TEST BANK M
Financial Accounting
M
by Robert Libby, Patricia Libby, Frank Hodge
M M M M M M
11th Edition.
M
FULL TEST BANK!!!
M M
, FULL SOLUTION MANUAL FOR
M M M
Financial Accounting 11th Edition Robert Libby, Patri
M M M M M M
cia Libby, Frank Hodge
M M M
Chapter 1 M
Financial Statements and Business Decisions
M M M M
ANSWERS TO QUESTIONS
M M
1. AccountingMisMaMsystemMthatMcollectsMandMprocessesM(analyzes,Mmeasures,MandMre
cords)MfinancialMinformationMaboutManMorganizationMandMreportsMthatMinformationMto
MdecisionMmakers.
2. FinancialMaccountingMinvolvesMpreparationMofMtheMfourMbasicMfinancialMstatementsMa
ndMrelatedMdisclosuresMforMexternalMdecisionMmakers.MManagerialMaccountingMinvolv
esMtheMpreparationMofMdetailedMplans,Mbudgets,Mforecasts,MandMperformanceMreports
MforMinternalMdecisionMmakers.
3. FinancialMreportsMareMusedMbyMbothMinternalMandMexternalMgroupsMandMindividuals.MT
heMinternalMgroupsMareMcomprisedMofMtheMvariousMmanagersMofMtheMentity.MTheMexte
rnalMgroupsMincludeMtheMowners,Minvestors,Mcreditors,MgovernmentalMagencies,Mothe
rMinterestedMparties,MandMtheMpublicMatMlarge.
4. InvestorsMpurchaseMallMorMpartMofMaMbusinessMandMhopeMtoMgainMbyMreceivingMpartM
ofMwhatMtheMcompanyMearnsMand/orMsellingMtheirMownershipMinterestMinMtheMcompa
nyMinMtheMfutureMatMaMhigherMpriceMthanMtheyMpaid.MCreditorsMlendMmoneyMtoMaMcom
panyMforMaMspecificMlengthMofMtimeMandMhopeMtoMgainMbyMchargingMinterestMonMtheMl
oan.
NURSEDOCS@2024
,5. InMaMsociety,MeachMorganizationMcanMbeMdefinedMasMaMseparateMaccountingMentity.MA
nMaccountingMentityMisMtheMorganizationMforMwhichMfinancialMdataMareMtoMbeMcollected
.MTypicalMaccountingMentitiesMareMaMbusiness,MaMchurch,MaMgovernmentalMunit,MaMuni
versityMandMotherMnonprofitMorganizationsMsuchMasMaMhospitalMandMaMwelfareMorganiz
ation.MAMbusinessMtypicallyMisMdefinedMandMtreatedMasMaMseparateMentityMbecauseMth
eMowners,Mcreditors,Minvestors,MandMotherMinterestedMpartiesMneedMtoMevaluateMitsMp
erformanceMandMitsMpotentialMseparatelyMfromMotherMentitiesMandMfromMitsMowners.
6. NameMofMStatement AlternativeMTitle
(a) IncomeMStatement (a)MStatementMofMEarnings;MStatementMof
Income;MStatementMofMOperations
(b) BalanceMSheet (b)MStatementMofMFinancialMPosition
(c) CashMFlowMStatement (c)M StatementMofMCashMFlows
7. TheMheadingMofMeachMofMtheMfourMrequiredMfinancialMstatementsMshouldMincludeMt
heMfollowing:
(a) NameMofMtheMentity
(b) NameMofMtheMstatement
(c) DateMofMtheMstatement,MorMtheMperiodMofMtime
(d) UnitMofMmeasure
8. (a)
TheMpurposeMofMtheMincomeMstatementMisMtoMpresentMinformationMaboutMtheMr
evenues,Mexpenses,MandMtheMnetMincomeMofManMentityMforMaMspecifiedMperiodM
ofMtime.
(b) TheMpurposeMofMtheMbalanceMsheetMisMtoMreportMtheMfinancialMpositionMofManMent
ityMatMaMgivenMdate,MthatMis,MtoMreportMinformationMaboutMtheMassets,MliabilitiesM
andMstockholders’MequityMofMtheMentityMasMofMaMspecificMdate.
