Solution Manual For
Financial Reporting and Analysis_ Using Financial Accounting Information (with Thomson Analytics
Access Code) 10 Edition by Charles H. Gibson
Chapter 1-13 include:Essay/Problem-Based Questions: In law exams, students are often given hypothetical scenarios (problem questions)
and are asked to analyze the legal issues involved. These require students to apply specific legal principles
TABLE OF CONTENTS
Chapter 1 Introduction to Financial Reporting ................................................................. 1
Chapter 2 Introduction to Financial Statements and Other Financial
Reporting Topics. ............................................................................................. 20
Chapter 3 Balance Sheet ................................................................................................... 41
Chapter 4 Income Statement. ............................................................................................ 68
Chapter 5 Basics of Analysis. ........................................................................................... 88
Chapter 6 Liquidity of Short-term Assets; Related Debt-Paying Ability 107
Chapter 7 Long-Term Debt-Paying Ability ...................................................................... 160
Chapter 8 Profitability ....................................................................................................... 187
Chapter 9 For the Investor. ............................................................................................... 234
Chapter 10 Statement of Cash Flows .................................................................................. 260
Chapter 11 Expanded Analysis ........................................................................................... 299
Chapter 12 Special Industries: Banks, Utilities, Oil and Gas, Transportation,
Insurance, Real Estate Companies. .................................................................. 340
Chapter 13 Personal Financial Statements and Accounting for
Governments and Not-For-Profit Organizations. ............................................. 366
scenario.Multiple Choice Questions (MCQs): Some law exams, particularly in foundational subjects like contract
law or tort law, may feature MCQs designed to test knowledge of legal terminology
1
, Chapter 1 Introduction to Financial Reporting
include:Essay/Problem-Based Questions: In law exams, students are often given hypothetical scenarios (problem questions) and
are asked to analyze the legal issues involved. These require students to apply specific legal principles
TO THE NET
1. a. he Mission of the Financial Accounting Standard Board (In Part)
The mission of the Financial Accounting Standards Board (FASB)is to
establish and improve standards of financial accounting and reporting for the
guidance and education of the public, including issuers, auditors and users of
financial information.
Accounting standards are essential to the efficient functioning of the economy
because decisions about the allocation of resources rely heavily on credible,
concise, transparent and understandable financial information. Financial
information about the operations and financial position of individual entities
also is used by the public in making various other kinds of decisions.
scenario.Multiple Choice Questions (MCQs): Some law exams, particularly in foundational subjects like contract law or tort law, may feature
MCQs designed to test knowledge of legal terminology
To accomplish its mission, the FASB acts to:
Improve the usefulness of financial reporting by
focusing on the primary characteristics of relevance
and reliability and on the qualities of comparability
and constancy;
Keep standards current to reflect changes in methods of
doing business and changes in the economic environment;
Consider promptly any significant areas of deficiency in
financial reporting that
might be improved through the standard- setting process;
Promote the international convergence of accounting
standards concurrent with improving the quality of
financial reporting; and
Improve the common understanding of the nature and
purposes of information contained in financial reports.
b Financial Accounting Standards Advisory Council An Overview
The Financial Accounting Standards Advisory Council, FASAC or ―the
Council‖ for short, was formed in 1973 concurrent with the establishment of
the Financial Accounting Standards Board (the FASB or the Board).
The primary function of FASAC is to advise the Board on issues related to
projects on the Board’s agenda, possible new agenda items, project priorities,
procedural matters that may require the attention of the FASB, and other
2
, matters as requested by the chairman of the FASB. FASAC meetings provide
the Board with an opportunity to obtain and discuss the views of a very
diverse group of individuals from varied business and professional
backgrounds. include:Essay/Problem-Based Questions: In law exams, students are often given
hypothetical scenarios (problem questions) and are asked to analyze the legal issues involved. These
require students to apply specific legal principles
The members of FASAC are drawn from the ranks of CEOs, CFOs, senior
partners of public accounting firms, executive directors of professional
organizations, and senior members of the academic and analyst communities,
all disclosure.
