SOLUTION MANUAL FOR
Financial Accounting 11th Edition
by Robert Libby, All Chapters 1 - 13
,TABLE OF CONTENTS
CHAPTER 1: Financial Statements and Business Decisions
Focus Company: Le-Nature’s Inc.
CHAPTER 2: Investing and Financing Decisions and the Accounting System
Focus Company: Chipotle Mexican Grill
CHAPTER 3: Operating Decisions and the Accounting System
Focus Company: Chipotle Mexican Grill
CHAPTER 4: Adjustments, Financial Statements, and the Closing Process
Focus Company: Chipotle Mexican Grill
CHAPTER 5: Communicating and Analyzing Accounting Information
Focus Company: Apple Inc.
CHAPTER 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash
Focus Company: Skechers U.S.A.
CHAPTER 7: Reporting and Interpreting Cost of Goods Sold and Inventory
Focus Company: Harley-Davidson, Inc.
CHAPTER 8: Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural
Resources
Focus Company: FedEx Corporation
CHAPTER 9: Reporting and Interpreting Liabilities
Focus Company: Starbucks
CHAPTER 10: Reporting and Interpreting Bond Securities
Focus Company: Amazon
CHAPTER 11: Reporting and Interpreting Stockholders’ Equity
Focus Company: Microsoft
CHAPTER 12: Statement of Cash Flows
Focus Company: National Beverage Corporation
CHAPTER 13: Analyzing Financial Statements
Focus Company: The Home Depot
,Chapter 1 D
Financial Statements and Business Decisions D D D D
ANSWERS TO QUESTIONS D D
1. Accounting is a system that collects and processes (analyzes, measures, and
D D D D D D D D D D
records) financial information about an organization and reports that information
D D D D D D D D D D
todecision makers.
D D D
2. Financial accounting involves preparation of the four basic financial statements
D D D D D D D D D
andrelated disclosures for external decision makers. Managerial accounting
D D D D D D D D D
involves the preparation of detailed plans, budgets, forecasts, and performance
D D D D D D D D D D
reports for internal decision makers.
D D D D D
3. Financial reports are used by both internal and external groups and individuals.
D D D D D D D D D D D
Theinternal groups are comprised of the various managers of the entity. The
D D D D D D D D D D D D D
external groups include the owners, investors, creditors, governmental agencies,
D D D D D D D D D
other interested parties, and the public at large.
D D D D D D D D
4. Investors purchase all or part of a business and hope to gain by receiving part
D D D D D D D D D D D D D D
of what the company earns and/or selling their ownership interest in the
D D D D D D D D D D D D
company in the future at a higher price than they paid. Creditors lend money to
D D D D D D D D D D D D D D D
a company fora specific length of time and hope to gain by charging interest on
D D D D D D D D D D D D D D D D
the loan.
D D
, 5. In a society, each organization can be defined as a separate accounting entity.
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An accounting entity is the organization for which financial data are to be
D D D D D D D D D D D D D
collected. Typical accounting entities are a business, a church, a governmental
D D D D D D D D D D D
unit, a university and other nonprofit organizations such as a hospital and a
D D D D D D D D D D D D D
welfare organization. A business typically is defined and treated as a separate
D D D D D D D D D D D D
entity because the owners, creditors, investors, and other interested parties need
D D D D D D D D D D D
to evaluate its performance and its potential separately from other entities and
D D D D D D D D D D D D
from itsowners.
D D D
6. Name of Statement D D Alternative Title D
(a) Income Statement D (a) Statement of Earnings; Statement of
D D D D D
Income; Statement of Operations D D D
(b) Balance Sheet D (b) Statement of Financial Position
D D D D
(c) Cash Flow Statement D D (c) Statement of Cash Flows
D D D D
7. The heading of each of the four required financial statements should include
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thefollowing:
D D
(a) Name of the entity D D D
(b) Name of the statement D D D
(c) Date of the statement, or the period of time
D D D D D D D D
(d) Unit of measure D D
8. (a) The purpose of the income statement is to present information about the
D D D D D D D D D D D
revenues, expenses, and the net income of an entity for a specified period
D D D D D D D D D D D D D
oftime.
D D
(b) The purpose of the balance sheet is to report the financial position of an
D D D D D D D D D D D D D
entityat a given date, that is, to report information about the assets,
D D D D D D D D D D D D D
liabilities and stockholders’ equity of the entity as of a specific date.
D D D D D D D D D D D D
(c) The purpose of the statement of cash flows is to present information about
D D D D D D D D D D D D
theflow of cash into the entity (sources), the flow of cash out of the entity
D D D D D D D D D D D D D D D D
(uses), and the net increase or decrease in cash during the period.
D D D D D D D D D D D D
(d) The statement of stockholders’ equity reports the changes in each of the
D D D D D D D D D D D
company’s stockholders’ equity accounts during the accounting period,
D D D D D D D D
including issue and repurchase of stock and the way that net income and
D D D D D D D D D D D D D
distribution of dividends affected the retained earnings of the company
D D D D D D D D D D
duringthat period.
D D D
9. The income statement and the statement of cash flows are dated ―For the
D D D D D D D D D D D D
Year Ended December 31‖ because they report the inflows and outflows of
D D D D D D D D D D D D
resources during a period of time. In contrast, the balance sheet is dated ―At
D D D D D D D D D D D D D D
December 31‖because it represents the resources, obligations, and
D D D D D D D D D
stockholders’ equity at a specific date.