(c) TheMpurposeMofMtheMstatementMofMcashMflowsMisMtoMpresentMinformationMaboutMt
heMflowMofMcashMintoMtheMentityM(sources),MtheMflowMofMcashMoutMofMtheMentityM(u
ses),MandMtheMnetMincreaseMorMdecreaseMinMcashMduringMtheMperiod.
(d) TheMstatementMofMstockholders’MequityMreportsMtheMchangesMinMeachMofMtheMc
ompany’sMstockholders’MequityMaccountsMduringMtheMaccountingMperiod,Minclu
dingMissueMandMrepurchaseMofMstockMandMtheMwayMthatMnetMincomeMandMdistri
butionMofMdividendsMaffectedMtheMretainedMearningsMofMtheMcompanyMduringMth
atMperiod.
9. TheMincomeMstatementMandMtheMstatementMofMcashMflowsMareMdatedM―ForMtheMYe
arMEndedMDecemberM31‖MbecauseMtheyMreportMtheMinflowsMandMoutflowsMofMresou
rcesMduringMaMperiodMofMtime.MInMcontrast,MtheMbalanceMsheetMisMdatedM―AtMDece
mberM31‖MbecauseMitMrepresentsMtheMresources,Mobligations,MandMstockholders’Me
quityMatMaMspecificMdate.
, 10. AssetsMareMimportantMtoMcreditorsMandMinvestorsMbecauseMassetsMprovideMaMbasisMf
orMjudgingMwhetherMsufficientMresourcesMareMavailableMtoMoperateMtheMcompany.MA
ssetsMareMalsoMimportantMbecauseMtheyMcouldMbeMsoldMforMcashMinMtheMeventMtheMc
ompanyMgoesMoutMofMbusiness.MLiabilitiesMareMimportantMtoMcreditorsMandMinvestors
MbecauseMtheMcompanyMmustMbeMableMtoMgenerateMsufficientMcashMfromMoperations
MorMfurtherMborrowingMtoMmeetMtheMpaymentsMrequiredMbyMdebtMagreements.MIfMaMb
usinessMdoesMnotMpayMitsMcreditors,MtheMlawMmayMgiveMtheMcreditorsMtheMrightMtoMfor
ceMtheMsaleMofMassetsMsufficientMtoMmeetMtheirMclaims.
11. NetMincomeMisMtheMexcessMofMtotalMrevenuesMoverMtotalMexpenses.MNetMlossMisMt
heMexcessMofMtotalMexpensesMoverMtotalMrevenues.
12. TheMequationMforMtheMincomeMstatementMisMRevenuesM-
MExpensesM=MNetMIncomeM(orMNetMLossMifMtheMamountMisMnegative).MThus,MtheMthre
eMmajorMitemsMreportedMonMtheMincomeMstatementMareM(1)Mrevenues,M(2)Mexpense
s,MandM(3)MnetMincome.
13. TheMequationMforMtheMbalanceMsheetM(alsoMknownMasMtheMbasicMaccountingMequatio
n)Mis:MAssetsM=MLiabilitiesM+MStockholders’MEquity.MAssetsMareMtheMprobableM(expect
ed)MfutureMeconomicMbenefitsMownedMbyMtheMentityMasMaMresultMofMpastMtransactions.
M TheyMareMtheMresourcesMownedMbyMtheMbusinessMatMaMgivenMpointMinMtimeMsuchMas
Mcash,Mreceivables,Minventory,Mmachinery,Mbuildings,Mland,MandMpatents.MLiabilitiesM
areMprobableM(expected)MdebtsMorMobligationsMofMtheMentityMasMaMresultMofMpastMtran
sactionsMthatMwillMbeMpaidMwithMassetsMorMservicesMinMtheMfuture.MTheyMareMtheMoblig
ationsMofMtheMentityMsuchMasMaccountsMpayable,MnotesMpayable,MandMbondsMpayable
.MStockholders’MequityMisMfinancingMprovidedMbyMownersMofMtheMbusinessMandMopera
tions.MItMisMtheMclaimMofMtheMownersMtoMtheMassetsMofMtheMbusinessMafterMtheMcreditor
s’MclaimsMhaveMbeenMsatisfied.MItMmayMbeMthoughtMofMasMtheMresidualMinterestMbecau
seMitMrepresentsMassetsMminusMliabilities.