Carrying Out the Mission
It is the job of the FASB to establish the ―generally accepted accounting
principles,‖ or GAAP, to which public financial reporting by U.S. corporations
must conform and to keep those principles current.
In conducting its activities, the Board strives to carefully weight the views of
its users, preparers, and auditors of financial report. The Council provides an
important sounding board to help the FASB understand what constituents are
thinking about a wide range of issues.
FASAC’s role is not to reach a consensus or to vote on the issues that it
considers at its meetings.
Rather, FASAC operates as a window through which the Board can obtain and
discuss the representative views of the diverse groups the FASB affects. Thus,
FASAC provides the forum for two-way communication. While it is
important to convene the Council members as a group, that is so that the Board
can hear the individual views of those members and so that the members can
hear and respond to each other’s views.
scenario.Multiple Choice Questions (MCQs): Some law exams, particularly in foundational subjects like contract law or tort law, may feature
MCQs designed to test knowledge of legal terminology
Members of FASAC are urged to speak out publicly on matters before the
FASB and also to be supportive of the Board’s process, and the principle of
private- sector standard setting. Individual Council members are not expected
to agree with the Board’s decisions on all of the technical aspects of the
projects on the Board’s agenda, but it is important that FASAC members
support the institution and its due process.
Structure of the Organization
FASAC is an operating arm of the financial Accounting Foundation, an
organization that is independent of any other business or professional
organization. The Foundation is run by a 16-member Board of Trustees who
are leaders in the business, accounting, financial, government and academic
communities.
The Foundation selects the members of FASAC including the chairman and
broadly oversees its operations.
The Council comprises 33 members who represent a broad cross section of
the Board’s constituency. They are appointed for a one-year term are eligible
3
, to be reappointed for three additional one-year terms.
The Process
The Council meets once a quarter at the FASB’s offices in Norwalk, Ct. Like
the FASB, FASAC is committed to following an open, orderly process that is
open to public observation. In addition to eh Council members, the members
of the FASB, its director of research and technical activities, several members
of the FASB’s staff, and the chief accountant of the SEC attend each meeting.
2. Each student will select a company and obtain a copy of their annual report,
10-K, and proxy. include:Essay/Problem-Based Questions: In law exams, students are often given
hypothetical scenarios (problem questions) and are asked to analyze the legal issues involved. These
require students to apply specific legal principles
scenario.Multiple Choice Questions (MCQs): Some law exams, particularly in foundational subjects like
contract law or tort law, may feature MCQs designed to test knowledge of legal terminology
QUESTIONS
1- 1. a. The AICPA is an organization of CPAs that prior to 1973 accepted the primary
responsibility for the development of generally accepted accounting principles.
Their role was substantially reduced in 1973 when the Financial Accounting
Standards Board was established. Their role was further reduced with the
establishment of the Public Company Accounting Oversight Board was
established in 2002.
b. The Financial Accounting Standards Board replaced the Accounting Principles
Board as the primary rule- making body. It is an independent organization
and includes members other than public accountants.
c. The SEC has the authority to determine generally accepted accounting principles
and to regulate the accounting profession. The SEC has elected to leave much
of the determination of generally accepted accounting principles to the private
sector. For accounting standards the Financial Accounting Standards Board
has played the major role since 1973. Regulation of the accounting profession
was substantially turned over to the Public Company Accounting Oversight
Board in 2002.
1- 2. Consistency allows for the same accounting principle from period to period. A change in
principle requires statement disclosure.
1- 3. The concept of historical cost determines the balance sheet valuation of land. The
realization concept requires that a transaction has occurred for the profit to be
recognized.
