Solution Manual for Financial Accounting 11th Edition
A A A A A A A
AA Robert Libby, Patricia Libby, Complete Chapters 1 – 13
A A A A A A A A
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, TABLE OF CONTENTS
A A
CHAPTERA1:AFinancialAStatementsAandABusinessADecisions
CHAPTERA2:AInvestingAandAFinancingADecisionsAandAtheAAccountingASystem
CHAPTERA3:AOperatingADecisionsAandAtheAAccountingASystem
CHAPTERA4:AAdjustments,AFinancialAStatements,AandAtheAClosingAProcess
CHAPTERA5:ACommunicatingAandAAnalyzingAAccountingAInformation
CHAPTERA6:AReportingAandAInterpretingASalesARevenue,AReceivables,AandACash
CHAPTERA7:AReportingAandAInterpretingACostAofAGoodsASoldAandAInventory
CHAPTERA8:AReportingAandAInterpretingAProperty,APlant,AandAEquipment;AIntangibles;AandANatural
A Resources
CHAPTERA9:AReportingAandAInterpretingALiabilities
CHAPTERA10:AReportingAandAInterpretingABondASecurities
CHAPTERA11:AReportingAandAInterpretingAStockholders'AEquity
CHAPTERA12:AStatementAofACashAFlows
CHAPTERA13:AAnalyzingAFinancialAStatements
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, Chapter 1 Financial Statements and Business
A A A A A
Decisions
ANSWERS TO QUESTIONS
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1. AccountingAisAaAsystemAthatAcollectsAandAprocessesA(analyzes,Ameasures,AandArecords
)A financialAinformationAaboutAanAorganizationAandAreportsAthatAinformationAtoAdecisi
onA makers.
2. FinancialAaccountingAinvolvesApreparationAofAtheAfourAbasicAfinancialAstatementsAandA
relatedAdisclosuresAforAexternalAdecisionAmakers.AManagerialAaccountingAinvolvesAthe
A preparationAofAdetailedAplans,Abudgets,Aforecasts,AandAperformanceAreportsAforA inter
nalA decisionAmakers.
3. FinancialAreportsAareAusedAbyAbothAinternalAandAexternalAgroupsAandAindividuals.ATh
eA internalAgroupsAareAcomprisedAofAtheAvariousAmanagersAofAtheAentity.ATheAexterna
lA groupsAincludeAtheAowners,Ainvestors,Acreditors,AgovernmentalAagencies,AotherA int
erestedAparties,AandAtheApublicAatAlarge.
4. InvestorsApurchaseAallAorApartAofAaAbusinessAandAhopeAtoAgainAbyAreceivingApartAofA w
hatAtheAcompanyAearnsAand/orAsellingAtheirAownershipAinterestAinAtheAcompanyAinA t
heAfutureAatAaAhigherApriceAthanAtheyApaid.ACreditorsAlendAmoneyAtoAaAcompanyAforAa
A specificAlengthAofAtimeAandAhopeAtoAgainAbyAchargingAinterestAonAtheAloan.
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, 5. InAaAsociety,AeachAorganizationAcanAbeAdefinedAasAaAseparateAaccountingAentity.AAnA acc
ountingAentityAisAtheAorganizationAforAwhichAfinancialAdataAareAtoAbeAcollected.A TypicalA
accountingAentitiesAareAaAbusiness,AaAchurch,AaAgovernmentalAunit,AaAuniversityA andAot
herAnonprofitAorganizationsAsuchAasAaAhospitalAandAaAwelfareAorganization.AAA business
AtypicallyAisAdefinedAandAtreatedAasAaAseparateAentityAbecauseAtheAowners,A creditors,Ain
vestors,AandAotherAinterestedApartiesAneedAtoAevaluateAitsAperformanceAandA itsApotenti
alAseparatelyAfromAotherAentitiesAandAfromAitsAowners.
