Horngren’s Accounting
The Financial Chapters
ST
13th Edition
UV
SOLUTIONS
IA
_A
MANUAL
PP
RO
Tracie L. Nobles
Cathy Scott
VE
Brenda L. Mattison
────────────────────────────────────────────────────
Comprehensive Solutions Manual for Instructors
D?
and Students
?
© Tracie L. Nobles, Cathy Scott & Brenda L. Mattison. All rights reserved. Reproduction or
distribution without permission is prohibited.
© Successhands
, Solutions Manual for Horngren’s Accounting: The Financial Chapters
(13th Edition)
Tracie L. Nobles
ISBN: 9780136161844
ST
UNIT 1: ACCOUNTING FOUNDATIONS AND THE ACCOUNTING
CYCLE
UV
1. Accounting and the Business Environment
2. Recording Business Transactions
3. The Adjusting Process
4. Completing the Accounting Cycle
IA
UNIT 2: MERCHANDISING AND INVENTORY SYSTEMS
5. Merchandising Operations
6. Merchandise Inventory
_A
UNIT 3: ACCOUNTING SYSTEMS, INTERNAL CONTROL, AND
RECEIVABLES
7. Accounting Information Systems
8. Internal Control and Cash
PP
9. Receivables
UNIT 4: LONG-LIVED ASSETS AND LIABILITIES
10. Plant Assets, Natural Resources, and Intangibles
RO
11. Current Liabilities and Payroll
14. Long-Term Liabilities
UNIT 5: EQUITY AND INVESTMENTS
12. Partnerships
VE
13. Corporations
15. Investments
UNIT 6: CASH FLOW AND FINANCIAL ANALYSIS
16. The Statement of Cash Flows
D?
17. Financial Statement Analysis
?
© Successhands
, Solution Manual For
Horngren's Accounting The Financial Chapters,
13th edition Nobles
SMT
Chapter 1-17
Chapter 1
UEDV
Accounting and the Business Environment
Review Questions
1. Accounting is the information system that measures business activities, processes the information
ICAO
into reports, and communicates the results to decision makers. Accounting is the language of
business.
2. Financial accounting provides information for external decision makers, such as outside investors,
_NA
lenders, customers, and the federal government. Managerial accounting focuses on information for
internal decision makers, such as the company’s managers and employees.
3. Individuals use accounting information to help them manage their money, evaluate a new job, and
better decide whether they can afford to make a new purchase. Business owners use accounting
PNPO
information to set goals, measure progress toward those goals, and make adjustments when needed.
Investors use accounting information to help them decide whether or not a company is a good
investment and once they have invested, they use a company’s financial statements to analyze how
their investment is performing. Creditors use accounting information to decide whether to lend
money to a business and to evaluate a company’s ability to make the loan payments. Taxing
RISO
authorities use accounting information to calculate the amount of income tax that a company has to
pay.
4. Certified Public Accountants (CPAs) are licensed professional accountants who serve the general
public. They work for public accounting firms, businesses, government, or educational institutions.
SVE
A Chartered Global Management Accountant (CGMA) is an accountant who has advanced
knowledge in finance, operations, strategy, and management. Certified Management Accountants
(CMAs) specialize in accounting and financial management knowledge. They work for a single
EDU
company. Certified Financial Planners (CFPs) work with individuals to help them budget, plan for
retirement, save for education, and manage their finances.
5. The FASB oversees the creation and governance of accounting standards. They work with
governmental regulatory agencies, congressionally created groups, and private groups.
?R?
6. The guidelines for accounting information are called GAAP. It is the main U.S. accounting rule
book and is currently created and governed by the FASB. Investors and lenders must have
information that is relevant and has faithful representation in order to make decisions and GAAP
provides the framework for this financial reporting.
©2021 Pearson Education, Inc. 1-1
, 7. A sole proprietorship has a single owner, terminates upon the owner’s death or choice, the owner has
personal liability for the business’s debts, and it is not a separate tax entity. A partnership has two or
more owners, terminates at partner’s choice or death, the partners have personal liability, and it is
not a separate tax entity. A corporation is a separate legal entity, has one or more owners, has
indefinite life, the stockholders are not personally liable for the business’s debts, and it is a separate
tax entity. A limited-liability company has one or more members and each is only liable for his or
SMT
her own actions, has an indefinite life, and is not a separate tax entity.