1- 4. a. Entity f. Historical cost
b. Realization g. Disclosure
c. Materiality
d. Conservatism
4
Financial Reporting and Analysis_ Using Financial Accounting Information (with Thomson Analytics
Access Code) 10 Edition by Charles H. Gibson
Chapter 1-13 include:Essay/Problem-Based Questions: In law exams, students are often given hypothetical scenarios (problem questions)
and are asked to analyze the legal issues involved. These require students to apply specific legal principles
TABLE OF CONTENTS
Chapter 1 Introduction to Financial Reporting ................................................................. 1
Chapter 2 Introduction to Financial Statements and Other Financial
Reporting Topics. ............................................................................................. 20
Chapter 3 Balance Sheet ................................................................................................... 41
Chapter 4 Income Statement. ............................................................................................ 68
Chapter 5 Basics of Analysis. ........................................................................................... 88
Chapter 6 Liquidity of Short-term Assets; Related Debt-Paying Ability 107
Chapter 7 Long-Term Debt-Paying Ability ...................................................................... 160
Chapter 8 Profitability ....................................................................................................... 187
Chapter 9 For the Investor. ............................................................................................... 234
Chapter 10 Statement of Cash Flows .................................................................................. 260
Chapter 11 Expanded Analysis ........................................................................................... 299
Chapter 12 Special Industries: Banks, Utilities, Oil and Gas, Transportation,
Insurance, Real Estate Companies. .................................................................. 340
Chapter 13 Personal Financial Statements and Accounting for
Governments and Not-For-Profit Organizations. ............................................. 366
scenario.Multiple Choice Questions (MCQs): Some law exams, particularly in foundational subjects like contract
law or tort law, may feature MCQs designed to test knowledge of legal terminology
1
, Chapter 1 Introduction to Financial Reporting
include:Essay/Problem-Based Questions: In law exams, students are often given hypothetical scenarios (problem questions) and
are asked to analyze the legal issues involved. These require students to apply specific legal principles
TO THE NET
1. a. he Mission of the Financial Accounting Standard Board (In Part)
The mission of the Financial Accounting Standards Board (FASB)is to
establish and improve standards of financial accounting and reporting for the
guidance and education of the public, including issuers, auditors and users of
financial information.
Accounting standards are essential to the efficient functioning of the economy
because decisions about the allocation of resources rely heavily on credible,
concise, transparent and understandable financial information. Financial
information about the operations and financial position of individual entities
also is used by the public in making various other kinds of decisions.
scenario.Multiple Choice Questions (MCQs): Some law exams, particularly in foundational subjects like contract law or tort law, may feature
MCQs designed to test knowledge of legal terminology
To accomplish its mission, the FASB acts to:
Improve the usefulness of financial reporting by
focusing on the primary characteristics of relevance
and reliability and on the qualities of comparability
and constancy;
Keep standards current to reflect changes in methods of
doing business and changes in the economic environment;
Consider promptly any significant areas of deficiency in
financial reporting that
might be improved through the standard- setting process;
Promote the international convergence of accounting
standards concurrent with improving the quality of
financial reporting; and
Improve the common understanding of the nature and
purposes of information contained in financial reports.
b Financial Accounting Standards Advisory Council An Overview
The Financial Accounting Standards Advisory Council, FASAC or ―the
Council‖ for short, was formed in 1973 concurrent with the establishment of
the Financial Accounting Standards Board (the FASB or the Board).
The primary function of FASAC is to advise the Board on issues related to
projects on the Board’s agenda, possible new agenda items, project priorities,
procedural matters that may require the attention of the FASB, and other
2
, matters as requested by the chairman of the FASB. FASAC meetings provide
the Board with an opportunity to obtain and discuss the views of a very
diverse group of individuals from varied business and professional
backgrounds. include:Essay/Problem-Based Questions: In law exams, students are often given
hypothetical scenarios (problem questions) and are asked to analyze the legal issues involved. These
require students to apply specific legal principles
The members of FASAC are drawn from the ranks of CEOs, CFOs, senior
partners of public accounting firms, executive directors of professional
organizations, and senior members of the academic and analyst communities,
all disclosure.
