Solution Manual For Financial Accounting,
7th Canadian Edition by Libby, Hodge,
Kanaan, Sterling Chapters 1 - 13, Complete
1-1
,TABLE OF CONTENTS
CHAPTER ONE
Financial Statements and Business Decisions
CHAPTER TWO
Investing and Financing Decisions and the Accounting System
CHAPTER THREE
Operating Decisions and the Accounting System
CHAPTER FOUR
Adjustments, Financial Statements, and the Closing Process
CHAPTER FIVE
Reporting and Interpreting Sales Revenue, Receivables, and Cash
CHAPTER SIX
Reporting and Interpreting Cost of Sales and Inventory
CHAPTER SEVEN
Reporting and Interpreting Long-Lived Assets
CHAPTER EIGHT
Reporting and Interpreting Current Liabilities
CHAPTER NINE
Reporting and Interpreting Non-current Liabilities
CHAPTER TEN
Reporting and Interpreting Shareholders' Equity
CHAPTER ELEVEN
Statement of Cash Flows
CHAPTER TWELVE
Communicating Accounting Information and Analyzing Financial Statements
CHAPTER THIRTEEN
Reporting and Interpreting Investments in Other Corporations
1-2
,CHAPTER ONE
Financial Statements and Business Decisions
ANSWERS TO QUESTIONS
1. Accounting is a system that collects and processes (analyzes, measures, and
records) financial information about an organization and reports that information to
decision makers.
2. Financial accounting involves preparation of the four basic financial statements and
related disclosures for external decision makers. Managerial accounting involves
the preparation of detailed plans, budgets, forecasts, and performance reports for
internal decision makers.
3. Financial reports are used by both internal and external groups and individuals. The
internal groups are comprised of the various managers of the entity. The external
groups include the owners, investors, creditors, governmental agencies, other
interested parties, and the public at large.
4. Investors purchase all or part of a business and hope to gain by receiving part of
what the company earns and/or selling the company in the future at a higher price
than they paid. Creditors lend money to a company for a specific length of time and
hope to gain by charging interest on the loan.
5. In sa ssociety seach sorganization scan sbe sdefined sas sa sseparate saccounting
sentity. sAn saccounting sentity sis sthe sorganization sfor swhich sfinancial sdata sare sto
sbe scollected. sTypical saccounting sentities sare sa sbusiness, sa schurch, sa
sgovernmental sunit, sa suniversity sand sother snonprofit sorganizations ssuch sas sa
shospital sand sa swelfare sorganization. sA sbusiness stypically sis sdefined sand
streated sas sa sseparate s entity sbecause sthe sowners, screditors, sinvestors, sand
sother sinterested sparties sneed sto sevaluate sits sperformance sand sits spotential
sseparately sfrom sother sentities sand sfrom sitssowners.
1-3
, 6. Name sof sStatement Alternative sTitle
(a) Income sStatement (a) s Statement sof sEarnings; sStatement sof
Income; sStatement sof sOperations
(b) Balance sSheet (b) s Statement sof sFinancial sPosition
(c) Audit sReport (c) s Report sof sIndependent sAccountants
1-4
7th Canadian Edition by Libby, Hodge,
Kanaan, Sterling Chapters 1 - 13, Complete
1-1
,TABLE OF CONTENTS
CHAPTER ONE
Financial Statements and Business Decisions
CHAPTER TWO
Investing and Financing Decisions and the Accounting System
CHAPTER THREE
Operating Decisions and the Accounting System
CHAPTER FOUR
Adjustments, Financial Statements, and the Closing Process
CHAPTER FIVE
Reporting and Interpreting Sales Revenue, Receivables, and Cash
CHAPTER SIX
Reporting and Interpreting Cost of Sales and Inventory
CHAPTER SEVEN
Reporting and Interpreting Long-Lived Assets
CHAPTER EIGHT
Reporting and Interpreting Current Liabilities
CHAPTER NINE
Reporting and Interpreting Non-current Liabilities
CHAPTER TEN
Reporting and Interpreting Shareholders' Equity
CHAPTER ELEVEN
Statement of Cash Flows
CHAPTER TWELVE
Communicating Accounting Information and Analyzing Financial Statements
CHAPTER THIRTEEN
Reporting and Interpreting Investments in Other Corporations
1-2
,CHAPTER ONE
Financial Statements and Business Decisions
ANSWERS TO QUESTIONS
1. Accounting is a system that collects and processes (analyzes, measures, and
records) financial information about an organization and reports that information to
decision makers.
2. Financial accounting involves preparation of the four basic financial statements and
related disclosures for external decision makers. Managerial accounting involves
the preparation of detailed plans, budgets, forecasts, and performance reports for
internal decision makers.
3. Financial reports are used by both internal and external groups and individuals. The
internal groups are comprised of the various managers of the entity. The external
groups include the owners, investors, creditors, governmental agencies, other
interested parties, and the public at large.
4. Investors purchase all or part of a business and hope to gain by receiving part of
what the company earns and/or selling the company in the future at a higher price
than they paid. Creditors lend money to a company for a specific length of time and
hope to gain by charging interest on the loan.
5. In sa ssociety seach sorganization scan sbe sdefined sas sa sseparate saccounting
sentity. sAn saccounting sentity sis sthe sorganization sfor swhich sfinancial sdata sare sto
sbe scollected. sTypical saccounting sentities sare sa sbusiness, sa schurch, sa
sgovernmental sunit, sa suniversity sand sother snonprofit sorganizations ssuch sas sa
shospital sand sa swelfare sorganization. sA sbusiness stypically sis sdefined sand
streated sas sa sseparate s entity sbecause sthe sowners, screditors, sinvestors, sand
sother sinterested sparties sneed sto sevaluate sits sperformance sand sits spotential
sseparately sfrom sother sentities sand sfrom sitssowners.
1-3
, 6. Name sof sStatement Alternative sTitle
(a) Income sStatement (a) s Statement sof sEarnings; sStatement sof
Income; sStatement sof sOperations
(b) Balance sSheet (b) s Statement sof sFinancial sPosition
(c) Audit sReport (c) s Report sof sIndependent sAccountants
1-4
