Solution Manual for Financial Accounting 11th Edition
Robert Libby, Patricia Libby, Complete Chapters 1 – 13
, TABLE OF CONTENTS
CHAPTER 1: Financial Statements and Business Decisions
CHAPTER 2: Investing and Financing Decisions and the Accounting System
CHAPTER 3: Operating Decisions and the Accounting System
CHAPTER 4: Adjustments, Financial Statements, and the Closing Process
CHAPTER 5: Communicating and Analyzing Accounting Information
CHAPTER 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash
CHAPTER 7: Reporting and Interpreting Cost of Goods Sold and Inventory
CHAPTER 8: Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural
Resources
CHAPTER 9: Reporting and Interpreting Liabilities
CHAPTER 10: Reporting and Interpreting Bond Securities
CHAPTER 11: Reporting and Interpreting Stockholders' Equity
CHAPTER 12: Statement of Cash Flows
CHAPTER 13: Analyzing Financial Statements
,Chapter 1 Financial Statements and Business
Decisions
ANSWERSXTOXQUESTIONS
1. Accounting Xis Xa Xsystem Xthat Xcollects Xand Xprocesses X(analyzes, Xmeasures, Xand
X records) X financial Xinformation Xabout Xan Xorganization Xand Xreports Xthat
Xinformation Xto X decision X makers.
2. Financial Xaccounting Xinvolves Xpreparation Xof Xthe Xfour Xbasic Xfinancial Xstatements
Xand X related Xdisclosures Xfor Xexternal Xdecision Xmakers. XManagerial Xaccounting
Xinvolves Xthe X preparation Xof Xdetailed Xplans, Xbudgets, Xforecasts, Xand Xperformance
Xreports Xfor X internal X decision Xmakers.
3. Financial Xreports Xare Xused Xby Xboth Xinternal Xand Xexternal Xgroups Xand Xindividuals.
XThe X internal Xgroups Xare Xcomprised Xof Xthe Xvarious Xmanagers Xof Xthe Xentity. XThe
Xexternal X groups Xinclude Xthe Xowners, Xinvestors, Xcreditors, Xgovernmental
X agencies, Xother X interested Xparties, Xand Xthe Xpublic Xat Xlarge.
4. Investors Xpurchase Xall Xor Xpart Xof Xa Xbusiness Xand Xhope Xto Xgain Xby Xreceiving Xpart
Xof X what Xthe Xcompany Xearns Xand/or Xselling Xtheir Xownership Xinterest Xin Xthe
Xcompany Xin X the Xfuture Xat Xa Xhigher Xprice Xthan Xthey Xpaid. XCreditors Xlend Xmoney
Xto Xa Xcompany Xfor Xa X specific Xlength Xof Xtime Xand Xhope Xto Xgain Xby Xcharging
Xinterest Xon Xthe Xloan.
, 5. In Xa Xsociety, Xeach Xorganization Xcan Xbe Xdefined Xas Xa Xseparate Xaccounting Xentity. XAn
X accounting Xentity Xis Xthe Xorganization Xfor Xwhich Xfinancial Xdata Xare Xto Xbe Xcollected.
X Typical Xaccounting Xentities Xare Xa Xbusiness, Xa Xchurch, Xa Xgovernmental Xunit, Xa
Xuniversity X and Xother Xnonprofit Xorganizations Xsuch Xas Xa Xhospital Xand Xa Xwelfare
Xorganization. XA X business Xtypically Xis Xdefined Xand Xtreated Xas Xa Xseparate Xentity
Xbecause Xthe Xowners, X creditors, Xinvestors, Xand Xother Xinterested Xparties Xneed Xto
X evaluate Xits Xperformance Xand X its Xpotential Xseparately Xfrom Xother Xentities Xand
Xfrom Xits Xowners.
6. Name Xof XStatement Alternative XTitle
(a) Income XStatement (a) XStatement Xof XEarnings; XStatement Xof
Income; XStatement Xof XOperations
(b) Balance XSheet (b) XStatement Xof XFinancial XPosition
(c) Cash XFlow XStatement (c) X Statement Xof XCash XFlows
7. The Xheading Xof Xeach Xof Xthe Xfour Xrequired Xfinancial Xstatements Xshould Xinclude
Xthe X following:
(a) Name Xof Xthe Xentity
(b) Name Xof Xthe Xstatement
(c) Date Xof Xthe Xstatement, Xor Xthe Xperiod Xof Xtime
(d) Unit Xof Xmeasure
8. (a) The Xpurpose Xof Xthe Xincome Xstatement Xis Xto Xpresent Xinformation Xabout
Xthe X revenues, Xexpenses, Xand Xthe Xnet Xincome Xof Xan Xentity Xfor Xa Xspecified
Xperiod Xof X time.