Carrying Out the Mission
It is the job of the FASB to establish the ―generally accepted accounting
principles,‖ or GAAP, to which public financial reporting by U.S. corporations
must conform and to keep those principles current.
In conducting its activities, the Board strives to carefully weight the views of
its users, preparers, and auditors of financial report. The Council provides an
important sounding board to help the FASB understand what constituents are
thinking about a wide range of issues.
FASAC’s role is not to reach a consensus or to vote on the issues that it
considers at its meetings.
Rather, FASAC operates as a window through which the Board can obtain and
discuss the representative views of the diverse groups the FASB affects. Thus,
FASAC provides the forum for two-way communication. While it is
important to convene the Council members as a group, that is so that the Board
can hear the individual views of those members and so that the members can
hear and respond to each other’s views.
scenario.Multiple Choice Questions (MCQs): Some law exams, particularly in foundational subjects like contract law or tort law, may feature
MCQs designed to test knowledge of legal terminology
Members of FASAC are urged to speak out publicly on matters before the
FASB and also to be supportive of the Board’s process, and the principle of
private- sector standard setting. Individual Council members are not expected
to agree with the Board’s decisions on all of the technical aspects of the
projects on the Board’s agenda, but it is important that FASAC members
support the institution and its due process.
Structure of the Organization
FASAC is an operating arm of the financial Accounting Foundation, an
organization that is independent of any other business or professional
organization. The Foundation is run by a 16-member Board of Trustees who
are leaders in the business, accounting, financial, government and academic
communities.
The Foundation selects the members of FASAC including the chairman and
broadly oversees its operations.
The Council comprises 33 members who represent a broad cross section of
the Board’s constituency. They are appointed for a one-year term are eligible
3
, to be reappointed for three additional one-year terms.
The Process
The Council meets once a quarter at the FASB’s offices in Norwalk, Ct. Like
the FASB, FASAC is committed to following an open, orderly process that is
open to public observation. In addition to eh Council members, the members
of the FASB, its director of research and technical activities, several members
of the FASB’s staff, and the chief accountant of the SEC attend each meeting.
2. Each student will select a company and obtain a copy of their annual report,
10-K, and proxy. include:Essay/Problem-Based Questions: In law exams, students are often given
hypothetical scenarios (problem questions) and are asked to analyze the legal issues involved. These
require students to apply specific legal principles
scenario.Multiple Choice Questions (MCQs): Some law exams, particularly in foundational subjects like
contract law or tort law, may feature MCQs designed to test knowledge of legal terminology
QUESTIONS
1- 1. a. The AICPA is an organization of CPAs that prior to 1973 accepted the primary
responsibility for the development of generally accepted accounting principles.
Their role was substantially reduced in 1973 when the Financial Accounting
Standards Board was established. Their role was further reduced with the
establishment of the Public Company Accounting Oversight Board was
established in 2002.
b. The Financial Accounting Standards Board replaced the Accounting Principles
Board as the primary rule- making body. It is an independent organization
and includes members other than public accountants.
c. The SEC has the authority to determine generally accepted accounting principles
and to regulate the accounting profession. The SEC has elected to leave much
of the determination of generally accepted accounting principles to the private
sector. For accounting standards the Financial Accounting Standards Board
has played the major role since 1973. Regulation of the accounting profession
was substantially turned over to the Public Company Accounting Oversight
Board in 2002.
1- 2. Consistency allows for the same accounting principle from period to period. A change in
principle requires statement disclosure.
1- 3. The concept of historical cost determines the balance sheet valuation of land. The
realization concept requires that a transaction has occurred for the profit to be
recognized.
1- 4. a. Entity f. Historical cost
b. Realization g. Disclosure
c. Materiality
d. Conservatism
4
