SolutionManualForIntermediateAccounting,11thEditionby
DavidSpiceland,MarkNelson,wayneThomas,Jennifer
, Chapter1 EnvironmentandTheoreticalStructureof
FinancialAccounting
Question 1–1
J
Financial accounting is concerned with providing relevant financial information
about various kinds of organizations to different types of external users. The primar
J
y focus of financial accounting is on the financial information provided by profit-
oriented companies to their present and potential investors and creditors.
Question 1–2
J
Resources are efficiently allocated if they are given to enterprises that will use t
hem to provide goods and services desired by society and not to enterprises that wil
J
l waste them. The capital markets are the mechanism that fosters this efficient alloc
ation of resources.
Question 1–3
J
Two extremely important variables that must be considered in any investment J
decision are the expected rate of return and the uncertainty or risk of that expected
return.
Question 1–4
J
In the long run, a company will be able to provide investors and creditors with a
J
rate of return only if it can generate a profit. That is, it must be able to use the resour
J
ces provided to it to generate cash receipts from selling a product or service that exc
eed the cash disbursements necessary to provide that product or service.
Question 1–5
J
The primary objective of financial accounting is to provide investors and credit
ors with information that will help them make investment and credit decisions.
J
Question 1–6
J
Net operating cash flows are the difference between cash receipts and cash dis
bursements during a period of time from transactions related to providing goods an
d services to customers. Net operating cash flows may not be a good indicator of fut
ure cash flows because, by ignoring uncompleted transactions, they may not match J
the accomplishments and sacrifices of the period.
Fulldownload please email me
J
,Question 1–7
J
GAAP (generally accepted accounting principles) are a dynamic set of both bro
ad and specific guidelines that a company should follow in measuring and reporting
the information in their financial statements and related notes. It is important that a
ll companies follow GAAP so that investors can compare financial information acros
s companies to make their resource allocation decisions.
Question 1–8
J
In 1934, Congress created the SEC and gave it the job of setting accounting and r
eporting standards for companies whose securities are publicly traded. The SEC hasJ
retained the power, but has relied on private sector bodies to create the standards.
The current private sector body responsible for setting accounting standards is the F
ASB.
Question 1–9
J
Auditors are independent, professional accountants who examine financial sta
tements to express an opinion. The opinion reflects the auditors‘ assessment of the
statements' fairness, which is determined by the extent to which they are prepared i
n compliance with GAAP. The auditor adds credibility to the financial statements, w
hich increases the confidence of capital market participants relying on that informat
ion.
Question 1–10
J
, Keyprovisionsincluded inthetextare:
Creation ofthe Public Company Accounting Oversight Board
Regulate types of non-auditaudit services
Requirelead auditpartnerrotationevery 5 year
Corporateexecutiveaccountability
Addressesconflicts of interest forsecurityanalysts
J
Internalcontrolreporting and auditor opinionabout controls
J J
Question 1–11
J
New accounting standards, or changes in standards, can have significant differ
ential effects on companies, investors and creditors, and other interest groups by ca
using redistribution of wealth. There also is the possibility that standards could harm
J
the economy as a whole by causing companies to change their behavior.
Question 1–12
J
The FASB undertakes a series of elaborate information gathering steps before i
ssuing an accounting standard to determine consensus as to the preferred method
J
of accounting, as well as to anticipate adverse economic consequences.
Question 1–13
J
The purpose of the conceptual framework is to guide the Board in developing a
J J
ccounting standards by providing an underlying foundation and basic reasoning on
which to consider merits of alternatives. The framework does not prescribe GAAP.
Fulldownload please email me
J
DavidSpiceland,MarkNelson,wayneThomas,Jennifer
, Chapter1 EnvironmentandTheoreticalStructureof
FinancialAccounting
Question 1–1
J
Financial accounting is concerned with providing relevant financial information
about various kinds of organizations to different types of external users. The primar
J
y focus of financial accounting is on the financial information provided by profit-
oriented companies to their present and potential investors and creditors.
Question 1–2
J
Resources are efficiently allocated if they are given to enterprises that will use t
hem to provide goods and services desired by society and not to enterprises that wil
J
l waste them. The capital markets are the mechanism that fosters this efficient alloc
ation of resources.
Question 1–3
J
Two extremely important variables that must be considered in any investment J
decision are the expected rate of return and the uncertainty or risk of that expected
return.
Question 1–4
J
In the long run, a company will be able to provide investors and creditors with a
J
rate of return only if it can generate a profit. That is, it must be able to use the resour
J
ces provided to it to generate cash receipts from selling a product or service that exc
eed the cash disbursements necessary to provide that product or service.
Question 1–5
J
The primary objective of financial accounting is to provide investors and credit
ors with information that will help them make investment and credit decisions.
J
Question 1–6
J
Net operating cash flows are the difference between cash receipts and cash dis
bursements during a period of time from transactions related to providing goods an
d services to customers. Net operating cash flows may not be a good indicator of fut
ure cash flows because, by ignoring uncompleted transactions, they may not match J
the accomplishments and sacrifices of the period.
Fulldownload please email me
J
,Question 1–7
J
GAAP (generally accepted accounting principles) are a dynamic set of both bro
ad and specific guidelines that a company should follow in measuring and reporting
the information in their financial statements and related notes. It is important that a
ll companies follow GAAP so that investors can compare financial information acros
s companies to make their resource allocation decisions.
Question 1–8
J
In 1934, Congress created the SEC and gave it the job of setting accounting and r
eporting standards for companies whose securities are publicly traded. The SEC hasJ
retained the power, but has relied on private sector bodies to create the standards.
The current private sector body responsible for setting accounting standards is the F
ASB.
Question 1–9
J
Auditors are independent, professional accountants who examine financial sta
tements to express an opinion. The opinion reflects the auditors‘ assessment of the
statements' fairness, which is determined by the extent to which they are prepared i
n compliance with GAAP. The auditor adds credibility to the financial statements, w
hich increases the confidence of capital market participants relying on that informat
ion.
Question 1–10
J
, Keyprovisionsincluded inthetextare:
Creation ofthe Public Company Accounting Oversight Board
Regulate types of non-auditaudit services
Requirelead auditpartnerrotationevery 5 year
Corporateexecutiveaccountability
Addressesconflicts of interest forsecurityanalysts
J
Internalcontrolreporting and auditor opinionabout controls
J J
Question 1–11
J
New accounting standards, or changes in standards, can have significant differ
ential effects on companies, investors and creditors, and other interest groups by ca
using redistribution of wealth. There also is the possibility that standards could harm
J
the economy as a whole by causing companies to change their behavior.
Question 1–12
J
The FASB undertakes a series of elaborate information gathering steps before i
ssuing an accounting standard to determine consensus as to the preferred method
J
of accounting, as well as to anticipate adverse economic consequences.
Question 1–13
J
The purpose of the conceptual framework is to guide the Board in developing a
J J
ccounting standards by providing an underlying foundation and basic reasoning on
which to consider merits of alternatives. The framework does not prescribe GAAP.
Fulldownload please email me
J
