Table of Contents

Chapter 1 - Financial Statements, the Sarbanes-Oxley Act, and. 1

Corporate Governance - Section 1. 1

Learning Objectives: 1

1.1 What and Why of Financial Statements. 1

1.2 Classified Financial Statements. 4

1.3 Statement of Cash Flows. 9

Chapter 1 - Section 1 Review Questions. 11

Chapter 1 - Financial Statements, the Sarbanes-Oxley Act, and. 12

Corporate Governance - Section 2. 12

1.4 Cash Flow Analysis. 12

1.5 Other Sections of the Annual Report 17

1.6 Interim Financial Reports. 20

1.7 SEC Reporting Requirements: Integrated Disclosure System.. 28

1.8 The Sarbanes-Oxley (SOX) Act 32

Chapter 1 - Section 2 Review Questions. 44

Chapter 2 - How to Evaluate and Improve a Companys Financial Performance - Section 3. 46

Learning Objectives: 46

2.1 How to Evaluate a Companys Financial Performance. 46

2.1.1 Horizontal and Vertical Analysis. 47

2.1.2 Working with Financial Ratios. 50

Chapter 2 - Section 3 Review Questions. 64

Chapter 2 - How to Evaluate and Improve a Companys Financial Performance - Section 4. 66

2.2 How to Analyze and Improve Corporate Profitability and Shareholder Value. 66

2.2.1 Return on Investment (ROI) and the Du Pont Formula. 66

2.2.2 Return on Equity (ROE) and the Modified Du Pont Formula. 72

Chapter 2 - Section 4 Review Questions. 76

Chapter 3 - Internal Accounting Applications for Your Company. 77

- Section 5. 77

Learning Objectives: 77

3.1 How to Analyze Divisional and Departmental Performance. 77

3.2 Contribution Margin Analyses. 83

3.3 Pricing Tools. 89

3.4 Evaluating the Product Line. 90

3.5 How to Measure Marketing Effectiveness. 90

Chapter 3 - Section 5 Review Questions. 93

Chapter 3 - Internal Accounting Applications for Your Company. 95

- Section 6. 95

3.6 Budgeting Techniques. 95

3.7 Highlighting Problem Areas with Variance Analysis. 98

3.8 Activity-Based Costing (ABC) 105

3.9 Life-Cycle Costs and Target Costing. 110

3.10 Balanced Scorecard. 113

Chapter 3 - Section 6 Review Questions. 116

Chapter 4 - Cost-Volume-Profit Analysis, Operating Leverage, and. 119

Discounting Analysis - Section 7. 119

Learning Objectives: 119

4.1 Cost-Volume-Profit (CVP) Analysis. 119

4.2 Contribution Margin. 121

4.3 From Break-Even to Target Profits. 124

4.4 What-if Analysis. 127

4.5 Sales Mix Analysis. 129

4.6 Operating Leverage. 132

Chapter 4 - Section 7 Review Questions. 134

Chapter 4 - Cost-Volume-Profit Analysis, Operating Leverage, and. 136

Discounting Analysis - Section 8. 136

4.7 Time Value of MoneyFuture and Present Values. 136

Chapter 4 - Section 8 Review Questions. 151

Chapter 5 - Capital Budgeting - Section 9. 152

Learning Objectives: 152

5.1 Capital Budgeting. 152

5.2 Techniques for Evaluating Investment Proposals. 153

Chapter 5 - Section 9 Review Questions. 163

Chapter 5 - Capital Budgeting - Section 10. 164

5.3 Effect of Income Taxes on Capital Budgeting Decisions. 164

5.4 The Lease - Purchase Decision. 170

5.5 Capital Budgeting and Inflation. 173

Chapter 5 - Section 10 Review Questions. 175

Chapter 6 - Assets Management, Financing Techniques, and. 176

Portfolio Theory - Section 11. 176

Learning Objectives: 176

6.1 Managing Working Capital 177

6.2 Maximizing Your Return on Cash. 177

6.3 Managing Accounts Receivable. 180

6.4 Formulating the Best Investment Strategy. 184

Chapter 6 - Section 11 Review Questions. 189

