Stuvia.com - The Marketplace to Buy and Sell your Study Material
SolutionpoManualpoForpoFinancialpoStatementpoAnalysis,
13th Edition po
BypoCharlespoH.poGibson,poVerifiedpoChapter'spo1po-po13po|poCompletepo
Downloaded by: cathiecathie | Want to earn $1.236
Distribution of this document is illegal extra per year?
, Stuvia.com - The Marketplace to Buy and Sell your Study Material
Chapterpo1p o Introduct
ionpotopoFinancialpoReporting
QUESTIONS
1- 1. a.
ThepoAICPApoispoanpoorganizationpoofpoCPAspothatpopriorpotopo1973poac
ceptedpothepoprimaryporesponsibilitypoforpothepodevelopmentpoofpogenerall
ypoacceptedpoaccountingpoprinciples.poTheirporolepowasposubstantiallypore
ducedpoinpo1973powhenpothepoFinancialpoAccountingpoStandardspoBoardp
owaspoestablished.p o Theirporolepowaspofurtherporeducedpowithpothepoesta
blishmentpoofpothepoPublicpoCompanypoAccountingpoOversightpoBoardpow
aspoestablishedpoinpo2002.
b. ThepoFinancialpoAccountingpoStandardspoBoardporeplacedpothepoAcc
ountingpoPrinciplespoBoardpoaspothepoprimaryporule-
makingpobodypoforpoaccountingpostandards.poItpoispoanpoindependent
poorganizationpoandpoincludespomemberspootherpothanpopublicpoacco
untants.
c. ThepoSECpohaspothepoauthoritypotopodeterminepogenerallypoacceptedpoa
ccountingpoprinciplespoandpotoporegulatepothepoaccountingpoprofession.p
oThepoSECpohaspoelectedpotopoleavepomuchpoofpothepodeterminationpoof
pogenerallypoacceptedpoaccountingpoprinciplespotopothepoprivateposector.
p o ThepoFinancialpoAccountingpoStandardspoBoardpohaspoplayedpothepo
majorporolepoinpoestablishingpoaccountingpostandardsposincepo1973.p o R
egulationpoofpothepoaccountingpoprofessionpowasposubstantiallypoturnedp
ooverpotopothepoPublicpoCompanypoAccountingpoOversightpoBoardpoinpo2
002.
1-po2.
Consistencypoispoobtainedpothroughpothepoapplicationpoofpotheposamepoa
ccountingpoprinciplepofrompoperiodpotopoperiod.p o Apochangepoinpoprincipl
eporequirespostatementpodisclosure.
1-po3.
Thepoconceptpoofpohistoricalpocostpodeterminespothepobalanceposheetpovaluatio
npoofpoland.poTheporealizationpoconceptporequirespothatpoapotransactionponeedsp
otopooccurpoforpothepoprofitpotopobeporecognized.
1-po4. a.p o Entity e.p o Historicalpocost
b. Realization f.p o Historicalpocost
c. Materiality g.p o Disclosure
Downloaded by: cathiecathie | Want to earn $1.236
Distribution of this document is illegal extra per year?
, Stuvia.com - The Marketplace to Buy and Sell your Study Material
d. Conservatism
1-po5. Entitypoconcept
Downloaded by: cathiecathie | Want to earn $1.236
Distribution of this document is illegal extra per year?
, Stuvia.com - The Marketplace to Buy and Sell your Study Material
1-po6.
Generallypoacceptedpoaccountingpoprinciplespodoponotpoapplypowhenpoapofirm
podoesponotpoappearpotopobepoapogoingpoconcern.p o Ifpothepodecisionpoispomad
epothatpothispoisponotpoapogoingpoconcern,pothenpothepousepoofpoGAAPpowould
ponotpobepoappropriate.
1-po7.
Withpothepotimepoperiodpoassumption,poinaccuraciespoofpoaccountingpoforpothep
oentity,poshortpoofpoitspocompletepolifepospan,poarepoaccepted.poThepoassumptio
npoispomadepothatpothepoentitypocanpobepoaccountedpoforporeasonablypoaccurat
elypoforpoapoparticularpoperiodpoofpotime.p o Inpootherpowords,pothepodecisionpois
pomadepotopoacceptposomepoinaccuracypobecausepoofpoincompletepoinformatio
npoaboutpothepofuturepoinpoexchangepoforpomorepotimelyporeporting.p o Thepostat
ementspoarepoconsideredpotopobepomeaningfulpobecausepomaterialpoinaccuraci
espoareponotpoacceptable.