(b) The Xpurpose Xof Xthe Xbalance Xsheet Xis Xto Xreport Xthe Xfinancial Xposition Xof Xan
Xentity Xat X a Xgiven Xdate, Xthat Xis, Xto Xreport Xinformation Xabout Xthe Xassets,
Xliabilities Xand X stockholders’ Xequity Xof Xthe Xentity Xas Xof Xa Xspecific Xdate.
(c) The Xpurpose Xof Xthe Xstatement Xof Xcash Xflows Xis Xto Xpresent Xinformation Xabout
Xthe X flow Xof Xcash Xinto Xthe Xentity X(sources), Xthe Xflow Xof Xcash Xout Xof Xthe Xentity
X(uses), X and X the Xnet Xincrease Xor Xdecrease Xin Xcash Xduring Xthe Xperiod.
(d) The Xstatement Xof Xstockholders’ Xequity Xreports Xthe Xchanges Xin Xeach Xof Xthe
X company’s Xstockholders’ Xequity Xaccounts Xduring Xthe Xaccounting Xperiod,
X including Xissue Xand Xrepurchase Xof Xstock Xand Xthe Xway Xthat Xnet Xincome Xand
X distribution Xof Xdividends Xaffected Xthe Xretained Xearnings Xof Xthe Xcompany
Xduring X that Xperiod.
9. The Xincome Xstatement Xand Xthe Xstatement Xof Xcash Xflows Xare Xdated X―For Xthe
XYear X Ended XDecember X31‖ Xbecause Xthey Xreport Xthe Xinflows Xand Xoutflows Xof
Xresources X during Xa Xperiod Xof Xtime. XIn Xcontrast, Xthe Xbalance Xsheet Xis Xdated
X―At XDecember X31‖ X because Xit Xrepresents Xthe Xresources, Xobligations, Xand
Xstockholders’ Xequity Xat X a X specific Xdate.
Robert Libby, Patricia Libby, Complete Chapters 1 – 13
, TABLE OF CONTENTS
CHAPTER 1: Financial Statements and Business Decisions
CHAPTER 2: Investing and Financing Decisions and the Accounting System
CHAPTER 3: Operating Decisions and the Accounting System
CHAPTER 4: Adjustments, Financial Statements, and the Closing Process
CHAPTER 5: Communicating and Analyzing Accounting Information
CHAPTER 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash
CHAPTER 7: Reporting and Interpreting Cost of Goods Sold and Inventory
CHAPTER 8: Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural
Resources
CHAPTER 9: Reporting and Interpreting Liabilities
CHAPTER 10: Reporting and Interpreting Bond Securities
CHAPTER 11: Reporting and Interpreting Stockholders' Equity
CHAPTER 12: Statement of Cash Flows
CHAPTER 13: Analyzing Financial Statements
,Chapter 1 Financial Statements and Business
Decisions
ANSWERSXTOXQUESTIONS
1. Accounting Xis Xa Xsystem Xthat Xcollects Xand Xprocesses X(analyzes, Xmeasures, Xand
X records) X financial Xinformation Xabout Xan Xorganization Xand Xreports Xthat
Xinformation Xto X decision X makers.
2. Financial Xaccounting Xinvolves Xpreparation Xof Xthe Xfour Xbasic Xfinancial Xstatements
Xand X related Xdisclosures Xfor Xexternal Xdecision Xmakers. XManagerial Xaccounting
Xinvolves Xthe X preparation Xof Xdetailed Xplans, Xbudgets, Xforecasts, Xand Xperformance
Xreports Xfor X internal X decision Xmakers.
3. Financial Xreports Xare Xused Xby Xboth Xinternal Xand Xexternal Xgroups Xand Xindividuals.
XThe X internal Xgroups Xare Xcomprised Xof Xthe Xvarious Xmanagers Xof Xthe Xentity. XThe
Xexternal X groups Xinclude Xthe Xowners, Xinvestors, Xcreditors, Xgovernmental
X agencies, Xother X interested Xparties, Xand Xthe Xpublic Xat Xlarge.
