Solution Manual
Accounting What The Numbers Mean
13th Edition by David Marshall
All Chapters 1 - 16
,CHAPTER
1
Accounting—Present and Past
CHAPTER OUTLINE:
I. What Is Accounting?
A. Definition
B. Uses of Accounting Information
C. Classifications
1. Financial Accounting
2. Managerial Accounting / Cost Accounting
3. Auditing — Public Accounting
4. Internal Auditing
5. Governmental and Not-for-Profit Accounting
6. Income Tax Accounting
II. How Has Accounting Developed?
A. Early History
B. The Accounting Profession in the United States
C. Financial Accounting Standard Setting at the Present Time
1. Financial Accounting Standards Board
2. Standards are Evolving
D. Standards for Other Types of Accounting
1. Managerial Accounting / Cost Accounting
2. Auditing
3. Governmental and Not-for-Profit Accounting
4. Income Tax Accounting
E. International Accounting Standards
F. Ethics and the Accounting Profession
III. The Conceptual Framework
A. Context
B. Summary of Concepts Statement No. 8, Chapter 1 — The Objective of General
Purpose Financial Reporting
C. Objectives of Financial Reporting for Nonbusiness Organizations
IV. Plan of the Book
TEACHING/LEARNING OBJECTIVES:
,Principal:
1. To present a definition of accounting.
2. To identify and describe different classifications of accounting.
3. To emphasize that financial accounting standards are not a ―fixed code of rules,‖
but are established in response to user needs and business developments.
Accountants need to applyprofessional judgment in the application of accounting
principles.
4. To emphasize the role and sources of ethics for the accounting profession.
Supporting:
5. To summarize how accounting has evolved over time.
6. To identify sources of standards for other types of accounting and to contrast
these with financial accounting standards.
7. To introduce the issues associated with the development of international
accounting standards.
8. To describe the context of the FASB Conceptual Framework project.
9. To summarize Concepts Statement No. 8, Chapter 1 — The Objective of General
PurposeFinancial Reporting.
10. To relate the objectives of financial reporting for nonbusiness organizations to
those ofbusiness enterprises.
TEACHING OBSERVATIONS/ASSIGNMENT SUGGESTIONS:
1. Students should be put on notice about the jargon of accounting, the use of
synonymous terms, the importance of the context within which a term is used, and
the need for precision in the use of terminology. The first example of jargon is the
term entity.
2. When discussing "Auditing — Public Accounting," have students find the auditors'
opinion in the Campbell Soup Company 2020 Annual Report (see pages 87-88 of
the Appendix). Emphasize that a "clean opinion" is not a "clean bill of health."
, 3. Discuss the Summary of Concepts Statement No. 8, Chapter 1 — The Objective of
Financial Reporting, in detail.
4. Assign Exercise 1-1. Encourage students to experiment with websites that are of
interest. In addition, or as an alternative to having students request their own
annual reports, distribute reports that have been obtained by the instructor.
5. Use Exercise 1-5 to generate discussion about the importance of ethical standards
in general and independence (in both appearance and fact) in particular. Follow up
with a brief look at Exercise 1-7 concerning audit independence standards.
SOLUTIONS:
E1.3. This exercise provides an opportunity to gauge where the students are in
terms oftheir prior background in accounting, be it practical or
educational, and to clear up some of the common misconceptions (i.e., to
explain that accounting goes
beyond the ―how to‖ aspects of bookkeeping and involves the use of
judgment).
E1.4. This exercise provides an opportunity to align student and instructor
expectations. For first-time instructors in this course, or for those having a
diverse student group, you will get a glimpse at the common perceptions
students have concerning the course content, level of difficulty, and
methods of presentation,
testing/evaluation, and grading.
E1.5. The principal factors Jim Sandrolini must consider are his competence and
independence. Is he competent to prepare financial statements for a
company that operates in a different industry than the one in which he
works? Accepting a contingent fee arrangement would normally cause an
impairment of his
independence because he would directly benefit if the loan were to be
approved.
