Johnson Christie Wilson - Financial statements demystified a self-teaching guide

A SELF-TEACHING GUIDE

BONITA K. KRAMER
CHRISTIE W. JOHNSON

Copyright 2009 Bonita K. Kramer and Christie W. Johnson. All rights reserved. Except as permitted under the United States Copyright Act of 1976, 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 permission of the publisher.

ISBN: 978-0-07-154388-0

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From Bonita K. Kramer:
For Mark, David, and Kyleall of whom have demystified the meaning
of life in my mind.

From Christie W. Johnson:
For Pat and Swithinyou believe in me, always.

From both of us:

And for Gil W. Crain, Ph.D.,
who unexpectedly passed away in July of 2008.
A great friend, colleague, mentor, and professor
who encouraged and supported us in all our endeavors.

CHAPTER 7 Reading the Financial Statements:
The Auditors Reports and Financial
Statement Footnotes

From Bonita K. Kramer:

I doubt I would have undertaken this project without the support of my coauthor, Christie Johnson. Christie is an extraordinary writer who has a wealth of information about financial accounting. She has been a faculty member at Montana State University since I was an undergraduate accounting student here many years ago. Then, as now, she had a stellar reputation as an educator, and to coauthor this book with her as a colleague truly has been one of the highlights of my career.

Additionally, however, I could not have written this book without the patience of my husband, Mark, who is my best friend, and our boys, David and Kyle. While my husband never doubted my ability to write this book, he was concerned about the time I would invest in it.

Finally, I want to thank my parents, Rod and Betty Peterson, for their encouragement throughout my life to continue my education and to pursue various professional challenges over the years. They never doubted my abilities and always quietly cheered me on. Yet they also instilled in me a sense of what is truly important in life, and I am grateful.

From Christie W. Johnson:

Bonita flatters me with her remarks describing why our collaboration on this project took place, but I should set the record straight. The opportunity actually arose from Bonitas reputation as an expert in the area of fraud education and contributions to this specialized field and her outstanding reputation as a teacher and scholar. She has garnered numerous teaching and research-related honors during her career as an accounting educator. Bonita is a teaching role model and an incredibly patient and effective mentor when it comes to publishing endeavors. She has a talent for teaching an old dog (like me) some new tricks, and I was honored by her invitation to collaborate. I appreciate and am very grateful for this opportunity, one I probably would not have enjoyed had it not been for Bonitas faith and interest in working with me.

Bonita and I both very much enjoy getting to know our students in person and teaching to a live audience. We are motivated to come up with many different ways to illustrate or explain a concept, knowing that individual student learning styles vary considerably. If we see a few foreheads and eyebrows scrunching, we have a visual cue that our students are struggling to understand a difficult or important concept. In a classroom setting, we can react to these cues, ask and answer questions, and meet with students one on one.

In writing Financial Statements Demystified, it was our joint goal to connect with individuals we probably wont meet in person, a prospect both exciting and a bit daunting! We organized this book by presenting the topics and concepts we both felt to be most relevant to your understanding of financial accounting and reporting while avoiding the accounting system details found in most traditional textbooks. We hope that you find our explanations and illustrations provide useful information and that the benefits you gain by reading this book exceed the cost of its purchase!

I too would like to acknowledge my familys support in this endeavor. My husband, Pat, was remarkably patient, especially during marathon writing episodes when I would become so focused and paused just long enough to share the meals he prepared. My daughter, Swithin, plays an important supporting role in my writing and publishing endeavors. In an interesting reversal of roles, I now seek Swithins input and advice. I think she must take great delight when she has an opportunity to wield a bold-line red pen, much like the one I drew out of my bag and used to critique her written work when she was in junior high and high school.