4. Investors Xpurchase Xall Xor Xpart Xof Xa Xbusiness Xand Xhope Xto Xgain Xby Xreceiving Xpart
Xof X what Xthe Xcompany Xearns Xand/or Xselling Xtheir Xownership Xinterest Xin Xthe
Xcompany Xin X the Xfuture Xat Xa Xhigher Xprice Xthan Xthey Xpaid. XCreditors Xlend Xmoney
Xto Xa Xcompany Xfor Xa X specific Xlength Xof Xtime Xand Xhope Xto Xgain Xby Xcharging
Xinterest Xon Xthe Xloan.
, 5. In Xa Xsociety, Xeach Xorganization Xcan Xbe Xdefined Xas Xa Xseparate Xaccounting Xentity. XAn
X accounting Xentity Xis Xthe Xorganization Xfor Xwhich Xfinancial Xdata Xare Xto Xbe Xcollected.
X Typical Xaccounting Xentities Xare Xa Xbusiness, Xa Xchurch, Xa Xgovernmental Xunit, Xa
Xuniversity X and Xother Xnonprofit Xorganizations Xsuch Xas Xa Xhospital Xand Xa Xwelfare
Xorganization. XA X business Xtypically Xis Xdefined Xand Xtreated Xas Xa Xseparate Xentity
Xbecause Xthe Xowners, X creditors, Xinvestors, Xand Xother Xinterested Xparties Xneed Xto
X evaluate Xits Xperformance Xand X its Xpotential Xseparately Xfrom Xother Xentities Xand
Xfrom Xits Xowners.
6. Name Xof XStatement Alternative XTitle
(a) Income XStatement (a) XStatement Xof XEarnings; XStatement Xof
Income; XStatement Xof XOperations
(b) Balance XSheet (b) XStatement Xof XFinancial XPosition
(c) Cash XFlow XStatement (c) X Statement Xof XCash XFlows
7. The Xheading Xof Xeach Xof Xthe Xfour Xrequired Xfinancial Xstatements Xshould Xinclude
Xthe X following:
(a) Name Xof Xthe Xentity
(b) Name Xof Xthe Xstatement
(c) Date Xof Xthe Xstatement, Xor Xthe Xperiod Xof Xtime
(d) Unit Xof Xmeasure
8. (a) The Xpurpose Xof Xthe Xincome Xstatement Xis Xto Xpresent Xinformation Xabout
Xthe X revenues, Xexpenses, Xand Xthe Xnet Xincome Xof Xan Xentity Xfor Xa Xspecified
Xperiod Xof X time.
(b) The Xpurpose Xof Xthe Xbalance Xsheet Xis Xto Xreport Xthe Xfinancial Xposition Xof Xan
Xentity Xat X a Xgiven Xdate, Xthat Xis, Xto Xreport Xinformation Xabout Xthe Xassets,
Xliabilities Xand X stockholders’ Xequity Xof Xthe Xentity Xas Xof Xa Xspecific Xdate.
(c) The Xpurpose Xof Xthe Xstatement Xof Xcash Xflows Xis Xto Xpresent Xinformation Xabout
Xthe X flow Xof Xcash Xinto Xthe Xentity X(sources), Xthe Xflow Xof Xcash Xout Xof Xthe Xentity
X(uses), X and X the Xnet Xincrease Xor Xdecrease Xin Xcash Xduring Xthe Xperiod.
(d) The Xstatement Xof Xstockholders’ Xequity Xreports Xthe Xchanges Xin Xeach Xof Xthe
X company’s Xstockholders’ Xequity Xaccounts Xduring Xthe Xaccounting Xperiod,
X including Xissue Xand Xrepurchase Xof Xstock Xand Xthe Xway Xthat Xnet Xincome Xand
X distribution Xof Xdividends Xaffected Xthe Xretained Xearnings Xof Xthe Xcompany
Xduring X that Xperiod.
9. The Xincome Xstatement Xand Xthe Xstatement Xof Xcash Xflows Xare Xdated X―For Xthe
XYear X Ended XDecember X31‖ Xbecause Xthey Xreport Xthe Xinflows Xand Xoutflows Xof
Xresources X during Xa Xperiod Xof Xtime. XIn Xcontrast, Xthe Xbalance Xsheet Xis Xdated
X―At XDecember X31‖ X because Xit Xrepresents Xthe Xresources, Xobligations, Xand
Xstockholders’ Xequity Xat X a X specific Xdate.