Accounting What The Numbers Mean
13th Edition by David Marshall
All Chapters 1 - 16
,CHAPTER
1
Accounting—Present and Past
CHAPTER OUTLINE:
I. What Is Accounting?
A. Definition
B. Uses of Accounting Information
C. Classifications
1. Financial Accounting
2. Managerial Accounting / Cost Accounting
3. Auditing — Public Accounting
4. Internal Auditing
5. Governmental and Not-for-Profit Accounting
6. Income Tax Accounting
II. How Has Accounting Developed?
A. Early History
B. The Accounting Profession in the United States
C. Financial Accounting Standard Setting at the Present Time
1. Financial Accounting Standards Board
2. Standards are Evolving
D. Standards for Other Types of Accounting
1. Managerial Accounting / Cost Accounting
2. Auditing
3. Governmental and Not-for-Profit Accounting
4. Income Tax Accounting
E. International Accounting Standards
F. Ethics and the Accounting Profession
III. The Conceptual Framework
A. Context
B. Summary of Concepts Statement No. 8, Chapter 1 — The Objective of General
Purpose Financial Reporting
C. Objectives of Financial Reporting for Nonbusiness Organizations
IV. Plan of the Book
TEACHING/LEARNING OBJECTIVES:
,Principal:
1. To present a definition of accounting.
2. To identify and describe different classifications of accounting.
3. To emphasize that financial accounting standards are not a ―fixed code of rules,‖
but are established in response to user needs and business developments.
Accountants need to applyprofessional judgment in the application of accounting
principles.
4. To emphasize the role and sources of ethics for the accounting profession.
Supporting:
5. To summarize how accounting has evolved over time.
6. To identify sources of standards for other types of accounting and to contrast
these with financial accounting standards.
7. To introduce the issues associated with the development of international
accounting standards.
8. To describe the context of the FASB Conceptual Framework project.
9. To summarize Concepts Statement No. 8, Chapter 1 — The Objective of General
PurposeFinancial Reporting.
10. To relate the objectives of financial reporting for nonbusiness organizations to
those ofbusiness enterprises.
TEACHING OBSERVATIONS/ASSIGNMENT SUGGESTIONS:
1. Students should be put on notice about the jargon of accounting, the use of
synonymous terms, the importance of the context within which a term is used, and
the need for precision in the use of terminology. The first example of jargon is the
term entity.
2. When discussing "Auditing — Public Accounting," have students find the auditors'
opinion in the Campbell Soup Company 2020 Annual Report (see pages 87-88 of
the Appendix). Emphasize that a "clean opinion" is not a "clean bill of health."
, 3. Discuss the Summary of Concepts Statement No. 8, Chapter 1 — The Objective of
Financial Reporting, in detail.
4. Assign Exercise 1-1. Encourage students to experiment with websites that are of
interest. In addition, or as an alternative to having students request their own
annual reports, distribute reports that have been obtained by the instructor.
5. Use Exercise 1-5 to generate discussion about the importance of ethical standards
in general and independence (in both appearance and fact) in particular. Follow up
with a brief look at Exercise 1-7 concerning audit independence standards.
SOLUTIONS:
E1.3. This exercise provides an opportunity to gauge where the students are in
terms oftheir prior background in accounting, be it practical or
educational, and to clear up some of the common misconceptions (i.e., to
explain that accounting goes
beyond the ―how to‖ aspects of bookkeeping and involves the use of
judgment).
E1.4. This exercise provides an opportunity to align student and instructor
expectations. For first-time instructors in this course, or for those having a
diverse student group, you will get a glimpse at the common perceptions
students have concerning the course content, level of difficulty, and
methods of presentation,
testing/evaluation, and grading.
E1.5. The principal factors Jim Sandrolini must consider are his competence and
independence. Is he competent to prepare financial statements for a
company that operates in a different industry than the one in which he
works? Accepting a contingent fee arrangement would normally cause an
impairment of his
independence because he would directly benefit if the loan were to be
approved.
