Preface

To the Student

The purpose of this study guide is to help you to improve your success rate in solving accounting homework assignments and in answering accounting exam questions. For each chapter we include the following:

This book will provide you with the opportunity to solve accounting problems in addition to the ones assigned by your instructor without having to rely on your teacher for solutions. Many of the exercises and questions contained herein are very similar to material in your intermediate accounting textbook; the difference is, the ones in this book are accompanied with detailed, clearly laid out solutions.

The use of the multiple-choice questions in this volume and the related suggestions on how to approach them can easily increase your ability (and confidence in your ability) to deal with exam questions of this variety.

HOW TO STUDY ACCOUNTING

The successful study of accounting requires a different approach than most other subjects. In addition to reading a chapter, applying the material through completion of exercises or problems is necessary in developing a true and lasting understanding of the concepts introduced in the text chapter. The study of accounting principles is a combination of theory and practice; theory describes what to do and why, and practice is the application of guidelines to actual situations. We use illustrations to demonstrate how theory works and we use theory to explain why something is done in practice. Therefore, it is impossible to separate the two in the study of accounting.

Learning accounting is a cumulative process. It is difficult to master Chapter 4 until you are thoroughly familiar with Chapters 1–3, and so on. Therefore, it is imperative that you keep up with class assignments. And, because accounting is a technical subject, you must pay particular attention to terminology.

Accounting is the language of business. It is an exciting subject that provides a challenge for most business majors. Your ultimate success in life may well depend on your ability to grasp financial data. The effort you expend now will provide rewards for years to come.

We encourage you to follow the four steps for study outlined below to give yourself the best possible chance for a successful learning experience and to make the most efficient use of your time. These steps provide a system of study for each chapter in your text.

Step 1

• Scan the learning objectives at the beginning of each chapter.
• Scan the chapter (or chapter section).
• Glance over the questions at the end of the chapter.

This first step will give you an overview of the material to be mastered.

Step 2

• Read the assigned pages slowly.
• Study carefully, and mark for later attention any sections requiring review.
• Pay particular attention to examples and illustrations.
• Try to formulate tentative answers to end-of-chapter questions.

During this phase, you will be filling in the chapter “outline” you formed in Step 1. Most of the details will fall into place during this phase of your study. The remaining steps are necessary, however, for a keen understanding of the subject.

Step 3

• Carefully read the Overview, Study Steps, and Tips sections of this study guide.
• Do the Exercises and Cases in this study guide that pertain to the same topics as your homework assignments.
• Review the relevant Illustrations in this study guide.
• Do the Multiple-Choice Questions in the study guide that pertain to the same topics as your homework assignments.
• Refer back to the text chapter sections that you marked for review, if any. It is likely that any confusion or questions will have been cleared up through your work in the study guide. If a section remains unclear, carefully reread it and rework relevant pages of the study guide.
• Repeat this process for each assigned topic area.

Step 4

• Write out formal answers to homework assignments in the text.

This step is crucial because you can determine whether you can independently apply the material you have been studying to new situations. You may find it necessary to go back to the text and/or the study guide to restudy certain sections. This is common and a good indicator that the study assignments are working for you.

Here is some additional guidance to help you get the most out of this study guide:

The Study Steps and Tips, along with the Illustrations, will aid your understanding and retention of the material. Exercises provide examples of application of the text material. These should be very valuable in giving you guidance in completing homework assignments that are often similar in nature and content.

The Approach stated for an exercise or question is likely the most valuable feature of this study guide because it provides guidance on how to think through the situation at hand. This thought process can then be used in similar situations. It is impossible to illustrate every situation you may encounter. You can, however, handle new situations by simply applying what you know and making modifications where appropriate. Many students make the mistake of attempting to memorize their way through an accounting book. That, too, is an impossible feat. Do not rely on memorization. If this material is going to be useful to you, you must think about what you are reading and always be thinking of why things are as they are. If you know the reasoning for a particular accounting treatment, it will be much easier to remember that treatment and reconstruct it, even weeks after your initial study of it.

Explanations are provided for exercises and questions. These are very detailed so that you will thoroughly understand what is being done and why. These details will serve you well when you complete your homework assignments.

Always make an honest effort to solve the exercises and answer the questions contained in this study guide before you look at the solutions. Answering the questions on your own will maximize the benefits you can expect from this book.

The Multiple-Choice Questions are self-tests to give you immediate feedback on how well you understand the material. Study the Approaches suggested for answering these questions in the study guide. Practice the approaches when answering the multiple-choice questions in the text. Apply them when taking examinations. By doing so, you will learn to calmly, methodically, and successfully process examination questions. This will very likely improve your exam scores.

When you work through an Exercise or Case in the study guide or in the text, always read the instructions before you read all of the given data. This allows you to determine what is being asked of you and what you are to accomplish before you read the given data. As you tread through the data, you can begin to process it because you can determine its significance and relevance. If you read the data before the instructions, you will likely waste time having to reread the data after you find out what you are to do with it. Also, more importantly, reading the data before the instructions will likely cause you to begin anticipating what will be asked of you, which will often cause you to do analysis other than what is required of you.

Good luck and best wishes for a positive learning experience!