D D D D D D
Financial Accounting 11th Edition
by Robert Libby, All Chapters 1 - 13
,TABLE OF CONTENTS
CHAPTER 1: Financial Statements and Business Decisions
Focus Company: Le-Nature’s Inc.
CHAPTER 2: Investing and Financing Decisions and the Accounting System
Focus Company: Chipotle Mexican Grill
CHAPTER 3: Operating Decisions and the Accounting System
Focus Company: Chipotle Mexican Grill
CHAPTER 4: Adjustments, Financial Statements, and the Closing Process
Focus Company: Chipotle Mexican Grill
CHAPTER 5: Communicating and Analyzing Accounting Information
Focus Company: Apple Inc.
CHAPTER 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash
Focus Company: Skechers U.S.A.
CHAPTER 7: Reporting and Interpreting Cost of Goods Sold and Inventory
Focus Company: Harley-Davidson, Inc.
CHAPTER 8: Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural
Resources
Focus Company: FedEx Corporation
CHAPTER 9: Reporting and Interpreting Liabilities
Focus Company: Starbucks
CHAPTER 10: Reporting and Interpreting Bond Securities
Focus Company: Amazon
CHAPTER 11: Reporting and Interpreting Stockholders’ Equity
Focus Company: Microsoft
CHAPTER 12: Statement of Cash Flows
Focus Company: National Beverage Corporation
CHAPTER 13: Analyzing Financial Statements
Focus Company: The Home Depot
,Chapter 1 D
Financial Statements and Business Decisions D D D D
ANSWERS TO QUESTIONS D D
1. Accounting is a system that collects and processes (analyzes, measures, and
D D D D D D D D D D
records) financial information about an organization and reports that information
D D D D D D D D D D
todecision makers.
D D D
2. Financial accounting involves preparation of the four basic financial statements
D D D D D D D D D
andrelated disclosures for external decision makers. Managerial accounting
D D D D D D D D D
involves the preparation of detailed plans, budgets, forecasts, and performance
D D D D D D D D D D
reports for internal decision makers.
D D D D D
3. Financial reports are used by both internal and external groups and individuals.
D D D D D D D D D D D
Theinternal groups are comprised of the various managers of the entity. The
D D D D D D D D D D D D D
external groups include the owners, investors, creditors, governmental agencies,
D D D D D D D D D
other interested parties, and the public at large.
D D D D D D D D
4. Investors purchase all or part of a business and hope to gain by receiving part
D D D D D D D D D D D D D D
of what the company earns and/or selling their ownership interest in the
D D D D D D D D D D D D
company in the future at a higher price than they paid. Creditors lend money to
D D D D D D D D D D D D D D D
a company fora specific length of time and hope to gain by charging interest on
D D D D D D D D D D D D D D D D
the loan.
D D
, 5. In a society, each organization can be defined as a separate accounting entity.
D D D D D D D D D D D D
An accounting entity is the organization for which financial data are to be
D D D D D D D D D D D D D
collected. Typical accounting entities are a business, a church, a governmental
D D D D D D D D D D D
unit, a university and other nonprofit organizations such as a hospital and a
D D D D D D D D D D D D D
welfare organization. A business typically is defined and treated as a separate
D D D D D D D D D D D D
entity because the owners, creditors, investors, and other interested parties need
D D D D D D D D D D D
to evaluate its performance and its potential separately from other entities and
D D D D D D D D D D D D
from itsowners.
D D D
6. Name of Statement D D Alternative Title D
(a) Income Statement D (a) Statement of Earnings; Statement of
D D D D D
Income; Statement of Operations D D D
(b) Balance Sheet D (b) Statement of Financial Position
D D D D
(c) Cash Flow Statement D D (c) Statement of Cash Flows
D D D D
7. The heading of each of the four required financial statements should include
D D D D D D D D D D D
thefollowing:
D D
(a) Name of the entity D D D
(b) Name of the statement D D D
(c) Date of the statement, or the period of time
D D D D D D D D
(d) Unit of measure D D
8. (a) The purpose of the income statement is to present information about the
D D D D D D D D D D D
revenues, expenses, and the net income of an entity for a specified period
D D D D D D D D D D D D D
oftime.
D D
(b) The purpose of the balance sheet is to report the financial position of an
D D D D D D D D D D D D D
entityat a given date, that is, to report information about the assets,
D D D D D D D D D D D D D
liabilities and stockholders’ equity of the entity as of a specific date.
D D D D D D D D D D D D
(c) The purpose of the statement of cash flows is to present information about
D D D D D D D D D D D D
theflow of cash into the entity (sources), the flow of cash out of the entity
D D D D D D D D D D D D D D D D
(uses), and the net increase or decrease in cash during the period.
D D D D D D D D D D D D
(d) The statement of stockholders’ equity reports the changes in each of the
D D D D D D D D D D D
company’s stockholders’ equity accounts during the accounting period,
D D D D D D D D
including issue and repurchase of stock and the way that net income and
D D D D D D D D D D D D D
distribution of dividends affected the retained earnings of the company
D D D D D D D D D D
duringthat period.
D D D
9. The income statement and the statement of cash flows are dated ―For the
D D D D D D D D D D D D
Year Ended December 31‖ because they report the inflows and outflows of
D D D D D D D D D D D D
resources during a period of time. In contrast, the balance sheet is dated ―At
D D D D D D D D D D D D D D
December 31‖because it represents the resources, obligations, and
D D D D D D D D D
stockholders’ equity at a specific date.
D D D D D D
