Horizontal Financial Statements Model
A horizontal financial statements model replaces the accounting equation as the predominant teaching platform in this text. The model arranges the balance sheet, income statement and statement of cash flows horizontally across a single line of text as shown below.

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The statements model approach enables students to more clearly see how accounting relates to real-world decision making. Under the traditional approach students learn to journalize a series of events and to present summarized information in financial statements. They never see how individual transactions affect financial statements. In contrast, when students record transactions into a statements model, they see a direct connection between business events and financial statements. Most business people think “if I take this particular action, how will it affect my financials”, not “if I do these fifteen things how will they be journalized.” Accordingly, the statements model approach provides a learning experience that is more intuitive and relevant than the one provided by traditional teaching methodology.

Establishing the Conceptual Framework
Chapter 1 introduces the key components of the conceptual framework for financial accounting. Essential chapter concepts include definitions of the elements of financial statements, the interrelationships between those elements, and the presentation formats for the four basic financial statements.

Accruals are introduced in Chapter 2, deferrals in Chapter 3. The first three chapters use only non-technical terminology (increase/decrease rather than debit/credit) to discuss the effects of events on the financial statements. Chapter 4 introduces recording procedures, including debits and credits. By the end of the first four chapters, students using this text will have been exposed to the same accounting content as those who use traditional books. However instead of emerging from the learning experience with a memorized of set of seemingly unrelated details, students using this text will emerge with a firmly established conceptual foundation.

After Chapter 4, the text demonstrates both the conceptual structure and the recording procedures in tandem. Each time a new type of business event is introduced, the text illustrates the effects of that event on the financial statements using the statements model. The statements model is then followed with an illustration of the relevant journal entry or T-account entries.

Example of Text Presentation
To illustrate, assume that during 2002 Nelson Incorporated buys back 50 shares of its $10 par value common stock at a price of $20 per share. The purchase of the treasury stock is an asset use transaction. Assets and equity decrease by the amount of the cost of the purchase ($20 x 50 shares = $1,000). The income statement is not affected. The cash outflow is shown in the financing activities section of the statement of cash flows. The effects on the financial statements and the journal entry necessary to record the event are as follows:

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The Effects of Cash Flows Are Shown Throughout the Entire Text
The statement of cash flows is introduced in the first chapter and included routinely thereafter throughout the text. How can students learn to prepare a statement of cash flows in the first chapter of an introductory accounting text? Teach them to analyze each increase and decrease in the cash account. Preparing a statement of cash flows is simply a matter of classifying each entry in the cash account as an operating, investing, or financing activity.

Effects of Financial Statements Over Multiple Accounting Cycles
The text also uses a vertical statements model. The vertical format shows the financial statements from top to bottom on a single page. This model displays financial results for consecutive accounting cycles in adjacent columns.

The vertical model enables the instructor to show how related events are reported over multiple accounting cycles . Since all the statements are displayed on a single page, students can visually contrast the revenue and expense recognition with cash flows. Displaying simplified comparative financial statements on a single page using a vertical statements model is a powerful alternative to the traditional presentation which uses separate pages for different statements or accounting periods.

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Focus on the Corporate Form of Organization
We want students to learn that businesses acquire assets from three primary sources: from creditors, from investors, and from earnings. The corporate form of organization structure highlights these three asset sources by using separate account categories for liabilities, contributed capital, and retained earnings. While we cover accounting for proprietorships and partnerships in separate chapters of the text, we use the corporate form as the primary teaching platform.