of probable future sacrifices of economic benefits arising from present obligations
that are not payable within a year or the operating cycle of the company, whichever is longer.
Chapter 16: Dilutive Securities and Earnings Per Share
- Convertible securities as well as well as options, warrants, and other securities are often called dilutive
securities because upon exercise they may reduce (dilute) earnings per share.
Chapter 17A: Derivatives
1. Derivatives manage risk. Companies use the fair values or cash flows of these instruments to offset the
changes in fair values or cash flows of the at-risk assets. Financial instruments that derive their value from
value of oth
Chapter 22: Accounting Changes and Error Analysis
(Page 1387 for summary)
Changes in Accounting Principle
- Definition: A change from accounting principle to another one.
- Examples: Change the basis of inventory pricing from average cost to LIFO; change
Chapter 18: Revenue Recognition
- Revenue recognition is a top fraud risk.
- Revenue arises from ordinary operations whereas gains may or may not arise in the normal course of
operations. Typical gains are gains on sale of noncurrent assets or unrealized
Chapter 21: Accounting for Leases
A lease is a contractual agreement between a lessor and a lessee. This arrangement gives the lessee the right
to use specific property, owned by the lessor, for a specified period of time. In return for the use of t
Chapter 19: Accounting for Income Taxes
- Pretax financial income is a financial reporting term. It is often referred to as income before taxes, income
for financial reporting purposes, or income for book purposes. Companies determine pretax financial
Chapter 13: Current Liabilities and Contingencies
1. Liability: Probable future sacrifices of economic benefits arising from present obligations of a particular
entity to transfer assets or provide services to other entities in the future as a result of p