Solution Manual For Fundamentals of Financial Accounting, 8th Edition by Fred Phillips, Robert Libby, Verified Chapters 1 - 13, Complete Newest Version

SOLUTION MANUAL vg




Fundamentals of Financial Accounting
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vg 8th Edition
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Fred Phillips, Robert Libby, All Chapters 1 - 13
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, TABLE OF CONTENTS vg vg v g




CHAPTER 1: Business Decisions and Financial Accounting
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v g CHAPTER 2: The Balance Sheet
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CHAPTER 3: The Income Statement
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CHAPTER 4: Adjustments, Financial Statements, and Financial Results
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vg CHAPTER 5: Fraud, Internal Control, and Cash
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CHAPTER 6: Merchandising Operations and the Multi-step Income Statement
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v g CHAPTER 7: Inventory and Cost of Goods Sold
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CHAPTER 8: Receivables, Bad Debt Expense, and Interest Revenue
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vg CHAPTER 9: Long-Lived Tangible and Intangible Assets
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CHAPTER 10: Liabilities
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CHAPTER 11: Shareholders' Equity
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vg CHAPTER 12: Statement of Cash Flows
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CHAPTER 13: Measuring and Evaluating Financial Performance
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,Chapter 1 vg




Business Decisions and Financial Accounting vg vg vg vg




ANSWERS TO QUESTIONS vg vg




1. Accounting is a system of analyzing, recording, and summarizing the results
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of a business‘s activities and then reporting them to decision makers.
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2. An advantage of operating as a sole proprietorship, rather than a corporation, is that it is
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easy to establish. Another advantage is that income from a sole proprietorship is taxed
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v only once in the hands of the individual proprietor (income from a corporation is taxed in
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the corporation and then again in the hands of the individual proprietor). A disadvantage
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of operating as a sole proprietorship, rather than a corporation, is that the individual
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proprietor can be held responsible for the debts of the business.
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3. Financial accounting focuses on preparing and using the financial statements that are
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made available to owners and external users such as customers, creditors, and potential
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investors who are interested in reading them. Managerial accounting focuses on other
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accounting reports that are not released to the general public, but instead are prepared
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and used by employees, supervisors, and managers who run the company.
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4. Financial reports are used by both internal and external groups and individuals. The
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internal groups are comprised of the various managers of the business. The external
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groups include investors, creditors, governmental agencies, other interested parties, and
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the public at large.
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5. The business itself, not the individual shareholders who own the business, is viewed as owning
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the assets and owing the liabilities on its balance sheet. A business‘s balance sheet includes
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the assets, liabilities, and shareholders‘ equity of only that business and not the personal
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assets, liabilities, and equity of the shareholders. The financial statements of a company
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show the results of the business activities of only that company.
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6. (a) Operating – These activities are directly related to earning profits. They include buying
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supplies, making products, serving customers, cleaning the premises, advertising, renting a
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building, repairing equipment, and obtaining insurance coverage.
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, (b) Investing – These activities involve buying and selling productive resources with long lives
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(such as buildings, land, equipment, and tools), purchasing investments, and lending to
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others.
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(c) Financing – Any borrowing from banks, repaying bank loans, receiving contributions
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from shareholders, or paying dividends to shareholders are considered financing
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activities.
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7. The heading of each of the four primary financial statements should include the following:
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(a) Name of the business vg vg vg


(b) Name of the statement vg vg vg


(c) Date of the statement, or the period of time
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8. (a) The purpose of the balance sheet is to report the financial position (assets,
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liabilities and shareholders‘ equity) of a business at a point in time.
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(b) The purpose of the income statement is to present information about the revenues,
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expenses, and net income of a business for a specified period of time.
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(c) The statement of retained earnings reports the way that net income and the
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distribution of dividends affected the financial position of the company during the
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period.
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(d) The purpose of the statement of cash flows is to summarize how a business‘s
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operating, investing, and financing activities caused its cash balance to change over a
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particular period of time.
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9. The income statement, statement of retained earnings, and statement of cash flows would
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dated
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―For the Year Ended December 31, 2020,‖ because they report the inflows and outflows
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of resources during a period of time. In contrast, the balance sheet would be dated ―At
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December 31, 2020,‖ because it represents the assets, liabilities and shareholders‘ equity at
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a specific date.
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10. Net income is the excess of total revenues over total expenses. A net loss occurs if total
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expenses exceed total revenues.
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11. The accounting equation for the balance sheet is: Assets = Liabilities + Shareholders‘
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Equity. Assets are the economic resources controlled by the company.
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Liabilities are vg


amounts owed by the business. Shareholders‘ equity is the owners‘ claims to the business.
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It includes amounts contributed to the business (by investors through purchasing the
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company‘s shares) and the amounts earned and accumulated through profitable business
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operations.
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12. The equation for the income statement is Revenues – Expenses = Net Income. Revenues are
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increases in a company‘s resources, arising primarily from its operating activities.
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Expenses are decreases in a company‘s resources, arising primarily from its operating
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activities. Net Income is equal to revenues minus expenses. (If expenses are greater than
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revenues, the company has a Net Loss.)
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