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"Fundamental Accounting Principles" 25th Edition
by John J. Wild provides a comprehensive
introduction to the fundamental concepts and
procedures of accounting. This edition is updated with
the latest accounting standards and practices,
offering both beginners and advanced learners a solid
foundation in accounting. The book combines theory
and practical application, guiding readers through
accounting principles, financial reporting, and
decision-making processes, all while emphasizing
ethical responsibility in accounting.
Overview and Structure

The textbook is divided into several parts,

systematically covering the entire accounting cycle,
from basic accounting principles to complex
transactions. It includes real-world examples,
exercises, and applications to help readers grasp both
theoretical and practical aspects of accounting. The
25th Edition introduces new case studies, exercises,
and technologies that reflect the current business
environment and the evolution of accounting
practices.
1. Introduction to Accounting

The first chapter introduces the role of accounting in

business and its importance in the decision-making
process. It discusses key concepts such as:

• Definition of Accounting: Accounting is defined

as the process of identifying, recording, and
communicating financial information about a
business entity. It is the language of business,
used to communicate economic information to
various stakeholders.
• Users of Accounting Information: The book
explains the two primary categories of users:
internal users (managers, employees) and
external users (investors, creditors, regulators).
Each user group relies on accounting information
for different purposes, such as decision-making,
investment evaluation, or regulatory compliance.
 • Ethical Responsibility in Accounting: This
section emphasizes the importance of ethics in
accounting. The book covers accounting scandals
(e.g., Enron, WorldCom) and the role of ethical
conduct in maintaining trust in financial reporting.
The textbook also introduces the Sarbanes-Oxley
Act (SOX), explaining its implications for
corporate governance and financial reporting.
• The Accounting Equation: The text explains the
foundational accounting equation: Assets =
Liabilities + Equity. This equation serves as the
basis for understanding how transactions affect a
company's financial position.
2. The Accounting Cycle

The core of the book revolves around the accounting

cycle, which is the process accountants use to
identify, record, and report business transactions. The
following steps in the accounting cycle are covered in
detail:

• Transaction Analysis: This section explains how

to identify and analyze transactions, determining
 their effect on the accounting equation. The
concept of debits and credits is introduced, with
examples of how various transactions affect
assets, liabilities, and equity.
• Journal Entries: The book introduces general
journal entries, which are used to record
transactions in the accounting system. Each
journal entry includes a date, accounts to be
debited and credited, and a brief description of
the transaction.
• Posting to the Ledger: The process of posting
journal entries to the general ledger is explained.
This step involves transferring the data from the
journal to individual ledger accounts, which track
each account’s balance over time.
• Trial Balance: The trial balance is a list of all
ledger accounts and their balances at a specific
point in time. It is used to verify that debits equal
credits, ensuring the accuracy of the accounting
records. The textbook explains how to prepare
and analyze a trial balance.
 • Adjusting Entries: Adjusting entries are used to
update account balances before preparing
financial statements. This section covers the
different types of adjustments (e.g., accruals,
deferrals) and their role in matching revenues and
expenses to the appropriate accounting period.
• Financial Statements: The chapter explains how
to prepare the four primary financial statements:
the Income Statement, Balance Sheet,
Statement of Owner’s Equity, and Cash Flow
Statement. It discusses the purpose of each
statement and how they provide valuable
information to external and internal users.
• Closing Entries: After the financial statements
are prepared, the temporary accounts (revenues,
expenses, dividends) must be closed to start the
new accounting period. The textbook covers the
process of making closing entries and preparing
the post-closing trial balance.
3. Financial Reporting and Analysis

This section of the textbook delves into the

preparation and interpretation of financial
statements, focusing on financial reporting
standards and analysis techniques.

• Generally Accepted Accounting Principles

(GAAP): The book explains GAAP, the framework
that governs how financial statements should be
prepared and presented. It also covers the role of
regulatory bodies like the Financial Accounting
Standards Board (FASB) and International
Financial Reporting Standards (IFRS) in setting
these standards.
• Income Statement: The Income Statement, or
Profit and Loss Statement, is discussed in detail.
The book explains how to calculate revenues,
expenses, gross profit, operating income, and
net income. It also covers multi-step and single-
step income statement formats.
• Balance Sheet: This section explains the
structure of the Balance Sheet, which shows a
company’s financial position at a specific date.
The book breaks down assets (current and long-
term), liabilities (current and long-term), and
equity (owner’s capital, retained earnings). It
 emphasizes the importance of liquidity and
solvency ratios in analyzing a company's financial
health.
• Cash Flow Statement: The Cash Flow
Statement is explored, detailing cash flows from
operating, investing, and financing activities. The
book covers how to prepare the statement and
the importance of cash flow in evaluating a
company's ability to generate cash and meet its
obligations.
• Statement of Owner’s Equity: The Statement of
Owner’s Equity shows the changes in owner’s
equity during the period. The book explains how to
calculate ending capital, taking into account
investments, net income, and withdrawals.
• Financial Ratio Analysis: The textbook
introduces key financial ratios that help analyze a
company’s performance. Ratios like current
ratio, quick ratio, debt-to-equity ratio, return on
equity (ROE), and return on assets (ROA) are
covered, with examples of how to interpret these
ratios in real-world scenarios.
4. Accounting for Merchandising Operations