Chapter 6 - Assets Management, Financing Techniques, and. 191

Portfolio Theory - Section 12. 191

6.5 How to Best Finance Your Business. 191

6.6 Working with a Bank. 197

6.7 Short- and Intermediate-Term Financing. 204

6.7.1 Issuing Commercial Paper 204

6.7.2 Using Receivables for Financing. 205

6.7.3 Using Inventories for Financing. 207

6.8 How to Reduce Risk: Diversify. 208

6.9 Beta - The Capital Asset Pricing Model (CAPM) 212

6.10 The Arbitrage Pricing Model (APM) 214

Chapter 6 - Section 12 Review Questions. 216

Chapter 7 - Long-Term Debt and Equity Financing - Section 13. 218

Learning Objectives: 218

7.1 Investment Banking. 218

7.2 Publicly and Privately Placed Securities. 220

7.3 Going Public  Initial Public Offerings (IPO) 220

7.4 Alternatives to Going Public. 225

7.5 Venture Capital Financing. 227

7.6 Investments in Bonds. 228

7.6.1 Computing Interest 228

7.6.2 Types of Bonds. 229

7.6.3 Bond Refunding. 230

7.6.4 The Advantages and Disadvantages of Debt Financing. 231

7.7 Equity Securities. 234

7.7.1 Preferred Stock. 234

7.7.2 Common Stock Features. 237

7.8 Financing Strategy. 241

Chapter 7 - Section 13 Review Questions. 245

Chapter 8 - Decision Making with Forecasting - Section 14. 247

Learning Objectives: 247

8.1 The Concept of Forecasting. 247

8.2 Types of Forecasts. 251

8.3 Selection of Forecasting Method. 252

8.4 The Qualitative Approach. 254

8.5 The Quantitative Approach. 256

8.5.1 Naive Models. 256

8.5.2 Moving Averages. 258

8.5.3 Exponential Smoothing. 260

8.5.4 Regression Analysis for Sales and Earnings Projections. 262

8.6 How to Use a Computer Statistical Package for Multiple Regressions. 268

8.7 Measuring the Accuracy of Your Forecasts. 274

Chapter 8 - Section 14 Review Questions. 277

Chapter 9 - The New World of Accounting - Section 15. 278

Learning Objectives: 278

9.1 Accounting Information Systems and Package. 278

9.1.1 The Fundamentals of Accounting Information Systems. 278

9.1.2 Web-Based Accounting Systems. 284

9.1.3 Economic Feasibility Study for a New Information System... 285

9.1.4 Extensible Business Reporting Language. 287

9.2 Modern Accounting Organization. 289

9.2.1 The Role of Emerging Technology. 289

9.2.2 The Big Data Opportunity. 292

9.2.3 Blockchain Technology. 293

9.2.4 Robotic Process Automation. 294

9.2.5 Cloud Computing. 297

Chapter 9 - Section 15 Review Questions. 302

Review Question Answers. 303

Chapter 1 - Section 1 Review Questions Feedback. 303

Chapter 1 - Section 2 Review Questions Feedback. 305

Chapter 2 - Section 3 Review Questions Feedback. 310

Chapter 2 - Section 4 Review Questions Feedback. 315

Chapter 3 - Section 5 Review Questions Feedback. 317

Chapter 3 - Section 6 Review Questions Feedback. 321

Chapter 4 - Section 7 Review Questions Feedback. 328

Chapter 4 - Section 8 Review Questions Feedback. 332

Chapter 5 - Section 9 Review Questions Feedback. 335

Chapter 5 - Section 10 Review Questions Feedback. 338

Chapter 6 - Section 11 Review Questions Feedback. 340

Chapter 6 - Section 12 Review Questions Feedback. 344

Chapter 7 - Section 13 Review Questions Feedback. 349

Chapter 8 - Section 14 Review Questions Feedback. 352

Chapter 9 - Section 15 Review Questions Feedback. 355

Glossary. 357

Index. 366

CPE Exam Answer Sheet. 368

Final Examination. 370

CPASelfstudy.com Course Evaluation. 384