1- 8.p o p o Itpoispotruepothatpothepoonlypoaccuratepowaypotopoaccountpoforpotheposucces
spoorpofailurepoofpoanpoentitypoispotopoaccumulatepoallpotransactionspofrompothe
poopeningpoofpobusinesspountilpothepobusinesspoeventuallypoliquidates.p o Butpoi
tpoisponotponecessarypothatpothepostatementspobepocompletelypoaccuratepoinpoo
rderpoforpothempotopobepomeaningful.
1- 9. a. Apoyearpothatpoendspowhenpooperationspoarepoatpoapolowpoebbpoforpothepoyear.
b. ThepoaccountingpotimepoperiodpoispoendedpoonpoDecemberpo31.
c. Apotwelve-
monthpoaccountingpoperiodpothatpoendspoatpothepoendpoofpoapomonthpooth
erpothanpoDecemberpo31.
1-10. Money.
1-
11.p o p o Whenpomoneypodoesponotpoholdpoapostablepovalue,pothepofinancialpo
statementspocanpolosepomuchpoofpotheirposignificance.p o Topothepoextentpothat
pomoneypodoesponotporemainpostable,poitpolosespousefulnesspoaspothepostanda
rdpoforpomeasuringpofinancialpotransactions.
1-12.
No.p o Therepoispoapoproblempowithpodeterminingpothepoindexpoinpoorderpotopoa
djustpothepostatements.p o Thepoitemspothatpoarepoincludedpoinpothepoindexpomu
stpobeporepresentative.poInpoaddition,pothepopricespoofpoitemspochangepobecau
sepoofpovariouspofactors,posuchpoaspoquality,potechnology,poandpoinflation.
Yes.poAporeasonablepoadjustmentpotopothepostatementspocanpobepomadepoforpoinflation.
1-13. False.p o Anpoarbitrarypowrite-
Downloaded by: cathiecathie | Want to earn $1.236
Distribution of this document is illegal extra per year?
SolutionpoManualpoForpoFinancialpoStatementpoAnalysis,
13th Edition po
BypoCharlespoH.poGibson,poVerifiedpoChapter'spo1po-po13po|poCompletepo
Downloaded by: cathiecathie | Want to earn $1.236
Distribution of this document is illegal extra per year?
, Stuvia.com - The Marketplace to Buy and Sell your Study Material
Chapterpo1p o Introduct
ionpotopoFinancialpoReporting
QUESTIONS
1- 1. a.
ThepoAICPApoispoanpoorganizationpoofpoCPAspothatpopriorpotopo1973poac
ceptedpothepoprimaryporesponsibilitypoforpothepodevelopmentpoofpogenerall
ypoacceptedpoaccountingpoprinciples.poTheirporolepowasposubstantiallypore
ducedpoinpo1973powhenpothepoFinancialpoAccountingpoStandardspoBoardp
owaspoestablished.p o Theirporolepowaspofurtherporeducedpowithpothepoesta
blishmentpoofpothepoPublicpoCompanypoAccountingpoOversightpoBoardpow
aspoestablishedpoinpo2002.
b. ThepoFinancialpoAccountingpoStandardspoBoardporeplacedpothepoAcc
ountingpoPrinciplespoBoardpoaspothepoprimaryporule-
makingpobodypoforpoaccountingpostandards.poItpoispoanpoindependent
poorganizationpoandpoincludespomemberspootherpothanpopublicpoacco
untants.
c. ThepoSECpohaspothepoauthoritypotopodeterminepogenerallypoacceptedpoa
ccountingpoprinciplespoandpotoporegulatepothepoaccountingpoprofession.p
oThepoSECpohaspoelectedpotopoleavepomuchpoofpothepodeterminationpoof
pogenerallypoacceptedpoaccountingpoprinciplespotopothepoprivateposector.
p o ThepoFinancialpoAccountingpoStandardspoBoardpohaspoplayedpothepo
majorporolepoinpoestablishingpoaccountingpostandardsposincepo1973.p o R
egulationpoofpothepoaccountingpoprofessionpowasposubstantiallypoturnedp
ooverpotopothepoPublicpoCompanypoAccountingpoOversightpoBoardpoinpo2
002.
