JAN R. WILLIAMS University of Tennessee
SUSAN F. HAKA Michigan State University
MARK S. BETTNER Bucknell University
JOSEPH V. CARCELLO University of Tennessee
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FINANCIAL ACCOUNTING, SIXTEENTH EDITION
Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2015 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2012, 2010, and 2008. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.
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ISBN 978-0-07-786238-1 MHID 0-07-786238-4
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Library of Congress Cataloging-in-Publication Data
Williams, Jan R. Financial accounting / Jan R. Williams, University of Tennessee, Susan F. Haka, Michigan State University, Mark S. Bettner, Bucknell University, Joseph V. Carcello, University of Tennessee. —16th edition. pages cm Revised edition of: Financial accounting / Jan R. Williams . . . [et al.]. 15th ed. ISBN 978-0-07-786238-1 (alk. paper)—ISBN 0-07-786238-4 (alk. paper) 1. Accounting. I. Title. HF5636.W7254 2015 657—dc23 2013041567
The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.
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To Ben and Meg Wishart and Asher, Lainey, and Lucy Hunt, who have taught me the joys of being a grandfather.
— Jan R. Williams
For Cliff, Abi, and my mother, Fran.
— Susan F. Haka
To my parents, Fred and Marjorie.
— Mark S. Bettner
To Terri, Stephen, Karen, and Sarah, whose sacrifices enabled me to participate in writing this book. Thank you—I love you!
— Joseph V. Carcello
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Meet the Authors
Jan R. Williams is Dean and Professor Emeritus of the College of Business Administration at the University of Tennessee— Knoxville, where he has been a faculty member since 1977. He received a BS degree from George Peabody College, an MBA from Baylor University, and a PhD from the University of Arkansas. He previously served on the faculties at the Univer- sity of Georgia and Texas Tech University. A CPA in Tennessee and Arkansas, Dr. Williams is also the coauthor of three books and has published over 70 articles on issues of corporate financial reporting and accounting education.
He served as president of the American Accounting Association in 1999–2000 and has been actively involved in Beta Alpha Psi, the Tennessee Society of CPAs, the American Institute of CPAs, and AACSB International—the Association to Advance Collegiate Schools of Business—the accrediting organization for business schools and accounting programs worldwide. He served as chair of the Board of Directors of AACSB International in 2011 through 2012. He retired from the University of Tennessee in 2013, and remains active in several business and accounting profes- sional organizations.
Susan F. Haka is the Senior Associate Dean for Academic Affairs and Research in the Broad College of Business and the EY Professor of Accounting in the Department of Accounting and Information Systems at Michigan State University. Dr. Haka received her PhD from the University of Kansas and a master’s degree in accounting from the University of Illinois. She served as president of the American Accounting Association in 2008–2009 and has pre- viously served as president of the Management Accounting Section. Dr. Haka is active in editorial processes and has been editor of Behavioral Research
in Accounting and an associate editor of Journal of Management Accounting Research, Accounting Horizons, The International Journal of Accounting, and Contemporary Accounting Research. Dr. Haka has been honored by Michigan State University with several teaching and research awards, including both the university-wide Teacher- Scholar and Distinguished Faculty awards. In 2012, Dr. Haka was honored with the Outstanding Accounting Educator Award from the American Accounting Association.
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Mark S. Bettner is the Christian R. Lindback Chair of Accounting & Financial Management at Bucknell University. Dr. Bettner received his PhD in business administration from Texas Tech University and his MS in accounting from Virginia Tech University. In addition to his work on Financial Accounting and Financial & Managerial Accounting, he has written many ancillary materi- als, published in scholarly journals, and presented at academic and practitio- ner conferences. Professor Bettner is also on the editorial advisory boards of several academic journals, including the International Journal of Accounting and Business Society and the International Journal of Business and Accounting, and has served as a reviewer for several journals, including Advances in Public Interest Accounting, Essays in Economics and Business History, Critical Perspectives on Accounting, and International Journal on Critical Accounting. Professor Bettner also offers professional development courses for the Pennsylvania Bankers Association.
Joseph V. Carcello is the EY and Business Alumni Professor in the Department of Accounting and Information Management at the University of Tennessee. He also is the cofounder and executive director for UT’s Corporate Governance Center. Dr. Carcello received his PhD from Georgia State Univer- sity, his MAcc from the University of Georgia, and his BS from the State Uni- versity of New York College at Plattsburgh. Dr. Carcello is currently the author or coauthor of three books, more than 60 journal articles, and five monographs. Dr. Carcello serves on the Public Company Accounting Oversight Board’s (PCAOB) Investor Advisory Group, and he previously served three terms on the PCAOB’s Standing Advisory Group. He has testified before committees and working groups of the U.S. Department of the Treasury on the future of the auditing profes- sion and on the JOBS Act. Dr. Carcello has also testified before a subcommittee of the U.S. House of Representatives Financial Services Committee on accounting and auditing regulation. He served as a member of the COSO task force that developed guidance on applying COSO’s internal control framework for smaller public com- panies. Dr. Carcello is active in the academic community—he serves as an editor of Contemporary Accounting Research, and serves on the editorial boards of The Accounting Review, Auditing: A Journal of Practice & Theory, Accounting Horizons, and Contemporary Issues in Auditing. Dr. Carcello has taught professional develop- ment programs for two of the Big Four accounting firms and for state CPA societies; conducted funded research for another Big Four firm, the AICPA, and the Center for Audit Quality; and served as an expert for the U.S. Securities and Exchange Commis- sion and for private attorneys.
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As our eyes are drawn upward to the skyline of great cities, it’s important
to remember that these impressive constructions are able to reach such
heights only because their foundations are strong. In much the same way,
being successful in the business world begins with fundamental courses like
financial accounting. It is only when students have a firm grasp of concepts
like the accounting cycle that they have a base on which to stand, a strong
foundation on which to grow.
In this edition, as before, the Williams team has revised the text with a keen
eye toward the principle of helping students establish the foundation they will
need for future success in business. However, through new coverage of Inter-
national Financial Reporting Standards and a revised globalization chapter, the
Williams book also introduces students to larger themes and evolving con-
cerns. This dual emphasis allows students to keep their eyes trained upward
even as they become solidly…