6. NameAofAStatement AlternativeATitle
(a) IncomeAStatement (a)AStatementAofAEarnings;AStatementAof
Income;AStatementAofAOperations
(b) BalanceASheet (b)AStatementAofAFinancialAPosition
(c) CashAFlowAStatement (c)A StatementAofACashAFlows
7. TheAheadingAofAeachAofAtheAfourArequiredAfinancialAstatementsAshouldAincludeAth
eA following:
(a) NameAofAtheAentity
(b) NameAofAtheAstatement
(c) DateAofAtheAstatement,AorAtheAperiodAofAtime
(d) UnitAofAmeasure
8. (a)
TheApurposeAofAtheAincomeAstatementAisAtoApresentAinformationAaboutA
theA revenues,Aexpenses,AandAtheAnetAincomeAofAanAentityAforAaAspecifiedAperi
odAofA time.
(b) TheApurposeAofAtheAbalanceAsheetAisAtoAreportAtheAfinancialApositionAofAanAentityAa
tA aAgivenAdate,AthatAis,AtoAreportAinformationAaboutAtheAassets,AliabilitiesAandA stoc
kholders’AequityAofAtheAentityAasAofAaAspecificAdate.
(c) TheApurposeAofAtheAstatementAofAcashAflowsAisAtoApresentAinformationAaboutAtheA f
lowAofAcashAintoAtheAentityA(sources),AtheAflowAofAcashAoutAofAtheAentityA(uses),Aan
dA theAnetAincreaseAorAdecreaseAinAcashAduringAtheAperiod.
(d) TheAstatementAofAstockholders’AequityAreportsAtheAchangesAinAeachAofAtheA com
pany’sAstockholders’AequityAaccountsAduringAtheAaccountingAperiod,A includingA
issueAandArepurchaseAofAstockAandAtheAwayAthatAnetAincomeAandA distributionAof
AdividendsAaffectedAtheAretainedAearningsAof AtheAcompanyAduringA thatAperiod.
9. TheAincomeAstatementAandAtheAstatementAofAcashAflowsAareAdatedA―ForAtheAYearA
EndedADecemberA31‖AbecauseAtheyAreportAtheAinflowsAandAoutflowsAofAresources
A duringAaAperiodAofAtime.AInAcontrast,AtheAbalanceAsheetAisAdatedA―At ADecemberA3
1‖A becauseAitArepresentsAtheAresources,Aobligations,AandAstockholders’AequityAatA
aA specificAdate.
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A
A A A A A A A
AA Robert Libby, Patricia Libby, Complete Chapters 1 – 13
A A A A A A A A
A
A
, TABLE OF CONTENTS
A A
CHAPTERA1:AFinancialAStatementsAandABusinessADecisions
CHAPTERA2:AInvestingAandAFinancingADecisionsAandAtheAAccountingASystem
CHAPTERA3:AOperatingADecisionsAandAtheAAccountingASystem
CHAPTERA4:AAdjustments,AFinancialAStatements,AandAtheAClosingAProcess
CHAPTERA5:ACommunicatingAandAAnalyzingAAccountingAInformation
CHAPTERA6:AReportingAandAInterpretingASalesARevenue,AReceivables,AandACash
CHAPTERA7:AReportingAandAInterpretingACostAofAGoodsASoldAandAInventory
CHAPTERA8:AReportingAandAInterpretingAProperty,APlant,AandAEquipment;AIntangibles;AandANatural
A Resources
CHAPTERA9:AReportingAandAInterpretingALiabilities
CHAPTERA10:AReportingAandAInterpretingABondASecurities
CHAPTERA11:AReportingAandAInterpretingAStockholders'AEquity
CHAPTERA12:AStatementAofACashAFlows
CHAPTERA13:AAnalyzingAFinancialAStatements
A
A
, Chapter 1 Financial Statements and Business
A A A A A
Decisions
ANSWERS TO QUESTIONS
A A
1. AccountingAisAaAsystemAthatAcollectsAandAprocessesA(analyzes,Ameasures,AandArecords
)A financialAinformationAaboutAanAorganizationAandAreportsAthatAinformationAtoAdecisi
onA makers.
2. FinancialAaccountingAinvolvesApreparationAofAtheAfourAbasicAfinancialAstatementsAandA
relatedAdisclosuresAforAexternalAdecisionAmakers.AManagerialAaccountingAinvolvesAthe
A preparationAofAdetailedAplans,Abudgets,Aforecasts,AandAperformanceAreportsAforA inter
nalA decisionAmakers.
