Solution Manual For Financial Statement Analysis, 13th Edition By Charles H. Gibson, Verified Chapter's 1 to 13 | Complete

Solution Manual For Financial Statement Analysis,
13th Edition
By Charles H. Gibson, Verified Chapter's 1 - 13 | Complete

, Chaptero1o Introductio
notooFinancialoReporting


QUESTIONS

1- 1. a.
TheoAICPAoisoanoorganizationoofoCPAsothatopriorotoo1973oacceptedotheo
primaryoresponsibilityoforotheodevelopmentoofogenerallyoacceptedoaccount
ingoprinciples.oTheiroroleowasosubstantiallyoreducedoino1973owhenotheoFin
ancialoAccountingoStandardsoBoardowasoestablished.o Theiroroleowasofurt
heroreducedowithotheoestablishmentoofotheoPublicoCompanyoAccountingoO
versightoBoardowasoestablishedoino2002.

b. TheoFinancialoAccountingoStandardsoBoardoreplacedotheoAccounting
oPrinciplesoBoardoasotheoprimaryorule-

makingobodyoforoaccountingostandards.oItoisoanoindependentoorganiz
ationoandoincludesomembersootherothanopublicoaccountants.

c. TheoSECohasotheoauthorityotoodetermineogenerallyoacceptedoaccounting
oprinciplesoandotooregulateotheoaccountingoprofession.oTheoSECohasoele

ctedotooleaveomuchoofotheodeterminationoofogenerallyoacceptedoaccounti
ngoprinciplesotootheoprivateosector.o TheoFinancialoAccountingoStandard
soBoardohasoplayedotheomajororoleoinoestablishingoaccountingostandards
osinceo1973.o Regulationoofotheoaccountingoprofessionowasosubstantially

oturnedooverotootheoPublicoCompanyoAccountingoOversightoBoardoino200

2.

1-o2.
Consistencyoisoobtainedothroughotheoapplicationoofotheosameoaccountingo
principleofromoperiodotooperiod.o Aochangeoinoprincipleorequiresostatement
odisclosure.



1-o3.
Theoconceptoofohistoricalocostodeterminesotheobalanceosheetovaluationoofoland.o
Theorealizationoconceptorequiresothatoaotransactiononeedsotoooccuroforotheoprofit
otoobeorecognized.



1-o4. a.o Entity e.o Historicalocost

b. Realization f.o Historicalocost

c. Materiality g.o Disclosure

d. Conservatism

,1-o5. Entityoconcept

, 1-o6.
Generallyoacceptedoaccountingoprinciplesodoonotoapplyowhenoaofirmodoesonot
oappearotoobeoaogoingoconcern.o Ifotheodecisionoisomadeothatothisoisonotoaogoin
goconcern,othenotheouseoofoGAAPowouldonotobeoappropriate.

1-o7.
Withotheotimeoperiodoassumption,oinaccuraciesoofoaccountingoforotheoentity,osh
ortoofoitsocompleteolifeospan,oareoaccepted.oTheoassumptionoisomadeothatotheoe
ntityocanobeoaccountedofororeasonablyoaccuratelyoforoaoparticularoperiodoofotime
.o Inootherowords,otheodecisionoisomadeotooacceptosomeoinaccuracyobecauseoofo
incompleteoinformationoaboutotheofutureoinoexchangeoforomoreotimelyoreporting.
o Theostatementsoareoconsideredotoobeomeaningfulobecauseomaterialoinaccurac

iesoareonotoacceptable.

1- 8.o o Itoisotrueothatotheoonlyoaccurateowayotooaccountoforotheosuccessoorofailureoofoanoe
ntityoisotooaccumulateoallotransactionsofromotheoopeningoofobusinessountilotheob
usinessoeventuallyoliquidates.o Butoitoisonotonecessaryothatotheostatementsobeoc
ompletelyoaccurateoinoorderoforothemotoobeomeaningful.

1- 9. a. Aoyearothatoendsowhenooperationsoareoatoaolowoebboforotheoyear.

b. TheoaccountingotimeoperiodoisoendedoonoDecembero31.

c. Aotwelve-
monthoaccountingoperiodothatoendsoatotheoendoofoaomonthootherothanoDec
embero31.
1-10. Money.

1-
11.o o Whenomoneyodoesonotoholdoaostableovalue,otheofinancialostatementsoca
noloseomuchoofotheirosignificance.o Tootheoextentothatomoneyodoesonotoremaino
stable,oitolosesousefulnessoasotheostandardoforomeasuringofinancialotransactio
ns.

1-12.
No.o Thereoisoaoproblemowithodeterminingotheoindexoinoorderotooadjustotheostat
ements.o Theoitemsothatoareoincludedoinotheoindexomustobeorepresentative.oIno
addition,otheopricesoofoitemsochangeobecauseoofovariousofactors,osuchoasoquali
ty,otechnology,oandoinflation.

Yes.oAoreasonableoadjustmentotootheostatementsocanobeomadeoforoinflation.

1-13. False.o Anoarbitraryowrite-
offoofoinventoryocannotobeojustifiedounderotheoconservatismoconcept.o Theocon
servatismoconceptocanoonlyobeoappliedowhereothereoareoalternativeomeasurem
entsoandoeachoofotheseoalternativeomeasurementsohasoreasonableosupport.