8. The land should be recorded at $5,000. The cost principle states that assets should be recorded at
their historical cost.
UEDV
9. The going concern assumption assumes that the entity will remain in business for the foreseeable
future and long enough to use existing resources for their intended purpose.
10. The faithful representation concept states that accounting information should be complete, neutral,
and free from material error.
ICAO
11. The monetary unit assumption states that items on the financial statements should be measured in
terms of a monetary unit.
_NA
12. The IASB is the organization that develops and creates IFRS which are a set of global accounting
standards that would be used around the world.
13. Assets = Liabilities + Equity. Assets are economic resources that are expected to benefit the
business in the future. They are things of value that a business owns or has control of. Liabilities
PNPO
are debts that are owed to creditors. They are one source of claims against assets. Equity is the
other source of claims against assets. Equity is the owner’s claims against assets and is the amount
of assets that is left over after the company has paid its liabilities. It represents the net worth of the
business.
RISO
14. Equity increases with owner contributions and revenues. Equity decreases with expenses and owner
withdrawals.
15. Revenues – Expenses = Net Income. Revenues are earnings resulting from delivering goods or
services to customers. Expenses are the cost of selling goods or service.
SVE
16. Step 1: Identify the accounts and the account type. Step 2: Decide if each account increases or
decreases. Step 3: Determine if the accounting equation is in balance.
EDU
17. Income Statement – Shows the difference between an entity’s revenues and expenses and reports the
net income or net loss for a specific period.
Statement of Owner’s Equity – Shows the changes in owner’s capital for a specific period including
owner contributions, net income (loss) and owner withdrawals Balance Sheet – Shows the assets,
?R?
liabilities, and owner’s equity of the business as of a specific date.
Statement of Cash Flows – Shows a business’s cash receipts and cash payments for a specific period.
18. Return on Assets = Net income / Average total assets. ROA measures how profitably a company
uses its assets.
© 2021 Pearson Education, Inc. 1-2
The Financial Chapters
ST
13th Edition
UV
SOLUTIONS
IA
_A
MANUAL
PP
RO
Tracie L. Nobles
Cathy Scott
VE
Brenda L. Mattison
────────────────────────────────────────────────────
Comprehensive Solutions Manual for Instructors
D?
and Students
?
© Tracie L. Nobles, Cathy Scott & Brenda L. Mattison. All rights reserved. Reproduction or
distribution without permission is prohibited.
© Successhands
, Solutions Manual for Horngren’s Accounting: The Financial Chapters
(13th Edition)
Tracie L. Nobles
ISBN: 9780136161844
ST
UNIT 1: ACCOUNTING FOUNDATIONS AND THE ACCOUNTING
CYCLE
UV
1. Accounting and the Business Environment
2. Recording Business Transactions
3. The Adjusting Process
4. Completing the Accounting Cycle
IA
UNIT 2: MERCHANDISING AND INVENTORY SYSTEMS
5. Merchandising Operations
6. Merchandise Inventory
_A
UNIT 3: ACCOUNTING SYSTEMS, INTERNAL CONTROL, AND
RECEIVABLES
7. Accounting Information Systems
8. Internal Control and Cash
PP
9. Receivables
UNIT 4: LONG-LIVED ASSETS AND LIABILITIES
10. Plant Assets, Natural Resources, and Intangibles
RO
11. Current Liabilities and Payroll
14. Long-Term Liabilities
UNIT 5: EQUITY AND INVESTMENTS
12. Partnerships
VE
13. Corporations
15. Investments
UNIT 6: CASH FLOW AND FINANCIAL ANALYSIS
16. The Statement of Cash Flows
D?
17. Financial Statement Analysis
?
© Successhands
, Solution Manual For
Horngren's Accounting The Financial Chapters,
13th edition Nobles
SMT
Chapter 1-17
Chapter 1
UEDV
Accounting and the Business Environment
Review Questions
1. Accounting is the information system that measures business activities, processes the information
ICAO
into reports, and communicates the results to decision makers. Accounting is the language of
business.
