Instructor Manual: Wahlen/Jones/Pagach, Intermediate Accounting, 5e, 2027, 9798214058955; Chapter 01: The Demand for and Supply of
Financial Accounting Information
Instructor Manual
Wahlen/Jones/Pagach, Intermediate Accounting, 5e, 2027, 9798214058955;
Chapter 01: The Demand for and Supply of Financial Accounting Information
TABLE OF CONTENTS
Purpose and Perspective of the Chapter......................................................................2
List of Student Downloads...........................................................................................2
Chapter Objectives........................................................................................................2
List of PowerPoint Activities and Assessments...........................................................3
Key Terms.....................................................................................................................3
What’s New in This Chapter........................................................................................6
Chapter Outline.............................................................................................................6
Additional Discussion Questions................................................................................19
Additional Activities and Assignments.......................................................................20
Additional Resources..................................................................................................20
Cengage Video Resources.......................................................................................................................20
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 1
accessible website, in whole or in part.
, Instructor Manual: Wahlen/Jones/Pagach, Intermediate Accounting, 5e, 2027, 9798214058955; Chapter 01: The Demand for and Supply of
Financial Accounting Information
PURPOSE AND PERSPECTIVE OF THE CHAPTER
The purpose of this chapter is to explore the demand for and supply of financial accounting information.
Accounting is a profession devoted to helping people by creating and reporting the financial information
they need to make good business decisions. Investors and creditors are becoming increasingly
sophisticated and global, demanding more relevant and reliable information from companies all over the
world. Future years will present great opportunities for the accounting profession to continue to create
tremendous value in the world economy and in local economies. In surveys of small business owners,
accountants are consistently viewed as among the most trusted business advisers. In addition, many
companies are placing increasing importance on accounting skills in their executive training programs
and emphasizing the certified public accountant (CPA) credential in their executive searches. The demand
for talented individuals with strong accounting skills is expected to continue.
The chapter begins by describing the forces that drive the demand for financial accounting information in
the world economy. This is followed by discussions about the Securities and Exchange Commission
(SEC) and the roles of the Financial Accounting Standards Board (FASB) and the International
Accounting Standards Board (IASB). The four primary financial statements used for reporting are
covered, as well as the important information that gets reported with those statements. A discussion
regarding the economic consequences of financial accounting information is followed by an exploration
of how data analytics are being used by accountants to make better decisions, predict future trends,
control operations, and mitigate risk. Lastly, the chapter highlights the importance to the accounting
profession of integrity and the ability to resolve ethical dilemmas.
LIST OF STUDENT DOWNLOADS
Students should download the following items from the Student Companion Center to complete the
activities and assignments related to this chapter:
Excel Template
FASB Accounting Standards
CHAPTER OBJECTIVES
The following objectives are addressed in this chapter:
LO 1.1 Describe the forces that drive the demand for financial accounting information in the world
economy.
LO 1.2 Describe the forces that determine the supply of accounting information, including the role of
the Securities and Exchange Commission (SEC).
LO 1.3 Explain the role of the Financial Accounting Standards Board (FASB) for establishing U.S.
Generally Accepted Accounting Principles (U.S. GAAP).
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 2
accessible website, in whole or in part.
, Instructor Manual: Wahlen/Jones/Pagach, Intermediate Accounting, 5e, 2027, 9798214058955; Chapter 01: The Demand for and Supply of
Financial Accounting Information
LO 1.4 Use the FASB Accounting Standards Codification system and understand the standard-setting
process.
LO 1.5 Explain the role of the International Accounting Standards Board (IASB) in establishing
International Financial Reporting Standards (IFRS) and the efforts to try to converge
accounting standards between the FASB and the IASB.
LO 1.6 Describe the output of the financial reporting process and the four primary financial statements,
as well as the important information reported with financial statements.
LO 1.7 Explain how financial accounting information triggers important economic consequences, and
explain why integrity and the ability to resolve ethical dilemmas is essential to the accounting
profession.
[return to top]
LIST OF POWERPOINT ACTIVITIES AND ASSESSMENTS
For additional guidance, refer to the Teaching Online Guide.
Chapter Objective Activity/Assessment Source
LO 1.1 Knowledge Check 1 PPT Slides 10–11
LO 1.2 Knowledge Check 2 PPT Slides 16–17
LO 1.3 Discussion Question 1 PPT Slides 20–21
LO 1.4 Discussion Question 2 PPT Slides 32–33
LO 1.6 Discussion Question 3 PPT Slides 40–41
LO 1.7 Knowledge Check 3 PPT Slides 45–46
LOs 1.1–1.7 Self-Assessment PPT Slide 47
[return to top]
KEY TERMS
Accounting standards: A natural demand used to measure and report relevant and representationally faithful
financial statements to investors and creditors.
Accounting Standards Update: A new standard issued by the FASB.
Agents: Persons hired to invest financial resources and run the company’s daily business activities on
behalf of the investors and creditors.
Assets: Resources of a firm.
