Management Decisions and Financial Accounting Reports

I very much liked the relative brevity of this text compared with other Intermediate Accounting texts. I do have one issue with the authors however. In reviewing their material on the differences between debt and equity on pp. 64-65 I felt that they needed to expand their coverage to note that debt on the balance sheet requires a formal contract with a fixed maturity date, periodic interest payments, security in case of default, and a clear statement about the role of the debtholder in management and the recording of debt interest as an expense. Equity on the balance sheet may require the creation of a bill of sale for shares of stock in the case of a start-up. Also, some consideration of the nature of the risks and rewards of both forms of capital contribution.