Financial Accounting for Undergraduates, 2nd ed.

by Ferris, Wallace and Christensen

Say hello to the most affordable Undergraduate Financial Accounting book on the market.

We wrote this book to satisfy the needs of students taking their first financial accounting course by providing a high quality, contemporary, and engaging textbook at an affordable price.

Financial Accounting for Undergraduates is written for students who want to understand how financial statements are prepared and how the information in published financial reports is used. The Second Edition has benefited from extensive feedback from adopters of the first edition and suggestions from focus groups, market surveys, manuscript reviews, and interviews with faculty from across the country.

Financial Accounting for Undergraduates, Second Edition is intended for use in the first financial accounting course at the undergraduate level; one that balances the preparation of financial statements with their interpretation and use. This book teaches students how to read, analyze, and interpret financial accounting data to make informed business decisions. We believe students become more engaged in the course when they see how the content pertains to their everyday lives. Once engaged in the course, students perform much better and enjoy the class more.

Furthermore, we believe accounting is a discipline best learned by doing. Unlike some other disciplines, accounting needs to be practiced. Consequently, we took great care to incorporate a number of pedagogical devices and real examples that show students the relevance of financial accounting to their lives and that help students succeed in the course.

Table of Contents

Chapter Title
1 Financial Accounting and Business Decisions
2 Processing Accounting Information
3 Accrual Basis of Accounting
4 Understanding Financial Statements
5 Accounting for Merchandising Operations
6 Accounting for Inventory
7 Internal Control and Cash
8 Accounting for Receivables
9 Accounting for Long-Lived and Intangible Assets
10 Accounting for Liabilities
11 Stockholders' Equity
12 Statement of Cash Flows
13 Analysis and Interpretation of Financial Statements
Appendix A Columbia Sportswear Company: Annual Report and Social Responsibility Report
Appendix B Financial Statements for Under Armour
Appendix C Financial Statements for Tesco PLC
Appendix D Accounting for Investments and Consolidated Financial Statements
Appendix E Accounting and the Time Value of Money


"Why do I need to study financial accounting?"

Students frequently ask this or similar questions. The extent to which they feel accounting is relevant to their daily lives will often determine how much effort they put into the course. The following feature are used throughout the book to convey the relevance of accounting to their lives and society.

Real Data and Examples

Today's students must be skilled in using real financial statements to make business decisions. Through their exposure to various financial statements, students will learn that, while financial statements do not all look the same, they can readily understand and interpret them to make business decisions. In each chapter, we incorporate a wide range of examples using real companies that students know. In addition, the Extending Your Knowledge section in the assignments of each chapter requires students to use the financial statements of Columbia Sportswear Company and Under Armour Corporation.

Accounting in Practice

These boxed inserts help bridge the gap between the classroom and what students encounter in the real world. Accounting In Practice illustrations document situations a reader is likely to encounter and present the choices that companies make in reporting financial results.

Forensic Accounting

Forensic Accounting is the one of the fastest growing areas in the practice of accounting. These boxed inserts help students understand how financial accounting knowledge can be used to aid in the prevention of financial accounting errors and the detection of fraud.

Corporate Social Responsibility

Increasingly, companies have found that “doing good leads to a more successful, profitable enterprise. These boxed inserts help students understand how corporate social responsibility is being embraced by forward-thinking enterprises as part of their long-term business models.