Assurance Opinion: The independent auditor must provide dual opinions on the effectiveness of the
internal control system.
Audit Opinion: The fairness of the amounts reported in the financial statement.
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 3
accessible website, in whole or in part.
, Instructor Manual: Wahlen/Jones/Pagach, Intermediate Accounting, 5e, 2027, 9798214058955; Chapter 01: The Demand for and Supply of
Financial Accounting Information
Balance sheet (or statement of financial position): The financial position of a company which
includes assets, liabilities, and shareholders’ equity at a point in time.
Code of Professional Conduct (CPC): The AICPA adopts it to help guide members in performing
their responsibilities in public practice, industry, government, and education.
Comprehensive income: The change in equity of a company during a period from transactions,
events, and circumstances relating to nonowner sources.
Earnings: The excess of the revenue over the expenses.
Emerging Issues Task Force (EITF): An organization that aims to provide a response to the need
for timely guidance on new, specific accounting issues.
Environmental, social and corporate governance (ESG): Criteria used to evaluate how
responsibly and sustainably an organization operates beyond its financial performance. Environmental
reporting involves providing information about the company’s environmental impact, risks, and practices.
Social reporting typically involves providing information about a company’s impact on people, local
communities, human rights, and initiatives for diversity, equity and inclusion, employment practices, and
other factors. Corporate governance reporting often provides information about the company’s
governance structure, executive compensation, employee relations, shareholders’ rights, and how the
corporate board holds managers and executives accountable.
Ethical dilemmas: A situation in which an accountant must have the integrity to decide what is the
“right” (ethical) action to take in given circumstances.
Expenses: The outflows of assets that a company consumes and the obligations it incurs in operating
the business to generate revenues.
FASB Accounting Standards Codification (or Codification): A searchable electronic database
that integrates and topically organizes U.S. GAAP into one coherent body of literature.
Financial Accounting Standards Board (FASB): The authoritative body that has the primary
responsibility for developing accounting principles.
Financial reporting: The process of communicating financial accounting information to existing and
potential future investors, creditors, lenders, and other external decision-makers.
Financing activities: Activities that include all the cash inflows and outflows involved in the
financing activities of the company.
Form 8-K: A report used to describe significant events that have affected or may affect the company.
Form 10-K: An extensive annual report.
Form 10-Q: An extensive quarterly report.
Form 20-F: An extensive annual report from non-U.S. companies.
Generally Accepted Accounting Principles (U.S. GAAP): The principles, concepts,
guidelines, methods, and practices that regulated companies are required to use in reporting accounting
information in financial statements for U.S. companies.
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 4
accessible website, in whole or in part.
Financial Accounting Information
Instructor Manual
Wahlen/Jones/Pagach, Intermediate Accounting, 5e, 2027, 9798214058955;
Chapter 01: The Demand for and Supply of Financial Accounting Information
TABLE OF CONTENTS
Purpose and Perspective of the Chapter......................................................................2
List of Student Downloads...........................................................................................2
Chapter Objectives........................................................................................................2
List of PowerPoint Activities and Assessments...........................................................3
Key Terms.....................................................................................................................3
What’s New in This Chapter........................................................................................6
Chapter Outline.............................................................................................................6
Additional Discussion Questions................................................................................19
Additional Activities and Assignments.......................................................................20
Additional Resources..................................................................................................20
Cengage Video Resources.......................................................................................................................20
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 1
accessible website, in whole or in part.
, Instructor Manual: Wahlen/Jones/Pagach, Intermediate Accounting, 5e, 2027, 9798214058955; Chapter 01: The Demand for and Supply of
Financial Accounting Information
PURPOSE AND PERSPECTIVE OF THE CHAPTER
The purpose of this chapter is to explore the demand for and supply of financial accounting information.
Accounting is a profession devoted to helping people by creating and reporting the financial information
they need to make good business decisions. Investors and creditors are becoming increasingly
sophisticated and global, demanding more relevant and reliable information from companies all over the
world. Future years will present great opportunities for the accounting profession to continue to create
tremendous value in the world economy and in local economies. In surveys of small business owners,
accountants are consistently viewed as among the most trusted business advisers. In addition, many
companies are placing increasing importance on accounting skills in their executive training programs
and emphasizing the certified public accountant (CPA) credential in their executive searches. The demand
for talented individuals with strong accounting skills is expected to continue.
The chapter begins by describing the forces that drive the demand for financial accounting information in
the world economy. This is followed by discussions about the Securities and Exchange Commission
(SEC) and the roles of the Financial Accounting Standards Board (FASB) and the International
Accounting Standards Board (IASB). The four primary financial statements used for reporting are
covered, as well as the important information that gets reported with those statements. A discussion
regarding the economic consequences of financial accounting information is followed by an exploration
of how data analytics are being used by accountants to make better decisions, predict future trends,
control operations, and mitigate risk. Lastly, the chapter highlights the importance to the accounting
profession of integrity and the ability to resolve ethical dilemmas.