14. TheMequationMforMtheMstatementMofMcashMflowsMis:MCashMflowsMfromMoperatingMactivities
+MCashMflowsMfromMinvestingMactivitiesM+MCashMflowsMfromMfinancingMactivitiesM=MCh
angeMinMcashMforMtheMperiod.MTheMnetMcashMflowsMforMtheMperiodMrepresentMtheMincre
aseMorMdecreaseMinMcashMthatMoccurredMduringMtheMperiod.MCashMflowsMfromMoperati
ngMactivitiesMareMcashMflowsMdirectlyMrelatedMtoMearningMincomeM(normalMbusinessMa
ctivityMincludingMinterestMpaidMandMincomeMtaxesMpaid).MCashMflowsMfromMinvestingMa
ctivitiesMincludeMcashMflowsMthatMareMrelatedMtoMtheMacquisitionMorMsaleMofMproductiveM
assetsMusedMbyMtheMcompany.MCashMflowsMfromMfinancingMactivitiesMareMdirectlyMrela
tedMtoMtheMfinancingMofMtheMenterpriseMitself.
15. TheMretainedMearningsMequationMis:MBeginningMRetainedMEarningsM+MNetMIncome
M-MDividendsM=MEndingMRetainedMEarnings.MItMbeginsMwithMbeginning-of-the-
yearMRetainedMEarningsMwhichMisMtheMpriorMyear’sMendingMretainedMearningsMrepo
rtedMonMtheMbalanceMsheet.M TheMcurrentMyear'sMNetMIncomeMreportedMonMtheMinco
meMstatementMisMaddedMandMtheMcurrentMyear'sMDividendsMareMsubtractedMfromMt
hisMamount.MTheMendingMRetainedMEarningsMamountMisMreportedMonMtheMend-of-
periodMbalanceMsheet.
NURSEDOCS@2024
Financial Accounting
M
by Robert Libby, Patricia Libby, Frank Hodge
M M M M M M
11th Edition.
M
FULL TEST BANK!!!
M M
, FULL SOLUTION MANUAL FOR
M M M
Financial Accounting 11th Edition Robert Libby, Patri
M M M M M M
cia Libby, Frank Hodge
M M M
Chapter 1 M
Financial Statements and Business Decisions
M M M M
ANSWERS TO QUESTIONS
M M
1. AccountingMisMaMsystemMthatMcollectsMandMprocessesM(analyzes,Mmeasures,MandMre
cords)MfinancialMinformationMaboutManMorganizationMandMreportsMthatMinformationMto
MdecisionMmakers.
2. FinancialMaccountingMinvolvesMpreparationMofMtheMfourMbasicMfinancialMstatementsMa
ndMrelatedMdisclosuresMforMexternalMdecisionMmakers.MManagerialMaccountingMinvolv
esMtheMpreparationMofMdetailedMplans,Mbudgets,Mforecasts,MandMperformanceMreports
MforMinternalMdecisionMmakers.
3. FinancialMreportsMareMusedMbyMbothMinternalMandMexternalMgroupsMandMindividuals.MT
heMinternalMgroupsMareMcomprisedMofMtheMvariousMmanagersMofMtheMentity.MTheMexte
rnalMgroupsMincludeMtheMowners,Minvestors,Mcreditors,MgovernmentalMagencies,Mothe
rMinterestedMparties,MandMtheMpublicMatMlarge.
4. InvestorsMpurchaseMallMorMpartMofMaMbusinessMandMhopeMtoMgainMbyMreceivingMpartM
ofMwhatMtheMcompanyMearnsMand/orMsellingMtheirMownershipMinterestMinMtheMcompa
nyMinMtheMfutureMatMaMhigherMpriceMthanMtheyMpaid.MCreditorsMlendMmoneyMtoMaMcom
panyMforMaMspecificMlengthMofMtimeMandMhopeMtoMgainMbyMchargingMinterestMonMtheMl
oan.