2. Financial accounting provides information for external decision makers, such as outside investors,
_NA
lenders, customers, and the federal government. Managerial accounting focuses on information for
internal decision makers, such as the company’s managers and employees.
3. Individuals use accounting information to help them manage their money, evaluate a new job, and
better decide whether they can afford to make a new purchase. Business owners use accounting
PNPO
information to set goals, measure progress toward those goals, and make adjustments when needed.
Investors use accounting information to help them decide whether or not a company is a good
investment and once they have invested, they use a company’s financial statements to analyze how
their investment is performing. Creditors use accounting information to decide whether to lend
money to a business and to evaluate a company’s ability to make the loan payments. Taxing
RISO
authorities use accounting information to calculate the amount of income tax that a company has to
pay.
4. Certified Public Accountants (CPAs) are licensed professional accountants who serve the general
public. They work for public accounting firms, businesses, government, or educational institutions.
SVE
A Chartered Global Management Accountant (CGMA) is an accountant who has advanced
knowledge in finance, operations, strategy, and management. Certified Management Accountants
(CMAs) specialize in accounting and financial management knowledge. They work for a single
EDU
company. Certified Financial Planners (CFPs) work with individuals to help them budget, plan for
retirement, save for education, and manage their finances.
5. The FASB oversees the creation and governance of accounting standards. They work with
governmental regulatory agencies, congressionally created groups, and private groups.
?R?
6. The guidelines for accounting information are called GAAP. It is the main U.S. accounting rule
book and is currently created and governed by the FASB. Investors and lenders must have
information that is relevant and has faithful representation in order to make decisions and GAAP
provides the framework for this financial reporting.
©2021 Pearson Education, Inc. 1-1
, 7. A sole proprietorship has a single owner, terminates upon the owner’s death or choice, the owner has
personal liability for the business’s debts, and it is not a separate tax entity. A partnership has two or
more owners, terminates at partner’s choice or death, the partners have personal liability, and it is
not a separate tax entity. A corporation is a separate legal entity, has one or more owners, has
indefinite life, the stockholders are not personally liable for the business’s debts, and it is a separate
tax entity. A limited-liability company has one or more members and each is only liable for his or
SMT
her own actions, has an indefinite life, and is not a separate tax entity.
8. The land should be recorded at $5,000. The cost principle states that assets should be recorded at
their historical cost.
UEDV
9. The going concern assumption assumes that the entity will remain in business for the foreseeable
future and long enough to use existing resources for their intended purpose.
10. The faithful representation concept states that accounting information should be complete, neutral,
and free from material error.
ICAO
11. The monetary unit assumption states that items on the financial statements should be measured in
terms of a monetary unit.
_NA
12. The IASB is the organization that develops and creates IFRS which are a set of global accounting
standards that would be used around the world.
13. Assets = Liabilities + Equity. Assets are economic resources that are expected to benefit the
business in the future. They are things of value that a business owns or has control of. Liabilities
PNPO
are debts that are owed to creditors. They are one source of claims against assets. Equity is the
other source of claims against assets. Equity is the owner’s claims against assets and is the amount
of assets that is left over after the company has paid its liabilities. It represents the net worth of the
business.
RISO
14. Equity increases with owner contributions and revenues. Equity decreases with expenses and owner
withdrawals.
15. Revenues – Expenses = Net Income. Revenues are earnings resulting from delivering goods or
services to customers. Expenses are the cost of selling goods or service.
SVE
16. Step 1: Identify the accounts and the account type. Step 2: Decide if each account increases or
decreases. Step 3: Determine if the accounting equation is in balance.
EDU
17. Income Statement – Shows the difference between an entity’s revenues and expenses and reports the
net income or net loss for a specific period.
Statement of Owner’s Equity – Shows the changes in owner’s capital for a specific period including
owner contributions, net income (loss) and owner withdrawals Balance Sheet – Shows the assets,
?R?
liabilities, and owner’s equity of the business as of a specific date.
Statement of Cash Flows – Shows a business’s cash receipts and cash payments for a specific period.
18. Return on Assets = Net income / Average total assets. ROA measures how profitably a company
uses its assets.
© 2021 Pearson Education, Inc. 1-2
