Chapter 1:

• New opener discussing the Enron / Andersen debacle as well as subsequent investor concerns and congressional scrutiny of the accounting profession
• Sarbanes-Oxley Act of 2002 discussed along with the new Public Accounting Oversights Board
• "Auditor Independence" Business in Practice box updated
• International Accounting Standards section updated to include reference to the International Accounting Standards Board (IASB)
• Reference made to the efforts of the European Union to draft a voluntary code of conduct relating to auditor independence

Chapter 2:

• New Study Suggestion box concerning the use of accounting models in problem solving
• Further reference to Enron made in "Cash Flows versus Accrual Accounting" Business in Practice box
• Levi-Strauss problem updated with fresh data

Chapter 3:

• Intel Corporation data and affected graphs updated

Chapter 4:

• Standard updating to make content current

Chapter 5:

• Horizontal model expanded to include a "Cash flows" column that classifies activities as operating, investing, or financing
• Beginning here, the horizontal model representation of the effects of new transactions is presented before the related journal entry
• Study Suggestion box added to provide an easy and clear methodology for analyzing the effects of inventory errors
• End-of-chapter case updated with new data

Chapter 6:

• Discussion of goodwill updated to reflect the non-amortization approach taken by the FASB
• Goodwill coverage now includes an illustration of the financial statement effects of goodwill impairment losses.
• "Present Value" appendix renamed "Time Value of Money" and now includes a discussion of future values and the presentation of future value tables

Chapter 7:

• Business in Practice box "Gross and Net Methods of Recording Purchases" expanded to incorporate examples of the effects of the related transactions on the financial statements
• Exhibit describing bond discount and premium enhanced with a graphical representation of the discount and premium amortization process

Chapter 8:

• Brief discussion of reverse stock splits added with several recent real-world examples included

Chapter 9:

• New Business in Practice box "The Hidden Cost of Shelf Space" added to highlight the difficulties faced by the FASB in defining how to account for the reporting entity's revenues and expenses

Chapter 10:

• "Significant Accounting Policies" section updated:
  -discussion of "Goodwill and other acquisition-related intangibles" included
  -illustration of the financial statement effects of the exercise of stock options added
• Purchase and pooling of interest methods discussion updated to reflect recent FASB changes in the accounting for business combinations
• Imation Corp. case updated with fresh data

Chapter 11:

• Intel Corporation data and affected discussion updated throughout chapter
• New appendix "Financial Reporting Misstatements" added to highlight a variety of accounting gimmicks, shenanigans, and fraud that have occurred in recent years

Chapter 13:

• All chapter exhibits reflecting the flow of costs for manufacturing firms enhanced to present transaction flows in the horizontal model
• New section on Cost Accounting in Service Organizations added
• Activity-Based Costing material expanded

Chapter 14:

• New exhibit "Overview of the Operating Budget Development Sequence" added
• New discussion on Cost of Goods Sold Budget
• New exhibit "Operating Expense Budget" added
• New examples of budgeting techniques in non-manufacturing firms provided

Chapter 15:

• Chapter reorganized with Reporting for Segments of an Organization placed after development of Flexible Budgets and Standard Cost Variance Analysis
• New discussion and graphical illustration added for fixed overhead volume variance
• New section on Analysis of Investment Centers
• New section on The Balanced Scorecard
• New Exercises for Investment Center Analysis; ROI and Residual Income

Chapter 16:

• New section on Relevant Costs in Action - The Make or Buy Decision added
• New section on Short-Term Allocation of Scarce Resources
• New Exercises added for the following examples of Relevant Cost Decision Making:
  -Sell or Process Further?
  -The Make of Buy Decision
  -The Product-Mix Decision