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Financial Accounting - 3rd Edition

Target Audience Key
Features		 New to the Third Edition Supplement Package
About the
Authors		 Brief Table of Contents Course
Design		  

New to the Third Edition

  • Robert Magee of Northwestern University's Kellogg School of Management joined the author team this edition.
  • We have expanded the discussion of International Financial Reporting Standards (IFRS) and incorporated new IFRS Reporting Insight boxes throughout the text to introduce students to the similarities and differences between U.S. GAAP and IFRS.
  • Chapter 4 on Cash Flows now introduces the direct method before transitioning to the indirect method. The spreadsheet approach to preparing the SCF is now an appendix to the chapter.
  • The chapter on financial statement analysis was rewritten and now presents a traditional approach to profitability analysis. It shows how return on equity (ROE) and its components reveal company profitability drivers. (The analysis of operating returns, which was the focus of this chapter in the 2nd edition, has been moved to an appendix.) This chapter was moved forward in the book - it is now Chapter 5 - to emphasize the importance of analysis for business decisions.
  • Pro forma financial statements are now covered in an appendix to Chapter 5.
  • The tax discussion in Chapter 10 has been expanded to include examples that illustrate the temporary and permanent differences that exist between income reported to the IRS for tax purposes and that which is reported under accrual accounting.
  • The real company data throughout the book has been updated to reflect the most current financial statements available at the time of publication.
  • Walgreens is featured as the focus company for Chapters 2, 3, and 4.
  • Chapter 5 features PepsiCo as the focus company. In addition, American Airlines replaces Southwest Airlines as the focus company in Chapter 10.
  • Appendix A explains time value of money concepts and provides TVM tables. Calculations are also illustrated using a financial calculator. The use of a financial calculator to value liabilities is highlighted in Chapters 9 and 10. A representative example follows:

In addition to the chapter specific changes, there have been several changes that span the entire book. Some of these global changes include: updated numbers for examples, illustrations, and assignments that use real data; updated footnotes and other nonfinancial disclosures; updated excerpts from the busi- ness and popular press; numerous assignments in each chapter have been revised or replaced with new assignments; and a new, accessible design was created for the 3rd edition.