Financial Accounting for Undergraduates, 3e

by Wallace, Nelson, Christensen, Ferris


Welcome to the Third Edition of Financial Accounting for Undergraduates.

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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 Third Edition has benefited from extensive feedback from adopters of the first two editions and suggestions from focus groups, market surveys, manuscript reviews, and interviews with faculty from across the country.

Target Audience

Financial Accounting for Undergraduates 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.

For overviews of the textbook, table of contents, features and end of chapter material, please watch the videos below.

The following clip provides an overview of the textbook and the series of videos created about the textbook.

The key pedagogical features utilized throughout the book are reviewed in the following video.

A quick review of the TOC and approach of the textbook is highlighted in the following video.

The End of Chapter material and Assignments are reviewed in the following video.


"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 world. Accounting In Practice illustrations document situations a reader is likely to encounter and present the choices that companies make in reporting financial results.


Accounting in Everyday Life

Accounting in Everyday Life boxes illustrate how accounting is used and is useful day-to-day situations. By demonstrating the relevance of accounting to students, we hope to further engage students and spur their interest in succeeding in the course.


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.



Financial accounting can be challenging—especially for students lacking business experience or previous exposure to business courses. To help students succeed in the course, we provide a wealth of resources through our online learning and homework systems, myBusinessCourse (MBC), and through pedagogical devices used throughout the textbook

Putting each chapter in context

Often, students lose sight of the big picture. The Past/Present/Future feature provides students with an overview of where the chapter fits within the whole course.


Mapping each chapter

Each chapter begins with an overview that visually depicts the layout of the chapter


Your Turn!

Your Turn boxes are integrated throughout each chapter as a mends of reinforcing the material just presented. Solutions are provided at the end of the chapter so students can check their work.


A.K.A Boxes

A.K.A (Also Know As) boxes inform students of commonly used alternative terms that they may encounter.



Helpful suggestions are inserted in the margin as Hints to help students understand difficult concepts. To record the bad debts expense for the period. This entry brings the credit balance in the Allowance for Doubtful Accounts account to the required amount—$1,560, as shown below



These in-chapter summaries ensure that students grasp key concepts before proceeding to the next topic.



In today’s post-Sarbanes-Oxley world, ethical decision making has never been more pertinent to business and students studying accounting. We discuss ethics where appropriate in the text, and we have included at least one assignment in each chapter that raises an ethical issue. Assignments involving ethics are identified by the icon in the margin.

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International Financial Reporting Standards (IFRS)

Our introductory students should develop a basic understanding of the similarities and differences in the current reporting requirements and methods under U.S. GAAP and IFRS. Consequently, we incorporate discussions that examine these similarities and differences where appropriate throughout the book in IFRS Alert! boxes. In addition, the financial statements for Tesco, PLC are included in Appendix C at the end of the book. Each chapter includes an IFRS assignment related to Tesco. The IFRS icon identifies those assignments.


Thinking Globally

In addition to IFRS Alert! boxes, the Thinking Globally inserts emphasize the similarities and differences between the United States and other countries that are not necessarily related to reporting standards