Instructor CD-ROM This convenient supplement provides the text's ancillary materials on a portable CD-ROM. All the faculty supplements that accompany the textbook are available, including PowerPoint, Solutions Manual, Test Bank, and Computerized Test Bank
Solutions Manual Created by the authors, the Solutions Manual contains complete solutions to all the assignment material in the text.
PowerPoint The PowerPoint slides outline key elements of each chapter.
Test Bank The test bank includes multiple-choice items, matching questions, short essay questions, and problems.
Excel Tempates Excel Templates: We provide Excel spreadsheets for assignments. These spreadsheets will save time in data entry and allow students to dedicate additional time to learning the material. The Excel spreadsheets are identified by the Excel icon.
myBusinessCourse A web-based learning and assessment program intended to complement your textbook and classroom instruction. This easy-to-use course management system grades homework automatically and provide students with additional help when you are not available. in addition, detailed diagnostic tools assess class and individual performance. myBusinessCourse is ideal for online courses or traditional face-to-face courses for which you want to offer students more resources to succeed. Assignments with the checkmark in the margin are available in myBusinessCourse.
Excel Templates We provide Excel spreadsheets for assignments. These spreadsheets will save students' time in data entry and allow them to dedicate additional time to learning the material. The Excel spreadsheets are identified by the Excel icon.
myBusinessCourse A web-based learning and assessment program intended to complement your textbook and faculty instruction. This easy-to-use program grades homework automatically and provides you with additional help when your instructor is not available. Assignments with the checkmark in the margin are available in myBusinessCourse. Access is free with new copies of this textbook (look for page containing the access code towards the front of the book) if you buy a used copy of the book, you can purchase access at


MyBusinessCourse is a web-based learning and assessment program that students and faculty can access anytime, anywhere, from most internet-enabled devices.

Whether being used as an Instructor Led or Student Self Study, myBusinessCourse offers excellent resources to help students.

Instructor Led

  • eLectures
  • Guided Examples
  • Self-Study Quizzes
  • Homework Problems
  • Computerized Test Bank

Self Study

  • eLectures
  • Guided Examples
  • Self-Study Quizzes

The Author Team

Kenneth R. Ferris

Professor in the W.P. Carey School of Business at Arizona State University where he teaches the undergraduate, introductory financial accounting course.

He received a B.B.A. and an M.B.A. from The George Washington University and an M.A. and a Ph.D. from The Ohio State University. He previously served on the faculties of Northwestern University, The Claremont Graduate University, Southern Methodist University, and Thunderbird School of Global Management, and he has taught at numerous academic institutions in Australia, Hong Kong, Japan, and New Zealand. Professor Ferris is the author or co-author of eleven books, over fifty academic and professional publications, and over eighty case studies. He previously served as a director of several NYSE listed companies and is active in executive education programs around the world.

James S. Wallace

Associate Professor at The Peter F. Drucker and Masatoshi Ito Graduate School of Management at The Claremont Graduate University.

He received his Bachelors of Arts from the University of California, Santa Barbara, his MBA from the University of California, Davis, and his PhD from the University of Washington. Professor Wallace also holds a CPA certification from the state of California. He previously served on the faculty of the University of California, Irvine and has served as a visiting professor at the University of California, San Diego. Professor Wallace's work has appeared in leading academic journals including the Journal of Accounting and Economics, the Journal of Corporate Finance, and Information Systems Research, along with leading applied journals such as the Journal of Applied Corporate Finance, the Journal of Accountancy, Issues in Accounting Education and Accounting Horizons. Prior to his career in academics, Professor Wallace worked in public accounting and in industry with a Fortune 500 company. He has done consulting work with numerous companies in multiple industries.

Theodore E. Christensen

Director and Terry Distinguished Chair of Business in the J.M. Tull School of Accounting at the University of Georgia (UGA)

Prior to coming to UGA, he was on the faculty at Brigham Young University from 2000-2015 and at Case Western Reserve University from 1995-2000. He was a visiting professor at the University of Michigan (2013-2014_ and the University of Utah (2012) and has taught at Santa Clara University in a summer program since 2005. He received a B.S. degree in accounting from San Jose State University, an M.Acc. degree in tax from Brigham Young University, and a Ph.D. in accounting from the University of Georgia. Professor Christensen has authored and coauthored articles published in many journals, including The Accounting Review; the Journal of Accounting and Economics; the Journal of Accounting Research; Review of Accounting Studies; Contemporary Accounting Research; Accounting Organizations and Society; the Journal of Business Finance & Accounting; the Journal of Accounting, Auditing, and Finance; Accounting Horizons; and Issues in Accounting Education.



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