NURSEDOCS@2024
,5. InMaMsociety,MeachMorganizationMcanMbeMdefinedMasMaMseparateMaccountingMentity.MA
nMaccountingMentityMisMtheMorganizationMforMwhichMfinancialMdataMareMtoMbeMcollected
.MTypicalMaccountingMentitiesMareMaMbusiness,MaMchurch,MaMgovernmentalMunit,MaMuni
versityMandMotherMnonprofitMorganizationsMsuchMasMaMhospitalMandMaMwelfareMorganiz
ation.MAMbusinessMtypicallyMisMdefinedMandMtreatedMasMaMseparateMentityMbecauseMth
eMowners,Mcreditors,Minvestors,MandMotherMinterestedMpartiesMneedMtoMevaluateMitsMp
erformanceMandMitsMpotentialMseparatelyMfromMotherMentitiesMandMfromMitsMowners.
6. NameMofMStatement AlternativeMTitle
(a) IncomeMStatement (a)MStatementMofMEarnings;MStatementMof
Income;MStatementMofMOperations
(b) BalanceMSheet (b)MStatementMofMFinancialMPosition
(c) CashMFlowMStatement (c)M StatementMofMCashMFlows
7. TheMheadingMofMeachMofMtheMfourMrequiredMfinancialMstatementsMshouldMincludeMt
heMfollowing:
(a) NameMofMtheMentity
(b) NameMofMtheMstatement
(c) DateMofMtheMstatement,MorMtheMperiodMofMtime
(d) UnitMofMmeasure
8. (a)
TheMpurposeMofMtheMincomeMstatementMisMtoMpresentMinformationMaboutMtheMr
evenues,Mexpenses,MandMtheMnetMincomeMofManMentityMforMaMspecifiedMperiodM
ofMtime.
(b) TheMpurposeMofMtheMbalanceMsheetMisMtoMreportMtheMfinancialMpositionMofManMent
ityMatMaMgivenMdate,MthatMis,MtoMreportMinformationMaboutMtheMassets,MliabilitiesM
andMstockholders’MequityMofMtheMentityMasMofMaMspecificMdate.
(c) TheMpurposeMofMtheMstatementMofMcashMflowsMisMtoMpresentMinformationMaboutMt
heMflowMofMcashMintoMtheMentityM(sources),MtheMflowMofMcashMoutMofMtheMentityM(u
ses),MandMtheMnetMincreaseMorMdecreaseMinMcashMduringMtheMperiod.
(d) TheMstatementMofMstockholders’MequityMreportsMtheMchangesMinMeachMofMtheMc
ompany’sMstockholders’MequityMaccountsMduringMtheMaccountingMperiod,Minclu
dingMissueMandMrepurchaseMofMstockMandMtheMwayMthatMnetMincomeMandMdistri
butionMofMdividendsMaffectedMtheMretainedMearningsMofMtheMcompanyMduringMth
atMperiod.
9. TheMincomeMstatementMandMtheMstatementMofMcashMflowsMareMdatedM―ForMtheMYe
arMEndedMDecemberM31‖MbecauseMtheyMreportMtheMinflowsMandMoutflowsMofMresou
rcesMduringMaMperiodMofMtime.MInMcontrast,MtheMbalanceMsheetMisMdatedM―AtMDece
mberM31‖MbecauseMitMrepresentsMtheMresources,Mobligations,MandMstockholders’Me
quityMatMaMspecificMdate.
, 10. AssetsMareMimportantMtoMcreditorsMandMinvestorsMbecauseMassetsMprovideMaMbasisMf
orMjudgingMwhetherMsufficientMresourcesMareMavailableMtoMoperateMtheMcompany.MA
ssetsMareMalsoMimportantMbecauseMtheyMcouldMbeMsoldMforMcashMinMtheMeventMtheMc
ompanyMgoesMoutMofMbusiness.MLiabilitiesMareMimportantMtoMcreditorsMandMinvestors
MbecauseMtheMcompanyMmustMbeMableMtoMgenerateMsufficientMcashMfromMoperations
MorMfurtherMborrowingMtoMmeetMtheMpaymentsMrequiredMbyMdebtMagreements.MIfMaMb
usinessMdoesMnotMpayMitsMcreditors,MtheMlawMmayMgiveMtheMcreditorsMtheMrightMtoMfor
ceMtheMsaleMofMassetsMsufficientMtoMmeetMtheirMclaims.