3. FinancialAreportsAareAusedAbyAbothAinternalAandAexternalAgroupsAandAindividuals.ATh
eA internalAgroupsAareAcomprisedAofAtheAvariousAmanagersAofAtheAentity.ATheAexterna
lA groupsAincludeAtheAowners,Ainvestors,Acreditors,AgovernmentalAagencies,AotherA int
erestedAparties,AandAtheApublicAatAlarge.
4. InvestorsApurchaseAallAorApartAofAaAbusinessAandAhopeAtoAgainAbyAreceivingApartAofA w
hatAtheAcompanyAearnsAand/orAsellingAtheirAownershipAinterestAinAtheAcompanyAinA t
heAfutureAatAaAhigherApriceAthanAtheyApaid.ACreditorsAlendAmoneyAtoAaAcompanyAforAa
A specificAlengthAofAtimeAandAhopeAtoAgainAbyAchargingAinterestAonAtheAloan.
A
A
, 5. InAaAsociety,AeachAorganizationAcanAbeAdefinedAasAaAseparateAaccountingAentity.AAnA acc
ountingAentityAisAtheAorganizationAforAwhichAfinancialAdataAareAtoAbeAcollected.A TypicalA
accountingAentitiesAareAaAbusiness,AaAchurch,AaAgovernmentalAunit,AaAuniversityA andAot
herAnonprofitAorganizationsAsuchAasAaAhospitalAandAaAwelfareAorganization.AAA business
AtypicallyAisAdefinedAandAtreatedAasAaAseparateAentityAbecauseAtheAowners,A creditors,Ain
vestors,AandAotherAinterestedApartiesAneedAtoAevaluateAitsAperformanceAandA itsApotenti
alAseparatelyAfromAotherAentitiesAandAfromAitsAowners.
6. NameAofAStatement AlternativeATitle
(a) IncomeAStatement (a)AStatementAofAEarnings;AStatementAof
Income;AStatementAofAOperations
(b) BalanceASheet (b)AStatementAofAFinancialAPosition
(c) CashAFlowAStatement (c)A StatementAofACashAFlows
7. TheAheadingAofAeachAofAtheAfourArequiredAfinancialAstatementsAshouldAincludeAth
eA following:
(a) NameAofAtheAentity
(b) NameAofAtheAstatement
(c) DateAofAtheAstatement,AorAtheAperiodAofAtime
(d) UnitAofAmeasure
8. (a)
TheApurposeAofAtheAincomeAstatementAisAtoApresentAinformationAaboutA
theA revenues,Aexpenses,AandAtheAnetAincomeAofAanAentityAforAaAspecifiedAperi
odAofA time.
(b) TheApurposeAofAtheAbalanceAsheetAisAtoAreportAtheAfinancialApositionAofAanAentityAa
tA aAgivenAdate,AthatAis,AtoAreportAinformationAaboutAtheAassets,AliabilitiesAandA stoc
kholders’AequityAofAtheAentityAasAofAaAspecificAdate.
(c) TheApurposeAofAtheAstatementAofAcashAflowsAisAtoApresentAinformationAaboutAtheA f
lowAofAcashAintoAtheAentityA(sources),AtheAflowAofAcashAoutAofAtheAentityA(uses),Aan
dA theAnetAincreaseAorAdecreaseAinAcashAduringAtheAperiod.
(d) TheAstatementAofAstockholders’AequityAreportsAtheAchangesAinAeachAofAtheA com
pany’sAstockholders’AequityAaccountsAduringAtheAaccountingAperiod,A includingA
issueAandArepurchaseAofAstockAandAtheAwayAthatAnetAincomeAandA distributionAof
AdividendsAaffectedAtheAretainedAearningsAof AtheAcompanyAduringA thatAperiod.
9. TheAincomeAstatementAandAtheAstatementAofAcashAflowsAareAdatedA―ForAtheAYearA
EndedADecemberA31‖AbecauseAtheyAreportAtheAinflowsAandAoutflowsAofAresources
A duringAaAperiodAofAtime.AInAcontrast,AtheAbalanceAsheetAisAdatedA―At ADecemberA3
1‖A becauseAitArepresentsAtheAresources,Aobligations,AandAstockholders’AequityAatA
aA specificAdate.
A
A