1-po2.
Consistencypoispoobtainedpothroughpothepoapplicationpoofpotheposamepoa
ccountingpoprinciplepofrompoperiodpotopoperiod.p o Apochangepoinpoprincipl
eporequirespostatementpodisclosure.
1-po3.
Thepoconceptpoofpohistoricalpocostpodeterminespothepobalanceposheetpovaluatio
npoofpoland.poTheporealizationpoconceptporequirespothatpoapotransactionponeedsp
otopooccurpoforpothepoprofitpotopobeporecognized.
1-po4. a.p o Entity e.p o Historicalpocost
b. Realization f.p o Historicalpocost
c. Materiality g.p o Disclosure
Downloaded by: cathiecathie | Want to earn $1.236
Distribution of this document is illegal extra per year?
, Stuvia.com - The Marketplace to Buy and Sell your Study Material
d. Conservatism
1-po5. Entitypoconcept
Downloaded by: cathiecathie | Want to earn $1.236
Distribution of this document is illegal extra per year?
, Stuvia.com - The Marketplace to Buy and Sell your Study Material
1-po6.
Generallypoacceptedpoaccountingpoprinciplespodoponotpoapplypowhenpoapofirm
podoesponotpoappearpotopobepoapogoingpoconcern.p o Ifpothepodecisionpoispomad
epothatpothispoisponotpoapogoingpoconcern,pothenpothepousepoofpoGAAPpowould
ponotpobepoappropriate.
1-po7.
Withpothepotimepoperiodpoassumption,poinaccuraciespoofpoaccountingpoforpothep
oentity,poshortpoofpoitspocompletepolifepospan,poarepoaccepted.poThepoassumptio
npoispomadepothatpothepoentitypocanpobepoaccountedpoforporeasonablypoaccurat
elypoforpoapoparticularpoperiodpoofpotime.p o Inpootherpowords,pothepodecisionpois
pomadepotopoacceptposomepoinaccuracypobecausepoofpoincompletepoinformatio
npoaboutpothepofuturepoinpoexchangepoforpomorepotimelyporeporting.p o Thepostat
ementspoarepoconsideredpotopobepomeaningfulpobecausepomaterialpoinaccuraci
espoareponotpoacceptable.
1- 8.p o p o Itpoispotruepothatpothepoonlypoaccuratepowaypotopoaccountpoforpotheposucces
spoorpofailurepoofpoanpoentitypoispotopoaccumulatepoallpotransactionspofrompothe
poopeningpoofpobusinesspountilpothepobusinesspoeventuallypoliquidates.p o Butpoi
tpoisponotponecessarypothatpothepostatementspobepocompletelypoaccuratepoinpoo
rderpoforpothempotopobepomeaningful.
1- 9. a. Apoyearpothatpoendspowhenpooperationspoarepoatpoapolowpoebbpoforpothepoyear.
b. ThepoaccountingpotimepoperiodpoispoendedpoonpoDecemberpo31.
c. Apotwelve-
monthpoaccountingpoperiodpothatpoendspoatpothepoendpoofpoapomonthpooth
erpothanpoDecemberpo31.
1-10. Money.
1-
11.p o p o Whenpomoneypodoesponotpoholdpoapostablepovalue,pothepofinancialpo
statementspocanpolosepomuchpoofpotheirposignificance.p o Topothepoextentpothat
pomoneypodoesponotporemainpostable,poitpolosespousefulnesspoaspothepostanda
rdpoforpomeasuringpofinancialpotransactions.
1-12.
No.p o Therepoispoapoproblempowithpodeterminingpothepoindexpoinpoorderpotopoa
djustpothepostatements.p o Thepoitemspothatpoarepoincludedpoinpothepoindexpomu
stpobeporepresentative.poInpoaddition,pothepopricespoofpoitemspochangepobecau
sepoofpovariouspofactors,posuchpoaspoquality,potechnology,poandpoinflation.
Yes.poAporeasonablepoadjustmentpotopothepostatementspocanpobepomadepoforpoinflation.
1-13. False.p o Anpoarbitrarypowrite-
Downloaded by: cathiecathie | Want to earn $1.236
Distribution of this document is illegal extra per year?
