Solution Manual for Accounting What The Numbers Mean 13th Edition David Marshall.pdf

Instructor’smManualm/mSolutionsmManual

FullmSolutionmManualmformAccountingmWhat mThemNumbersmMeanm13thmEditionmDavid mMarshall



CHAPTER
Accounting—Present and Past m m




1

CHAPTER mOUTLINE:

I. What mIsmAccounting?
A. Definition
B. Usesmof mAccountingmInformation
C. Classifications
1. FinancialmAccounting
2. ManagerialmAccountingm/mCost mAccounting
3. Auditingm—mPublicmAccounting
4. InternalmAuditing
5. Governmentalmand mNot-for-Profit mAccounting
6. IncomemTaxmAccounting

II. How mHasmAccountingmDeveloped?
A. EarlymHistory
B. ThemAccountingmProfessionminmthemUnited mStates
C. FinancialmAccountingmStandard mSettingmat mthemPresent mTime
1. FinancialmAccountingmStandardsmBoard
2. StandardsmaremEvolving
D. StandardsmformOthermTypesmof mAccounting
1. ManagerialmAccountingm/mCost mAccounting
2. Auditing
3. Governmentalmand mNot-for-Profit mAccounting
4. IncomemTaxmAccounting
E. InternationalmAccountingmStandards
F. Ethicsmand mthemAccountingmProfession

III. ThemConceptualmFramework
A. Context
B. Summarymof mConceptsmStatement mNo.m8,mChapterm1m—
mThemObjectivemof mGeneralmPurposemFinancialmReporting

C. Objectivesmof mFinancialmReportingmformNonbusinessmOrganizations

IV. Planmof mthemBook


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, Instructor’smManualm/mSolutionsmManual



TEACHING/LEARNING mOBJECTIVES:

Principal:

1. Tompresent mamdefinitionmof maccounting.

2. Tomidentifymand mdescribemdifferent m classificationsmof maccounting.

3. Tomemphasizemthat mfinancialmaccountingmstandardsmaremnot mam―fixed mcodemof mrules,‖ mbut mare
mestablished minmresponsemtomusermneedsmand mbusinessmdevelopments.mAccountantsmneed mtomap

plymprofessionalmjudgment minmthemapplicationmof maccountingmprinciples.

4. Tomemphasizemthemrolemand msourcesmof methicsmformthemaccountingmprofession.

Supporting:

5. Tomsummarizemhowmaccountingmhasmevolved movermtime.

6. Tomidentifymsourcesmof mstandardsmformothermtypesmof maccountingmand mtomcontrast mthesemw
ithmfinancialmaccountingmstandards.

7. Tomintroducemthemissuesmassociated mwithmthemdevelopment mof minternationalmaccounti
ngmstandards.

8. Tomdescribemthemcontext mof mthemFASBmConceptualmFrameworkmproject.

9. TomsummarizemConceptsmStatement mNo.m8,mChapterm1m—
mThemObjectivemof mGeneralmPurposemFinancialmReporting.




10. Tomrelatemthemobjectivesmof mfinancialmreportingmformnonbusinessmorganizationsmtomthosem
of mbusinessmenterprises.

TEACHING mOBSERVATIONS/ASSIGNMENT mSUGGESTIONS:

1. Studentsmshould mbemput monmnoticemabout mthemjargonmof maccounting,mthemusemof msynonymous
mterms,mthemimportancemof mthemcontext mwithinmwhichmamtermmismused,mand mthemneed mformpreci

sionminmthemusemof mterminology.mThemfirst mexamplemof mjargonmis mthemtermmentity.

2. Whenmdiscussingm"Auditingm—
mPublicmAccounting,"mhavemstudentsmfind mthemauditors'mopinionminmthemCampbellmSoupmCom

panym2020mAnnualmReport m(seempagesm87-
88mof mthemAppendix).mEmphasizemthat mam"cleanmopinion"mismnot mam"cleanmbillmof mhealth."