11. NetMincomeMisMtheMexcessMofMtotalMrevenuesMoverMtotalMexpenses.MNetMlossMisMt
heMexcessMofMtotalMexpensesMoverMtotalMrevenues.
12. TheMequationMforMtheMincomeMstatementMisMRevenuesM-
MExpensesM=MNetMIncomeM(orMNetMLossMifMtheMamountMisMnegative).MThus,MtheMthre
eMmajorMitemsMreportedMonMtheMincomeMstatementMareM(1)Mrevenues,M(2)Mexpense
s,MandM(3)MnetMincome.
13. TheMequationMforMtheMbalanceMsheetM(alsoMknownMasMtheMbasicMaccountingMequatio
n)Mis:MAssetsM=MLiabilitiesM+MStockholders’MEquity.MAssetsMareMtheMprobableM(expect
ed)MfutureMeconomicMbenefitsMownedMbyMtheMentityMasMaMresultMofMpastMtransactions.
M TheyMareMtheMresourcesMownedMbyMtheMbusinessMatMaMgivenMpointMinMtimeMsuchMas
Mcash,Mreceivables,Minventory,Mmachinery,Mbuildings,Mland,MandMpatents.MLiabilitiesM
areMprobableM(expected)MdebtsMorMobligationsMofMtheMentityMasMaMresultMofMpastMtran
sactionsMthatMwillMbeMpaidMwithMassetsMorMservicesMinMtheMfuture.MTheyMareMtheMoblig
ationsMofMtheMentityMsuchMasMaccountsMpayable,MnotesMpayable,MandMbondsMpayable
.MStockholders’MequityMisMfinancingMprovidedMbyMownersMofMtheMbusinessMandMopera
tions.MItMisMtheMclaimMofMtheMownersMtoMtheMassetsMofMtheMbusinessMafterMtheMcreditor
s’MclaimsMhaveMbeenMsatisfied.MItMmayMbeMthoughtMofMasMtheMresidualMinterestMbecau
seMitMrepresentsMassetsMminusMliabilities.
14. TheMequationMforMtheMstatementMofMcashMflowsMis:MCashMflowsMfromMoperatingMactivities
+MCashMflowsMfromMinvestingMactivitiesM+MCashMflowsMfromMfinancingMactivitiesM=MCh
angeMinMcashMforMtheMperiod.MTheMnetMcashMflowsMforMtheMperiodMrepresentMtheMincre
aseMorMdecreaseMinMcashMthatMoccurredMduringMtheMperiod.MCashMflowsMfromMoperati
ngMactivitiesMareMcashMflowsMdirectlyMrelatedMtoMearningMincomeM(normalMbusinessMa
ctivityMincludingMinterestMpaidMandMincomeMtaxesMpaid).MCashMflowsMfromMinvestingMa
ctivitiesMincludeMcashMflowsMthatMareMrelatedMtoMtheMacquisitionMorMsaleMofMproductiveM
assetsMusedMbyMtheMcompany.MCashMflowsMfromMfinancingMactivitiesMareMdirectlyMrela
tedMtoMtheMfinancingMofMtheMenterpriseMitself.
15. TheMretainedMearningsMequationMis:MBeginningMRetainedMEarningsM+MNetMIncome
M-MDividendsM=MEndingMRetainedMEarnings.MItMbeginsMwithMbeginning-of-the-
yearMRetainedMEarningsMwhichMisMtheMpriorMyear’sMendingMretainedMearningsMrepo
rtedMonMtheMbalanceMsheet.M TheMcurrentMyear'sMNetMIncomeMreportedMonMtheMinco
meMstatementMisMaddedMandMtheMcurrentMyear'sMDividendsMareMsubtractedMfromMt
hisMamount.MTheMendingMRetainedMEarningsMamountMisMreportedMonMtheMend-of-
periodMbalanceMsheet.
NURSEDOCS@2024