LIST OF STUDENT DOWNLOADS
Students should download the following items from the Student Companion Center to complete the
activities and assignments related to this chapter:
Excel Template
FASB Accounting Standards
CHAPTER OBJECTIVES
The following objectives are addressed in this chapter:
LO 1.1 Describe the forces that drive the demand for financial accounting information in the world
economy.
LO 1.2 Describe the forces that determine the supply of accounting information, including the role of
the Securities and Exchange Commission (SEC).
LO 1.3 Explain the role of the Financial Accounting Standards Board (FASB) for establishing U.S.
Generally Accepted Accounting Principles (U.S. GAAP).
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 2
accessible website, in whole or in part.
, Instructor Manual: Wahlen/Jones/Pagach, Intermediate Accounting, 5e, 2027, 9798214058955; Chapter 01: The Demand for and Supply of
Financial Accounting Information
LO 1.4 Use the FASB Accounting Standards Codification system and understand the standard-setting
process.
LO 1.5 Explain the role of the International Accounting Standards Board (IASB) in establishing
International Financial Reporting Standards (IFRS) and the efforts to try to converge
accounting standards between the FASB and the IASB.
LO 1.6 Describe the output of the financial reporting process and the four primary financial statements,
as well as the important information reported with financial statements.
LO 1.7 Explain how financial accounting information triggers important economic consequences, and
explain why integrity and the ability to resolve ethical dilemmas is essential to the accounting
profession.
[return to top]
LIST OF POWERPOINT ACTIVITIES AND ASSESSMENTS
For additional guidance, refer to the Teaching Online Guide.
Chapter Objective Activity/Assessment Source
LO 1.1 Knowledge Check 1 PPT Slides 10–11
LO 1.2 Knowledge Check 2 PPT Slides 16–17
LO 1.3 Discussion Question 1 PPT Slides 20–21
LO 1.4 Discussion Question 2 PPT Slides 32–33
LO 1.6 Discussion Question 3 PPT Slides 40–41
LO 1.7 Knowledge Check 3 PPT Slides 45–46
LOs 1.1–1.7 Self-Assessment PPT Slide 47
[return to top]
KEY TERMS
Accounting standards: A natural demand used to measure and report relevant and representationally faithful
financial statements to investors and creditors.
Accounting Standards Update: A new standard issued by the FASB.
Agents: Persons hired to invest financial resources and run the company’s daily business activities on
behalf of the investors and creditors.
Assets: Resources of a firm.
Assurance Opinion: The independent auditor must provide dual opinions on the effectiveness of the
internal control system.
Audit Opinion: The fairness of the amounts reported in the financial statement.
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 3
accessible website, in whole or in part.
, Instructor Manual: Wahlen/Jones/Pagach, Intermediate Accounting, 5e, 2027, 9798214058955; Chapter 01: The Demand for and Supply of
Financial Accounting Information
Balance sheet (or statement of financial position): The financial position of a company which
includes assets, liabilities, and shareholders’ equity at a point in time.
Code of Professional Conduct (CPC): The AICPA adopts it to help guide members in performing
their responsibilities in public practice, industry, government, and education.
Comprehensive income: The change in equity of a company during a period from transactions,
events, and circumstances relating to nonowner sources.
Earnings: The excess of the revenue over the expenses.
Emerging Issues Task Force (EITF): An organization that aims to provide a response to the need
for timely guidance on new, specific accounting issues.
Environmental, social and corporate governance (ESG): Criteria used to evaluate how
responsibly and sustainably an organization operates beyond its financial performance. Environmental
reporting involves providing information about the company’s environmental impact, risks, and practices.
Social reporting typically involves providing information about a company’s impact on people, local
communities, human rights, and initiatives for diversity, equity and inclusion, employment practices, and
other factors. Corporate governance reporting often provides information about the company’s
governance structure, executive compensation, employee relations, shareholders’ rights, and how the
corporate board holds managers and executives accountable.
Ethical dilemmas: A situation in which an accountant must have the integrity to decide what is the
“right” (ethical) action to take in given circumstances.
Expenses: The outflows of assets that a company consumes and the obligations it incurs in operating
the business to generate revenues.
FASB Accounting Standards Codification (or Codification): A searchable electronic database
that integrates and topically organizes U.S. GAAP into one coherent body of literature.
Financial Accounting Standards Board (FASB): The authoritative body that has the primary
responsibility for developing accounting principles.
Financial reporting: The process of communicating financial accounting information to existing and
potential future investors, creditors, lenders, and other external decision-makers.
Financing activities: Activities that include all the cash inflows and outflows involved in the
financing activities of the company.
Form 8-K: A report used to describe significant events that have affected or may affect the company.
Form 10-K: An extensive annual report.
Form 10-Q: An extensive quarterly report.
Form 20-F: An extensive annual report from non-U.S. companies.
Generally Accepted Accounting Principles (U.S. GAAP): The principles, concepts,
guidelines, methods, and practices that regulated companies are required to use in reporting accounting
information in financial statements for U.S. companies.
a
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly 4
accessible website, in whole or in part.