3. DiscussmthemSummarymof mConceptsmStatement mNo.m8,mChapterm1m—
mThemObjectivemof mFinancialmReporting,minmdetail.




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, Instructor’smManualm/mSolutionsmManual

4. AssignmExercisem1-
1.mEncouragemstudentsmtomexperiment mwithmwebsitesmthat maremof minterest.mInmaddition,mormasma
nmalternativemtomhavingmstudentsmrequest mtheirmownmannualmreports,mdistributemreportsmthat mh
avembeenmobtained mbymtheminstructor.

5. UsemExercisem1-
5mtomgeneratemdiscussionmabout mthemimportancemof methicalmstandardsminmgeneralmand mindepen
dencem(inmbothmappearancemand mfact)minmparticular.mFollow mupmwithmambrief mlookmat mExercise
m1-7mconcerningmaudit mindependencemstandards.




SOLUTIONS:

E1.3. Thismexercisemprovidesmanmopportunitymtomgaugemwheremthemstudentsmareminmtermsm
of mtheirmpriormbackground minmaccounting,mbemit mpracticalmormeducational,mand mtomcl
earmupmsomemof mthemcommonmmisconceptionsm(i.e.,mtomexplainmthat maccountingmgo
es
beyond mthem―how mto‖ maspectsmof mbookkeepingmand minvolvesmthemusemof mjudgment)
.

E1.4. Thismexercisemprovidesmanmopportunitymtomalignmstudent mand minstructormexpectation
s.mFormfirst-
timeminstructorsminmthismcourse,mormformthosemhavingmamdiversemstudent mgroup,myoum
willmget mamglimpsemat mthemcommonmperceptionsmstudentsmhavemconcerningmthemcou
rsemcontent,mlevelmof mdifficulty,mand mmethodsmof mpresentation,
testing/evaluation,mand mgrading.

E1.5. ThemprincipalmfactorsmJimmSandrolinim must mconsidermare mhism competencemand minde
pendence.mIsmhemcompetent mtompreparemfinancialmstatementsmformamcompanymthat mo
peratesminmamdifferent mindustrymthanmthemoneminmwhichmhemworks?mAcceptingmamco
ntingent mfeemarrangement mwould mnormallymcausemanmimpairment mof mhis
independencembecausemhemwould mdirectlymbenefit m if mthemloanmweremtombemapproved
.




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m Hill m LLC.

, Instructor’smManualm/mSolutionsmManual
E1.6. Suggestedm discussionm strategy:
Q:m Whymdoesmambusinessmhavemvalue?
A:m It mprovidesmthemownersmanmopportunitymtomearnmamprofit,manmopportunitymformpe
rsonalmfulfillment mfrommbeingminmcharge,mand manmopportunitymtomprovidemamprodu
ct mormservicemthat mismusefulmtomothers.

Q:m How mcanmthismvaluembemmeasured?
A:m Financialminformationmwillmhavemthemmost mtomdomwithmevaluatingmthemfirm‘smpr
ofitability,mand mthemfinancialmstatementsmincludemthisminformation.

Q:m How mismanmaskingmpricemformthemsalemof mambusinessmestablished?
A:m Themaskingmpricemshould mbemamfunctionmof mthemprofit,mresources,mand mobligatio
nsmrelated mtomthembusinessmasmshownminmthemfinancialmstatements.

Note:mThismexercisemalsomprovidesmanmopportunitymtompoint mout msomemof mthembasic
mlimitationsmof mthemdatamprovided mbymthemaccountingmprocessm(e.g.,mhistoricalmcost

minformationm—

mhow musefulmarempast mearningsmresultsminmpredictingmfuturemearningsmand mcashmflow

s?).mBemcarefulmnot mtomget mtoomcarried mawaymwithmdetails.mLet mthe
studentsmlead mthismdiscussion.




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©m McGraw m HillmLLC.mAllmrightsmreserved.mNomreproductionm ormdistributionm withoutm thempriormwrittenm consentmofmMcGraw
m Hill m LLC.