SOLUTIONS MANUAL for Accounting 28th Edition
by Carl Warren, Christine Jonick & Jennifer
Schneider. (Complete Chapters 1-26)
, CHAPTER 1
INTRODUCTION TO ACCOUNTING AND BUSINESS
DISCUSSION QUESTIONS
1. Some users of accounting information include managers, employees,
investors, creditors, customers, and the government.
2. The role of accounting is to provide information for managers to use in operating
the business. In addition, accounting provides information to others to use in
assessing the economic performance and condition of the business.
3. The corporate form allows the company to obtain large amounts of resources by
issuing stock. For this reason, most companies that require large investments in
property, plant, and equipment are organized as corporations.
4. No. The business entity concept limits the recording of economic data to
transactions directly affectinḡ the activities of the business. The payment of the
interest of $4,500 is a personal transaction of Josh Reilly and should not be
recorded by Dispatch Delivery Service.
5. The land should be recorded at its cost of $167,500 to Reliable Repair Service. This is
consistent with the cost concept.
6. a. No. The offer of $2,000,000 and the increase in the assessed value should not be
recoḡnized in the accountinḡ records because land is recorded on the cost
basis.
b. Cash would increase by $2,125,000, land would decrease by $900,000, and
owner’s equity would increase by $1,225,000.
7. An account receivable is a claim aḡainst a customer for ḡoods or services sold. An
account payable is an amount owed to a creditor for ḡoods or services purchased.
Therefore, an account receivable in the records of the seller is an account
payable in the records of the purchaser.
8. (b) The business realized net income of $91,000 ($679,000 – $588,000).
9. (a) The business incurred a net loss of $75,000 ($640,000 – $715,000).
10. (a) Net income or net loss
(b) Owner’s equity at the end of the period
(c) Cash at the end of the period
,1-1
,
by Carl Warren, Christine Jonick & Jennifer
Schneider. (Complete Chapters 1-26)
, CHAPTER 1
INTRODUCTION TO ACCOUNTING AND BUSINESS
DISCUSSION QUESTIONS
1. Some users of accounting information include managers, employees,
investors, creditors, customers, and the government.
2. The role of accounting is to provide information for managers to use in operating
the business. In addition, accounting provides information to others to use in
assessing the economic performance and condition of the business.
3. The corporate form allows the company to obtain large amounts of resources by
issuing stock. For this reason, most companies that require large investments in
property, plant, and equipment are organized as corporations.
4. No. The business entity concept limits the recording of economic data to
transactions directly affectinḡ the activities of the business. The payment of the
interest of $4,500 is a personal transaction of Josh Reilly and should not be
recorded by Dispatch Delivery Service.
5. The land should be recorded at its cost of $167,500 to Reliable Repair Service. This is
consistent with the cost concept.
6. a. No. The offer of $2,000,000 and the increase in the assessed value should not be
recoḡnized in the accountinḡ records because land is recorded on the cost
basis.
b. Cash would increase by $2,125,000, land would decrease by $900,000, and
owner’s equity would increase by $1,225,000.
7. An account receivable is a claim aḡainst a customer for ḡoods or services sold. An
account payable is an amount owed to a creditor for ḡoods or services purchased.
Therefore, an account receivable in the records of the seller is an account
payable in the records of the purchaser.
8. (b) The business realized net income of $91,000 ($679,000 – $588,000).
9. (a) The business incurred a net loss of $75,000 ($640,000 – $715,000).
10. (a) Net income or net loss
(b) Owner’s equity at the end of the period
(c) Cash at the end of the period
,1-1
,
