David Marshall - Accounting: What the Numbers Mean

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Thirteenth Edition

Accounting

What the Numbers Mean

David H. Marshall, MBA, CPA, CMA

Wayne W. McManus, LLM, JD, MS, MBA, CFA, CPA, CMA, CIA

Professor of Accounting and Law

International College of the Cayman Islands

Daniel F. Viele, MS, CPA, CMA

Professor of Accounting (Retired)

Executive Consultant

Maryville University

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ACCOUNTING, WHAT THE NUMBERS MEAN

Published by McGraw Hill LLC, 1325 Avenue of the Americas, New York, NY 10019. Copyright 2023 by McGraw Hill LLC. All rights reserved. Printed in the United States of America. 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 LLC, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 LWI 27 26 25 24 23 22

ISBN 978-1-265-05156-3

MHID 1-265-05156-9

Cover Image: PHILIPPE LOPEZ/AFP/Getty Images

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mheducation.com/highered

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Meet the Authors

Courtesy of David H. Marshall

David H. Marshall (19332018) was a distinguished faculty member at Millikin University, a small, independent university located in Decatur, Illinois. Professor Marshall taught at Millikin for 25 years and was named Professor of Accounting Emeritus upon his retirement in 1992. During his tenure at Millikin, he taught courses in accounting, finance, computer information systems, and business policy, served as Director of Financial Affairs, served twice as Vice President for Business Affairs, and was the Director of Planned Giving in the Development Department. Marshall was honored with a series of universitywide teaching and leadership awards throughout his career, culminating with receiving the prestigious Millikin University Centennial Medallion in 2002. The draft manuscript of this book was written by Professor Marshall in 1986 and used in a one-semester course that was developed for the nonbusiness major. Subsequently supplemented with cases, it was used in the business core accounting principles and managerial accounting courses. Concurrently, a one-credit-hour accounting laboratory taught potential accounting majors the mechanics of the accounting process. Prior to his teaching career, Marshall worked in public accounting and industry and he earned an MBA from Northwestern University. Professor Marshalls interests outside academia included community service, woodturning, sailing, and travel.

Courtesy of Wayne W. MacManus

Wayne W. McManus makes his home in Grand Cayman, Cayman Islands, BWI, where he worked in the private banking sector for several years and is now a semiretired consultant. He maintains an ongoing relationship with the International College of the Cayman Islands as an adjunct Professor of Accounting and Law and serves as the Chair of the Colleges Board of Trustees. McManus offered the Cayman CPA Review course through the Financial Education Institute Ltd. for a number of years as well as several professional development courses through the Chamber of Commerce. He earned an MS in accounting from Illinois State University, an MBA from the University of Kansas, a law degree from Northern Illinois University, and a masters of law in taxation from the University of MissouriKansas City. He served as an independent director and chairman of the audit committee for Endeavour Mining Corp. (EDV on the LSE and TSX exchanges) for 18 years prior to stepping down from the Board in 2020. He is a member of the Cayman Islands Society of Professional Accountants and the local chapter of the CFA Institute. Professor McManus enjoys working as a professional Santa each December, as well as travel, golf, and scuba diving, and is an audio/video enthusiast.

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Courtesy of Daniel F. Viele

Daniel F. Viele , Professor of Accounting, retired from Maryville University in 2020. During his 7 years at Maryville Professor Viele served as Dean of the School of Adult and Online Education and later as Chief Strategic Information Officer, where he continues to serve Maryville as an executive consultant. Over his 32 years in higher education Professor Viele taught courses in financial, managerial, and cost accounting, as well as accounting information systems. Prior to joining Maryville, Professor Vieles previous teaching experience included 15 years at Webster University and 10 years at Millikin University with Professor Marshall. After Millikin, he spent 8 years in the graphic arts industry, initially with a startup company in St. Louis and then as an industry consultant for a Silicon Valley graphics arts technology company. At Webster Professor Viele pioneered online teaching and learning in the late 1990s where he developed and taught many online courses and over the years led the development of numerous online programs. For his dedication to teaching and the innovative use of technology, Webster awarded him its highest honorthe Kemper Award for Teaching Excellence. Professor Viele holds an MS in accounting from Colorado State University. He has been a member of the American Accounting Association, the AICPA, the Missouri Society of CPAs, and the Institute of Management Accountants. Professor Viele enjoys sports of all kinds, boating, winemaking, and a good book.

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Preface

Named after a Chinese word meaning sparrow, mah-jongg is a centuries-old game of skill. The object of the game is to collect different tiles; players win points by accumulating different combinations of pieces and creating patterns. Weve chosen mah-jongg tiles as our cover image for the thirteenth edition of Accounting: What the Numbers Mean because the text is designed to show students how to put the pieces together and understand their relationship to one another to see the larger pattern.

Accounting has become known as the language of business. Financial statements result from the accounting process and are used by owners/investors, employees, creditors, and regulators in their planning, controlling, and decision-making activities as they evaluate the achievement of an organizations objectives.

Accounting: What the Numbers Mean takes the user through the basics: what accounting information is, how it is developed, how it is used, and what it means. Financial statements are examined to learn what they do and do not communicate, enhancing the students decision-making and problem-solving abilities from a user perspective. Achieving expertise in the preparation of financial statements is not an objective of this text. Instead, we have designed these materials to assist those who wish to learn what the numbers mean in a clear, concise, and conceptual manner, without focusing on the mechanical aspects of the accounting process.