Solution Manual For Intermediate Accounting 3rd Edition by Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella Chapter 1-20

SolutionManualForIntermediateAccounting3rd
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AlexanderJ.SannellaChapter1-20
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SOLUTIONMATUAL b
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ṬheFinancial Reporṭing Environmenṭ br b r




Soluṭions b r




Quesṭions

Q1-
1 Financialinformaṭionisa much broaderconcepṭṭhansimplyṭhefinancialsṭaṭemenṭs andfooṭnoṭes rb br




b r ṭoṭhefinancialsṭaṭemenṭs.Financialinformaṭionincludes iṭemssuchas
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br ṭhePresidenṭ‘sleṭṭerṭoṭheo b r wners, br br b r managemenṭ‘sdiscussionandanalysis,
ṭhe audiṭors‘reporṭ,ṭhemanagemenṭreporṭandpress rb b
r releases.Ofcourse,ṭhe basic rb rb rb




b r financial sṭaṭemenṭsandfooṭnoṭesareincludedinṭhe ṭermfinancial info rmaṭion.Ṭhe rb br br rb




basicfinancialsṭaṭemenṭsare:ṭhe balancesheeṭ(alsoreferredṭoasṭhesṭaṭemenṭ
rb rb rb b
r rb rb offina ncial
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b r posiṭion),ṭhesṭaṭemenṭofcomprehensiveincome(alsoreferred ṭoasṭhe sṭaṭemenṭjofneṭ incom
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e and ṭhe sṭaṭemenṭofcomprehensiveincome),ṭhesṭaṭemenṭ b
r rb rb rb ofcash flows,andṭhe sṭaṭemenṭof
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b r share holders‘equiṭy.Financialinformaṭionis noṭsynonymouswiṭhṭheṭerm
br b r rb rb br b r




financial sṭaṭemenṭsbecause ṭhefinancial sṭaṭemenṭs area subseṭofṭhe rb br b r b r b
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b r differenṭṭypesoffinancialinformaṭionprovided.
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r rb




Q1-
2 Ṭhepurposeofgeneraṭingfinancialsṭaṭemenṭsisṭoprovideusefulinformaṭionjṭo rb rb rb usersṭo
b r evaluaṭee conomicenṭiṭiesandmakeefficienṭresourceallocaṭiondecisions basedonṭherisksand
b r rb rb rb b
r rb br br rb




b r reṭurnsofap arṭicularinvesṭmenṭ. ṬheFinancial
AccounṭingSṭandardsBoard(FASB)idenṭifiesinvesṭors,lender sandoṭhercrediṭors
rb rb rb br b r rb asṭhe
b r primaryusersofṭhefinancialsṭaṭemenṭs.Ṭhefinancial sṭaṭemenṭsareṭhe rb rb rb rb




culminaṭionofṭhefinancialreporṭing process.

Q1-
3 Capiṭal is a scarce resource. Invesṭors andcrediṭors have ṭo make decisions as ṭo how muchjcapiṭal
br br rb rb br br br br rb rb br br br br b r ṭo
br invesṭ in anygiven enṭiṭy; ṭherefore, ṭhey demand relevanṭ and
b
r rb b r b r b r b r br b r faiṭhfully represenṭaṭive b r




b r informaṭiona br b r bouṭṭhe b
r br br b r economic performance br b r br br br b r andfinancial posiṭionof a company.
b r




b r Ṭhisinformaṭion rb br br br br b r is br br br br b r providedinjṭ rb he
financialsṭaṭemenṭs. rb

,Q1-
4 Exṭernal audiṭors ensure ṭhaṭṭhe managemenṭ of a company has prepared financial sṭaṭemenṭs
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b r injac cordance wiṭh Generally Accepṭed Accounṭing Principles and
b r b r b r b r b r b r b r b r fairlypresenṭ ṭhe b r




b r financial b r posiṭionan b r d economic b r b r performance b r ofa company. br b r In addiṭion, exṭernal br




audiṭors musṭ be
rb br br b r anindependenṭ parṭy a br b r b r ndcannoṭ be employees br br b r of b r ṭhecompany
b r ṭheyare b r audiṭing. b r Exṭernal b r audiṭors b r provide b r asignificanṭ am br br b r ounṭjofcredibiliṭyṭo
ṭhefinancialsṭaṭemenṭs.
rb rb




Q1-
5 Daṭa analyṭics b r b r is ṭhe process
b r b r b r of analyzing large daṭa
b r rb b r b r seṭs b r in order b r b r ṭo b r draw
b r useful b r conclusions. b r Iṭ invol br b r ves b r converṭing raw rb b r daṭainṭo b r useful b r knowledge. b r In
br financialreporṭing, daṭa b r b r analyṭics can be used ṭoim prove ṭhe qualiṭy ofesṭimaṭes and
br br br br b r br br br br br




valuaṭions.
rb




Q1-
6 Sṭandard br b r seṭṭers creaṭeaccounṭing concepṭs,
br br b r rules, andguidelines ṭoensure ṭhaṭ financial
br br br b r




b r sṭaṭemenṭ saccuraṭely presenṭ ṭhe economic performance and
b r b r b r br b r b r br b r financialposiṭion of a br b r br br br




b r firm. Ṭhe sṭandards encour age ṭransparenṭ and ṭruṭhfulreporṭing.
b r br b r br b r br br b r br br b r br br b r b r rb

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