The next section focuses on merchandising

companies, which buy and sell goods. This chapter
introduces new concepts related to inventory and cost
of goods sold (COGS):

• Inventory Systems: The book explains the two

types of inventory systems: perpetual and
periodic. In the perpetual system, inventory
records are updated after each sale, while in the
periodic system, inventory is only updated at the
end of the accounting period.
• Recording Purchases and Sales: The section
covers how to record merchandise purchases and
sales, including the use of purchase discounts,
sales returns, and allowances. It also explains
how to calculate net sales and net purchases.
• Inventory Valuation: The textbook discusses
various methods of inventory valuation, including
First-In, First-Out (FIFO), Last-In, First-Out
(LIFO), and the Weighted Average Cost method.
Each method’s impact on financial statements
and tax obligations is explored in detail.
 • Adjusting and Closing Entries for
Merchandising Companies: Merchandising
companies require specific adjustments related
to inventory, which are covered in this section. It
also explains how to make closing entries for
merchandising companies.
5. Internal Controls and Cash Management

This chapter emphasizes the importance of internal

controls in safeguarding a company’s assets and
ensuring the accuracy of its accounting records.

• Internal Control Principles: The book outlines

key principles of internal control, including the
separation of duties, authorization of
transactions, and physical controls. Real-world
examples are provided to illustrate how
companies implement internal controls.
• Cash Management: The section on cash
management explains how businesses manage
their cash flow to ensure they have enough
liquidity to meet their short-term obligations.
 Topics covered include bank reconciliations,
petty cash, and cash budgeting.
6. Accounting for Receivables, Payables, and Fixed Assets

This section focuses on specific types of accounts

and transactions that are common in many
businesses:

• Receivables: The book explains how to account

for accounts receivable and notes receivable,
including the use of the allowance method to
estimate uncollectible accounts. The direct write-
off method is also discussed.
• Payables: The section covers accounts payable,
notes payable, and accrued liabilities. It
explains how to account for interest expense and
the repayment of debt.
• Fixed Assets: This chapter focuses on accounting
for long-term assets like property, plant, and
equipment (PP&E). It explains how to record
acquisitions, calculate depreciation, and
account for the sale or disposal of fixed assets.
Methods of depreciation, such as straight-line,
 declining balance, and units of production, are
detailed.
7. Partnerships and Corporations

This section discusses the different forms of business

ownership and their unique accounting requirements:

• Partnerships: The book explains how to account

for partnerships, including how to allocate profits
and losses among partners. It also covers the
admission and withdrawal of partners and the
dissolution of partnerships.
• Corporations: The section on corporations
covers the issuance of common stock and
preferred stock, as well as dividends and
treasury stock. The text also explains how to
account for stockholders’ equity and corporate
income taxes.
8. Budgeting and Managerial Accounting

The final section of the book shifts focus to

managerial accounting, which helps managers make
informed business decisions. Topics include:
 • Budgeting: The book explains the budgeting
process, including how to prepare an operating
budget, capital expenditure budget, and cash
budget. It also covers variance analysis, which
compares actual results to budgeted amounts.
• Cost Accounting: This section introduces
concepts such as job order costing, process
costing, and activity-based costing. It explains
how to allocate costs to products and services to
determine profitability.
• Decision-Making Tools: The textbook also covers
tools for managerial decision-making, including
cost-volume-profit analysis and break-even
analysis. These tools help managers evaluate the
impact of different business decisions on
profitability.
Conclusion

Overall, the 25th Edition of "Fundamental

Accounting Principles" is a comprehensive resource
that covers the full spectrum of accounting concepts,
from basic principles to advanced topics. The book is
designed to provide students with a solid foundation
in accounting theory, while also offering practical
tools and techniques for analyzing and interpreting
financial data. The inclusion of ethical considerations,
up-to-date standards, and real-world applications
makes this edition a valuable guide for both students
and professionals in the field of accounting.

Find the Full Original Textbook (PDF) in the link

below:

CLICK HERE