Solution Manual for Financial Accounting 11th Edition – Libby, Libby, Hodge

SOLUTION MANUAL FOR
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Financial Accounting 11th Edition
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by Robert Libby, All Chapters 1 - 13
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,TABLE OF CONTENTS l l



CHAPTERl1:lFinanciallStatementslandlBusinesslDecisionslFocus
l Company:lLe-Nature’slInc.
CHAPTERl2:lInvestinglandlFinancinglDecisionslandlthelAccountinglSystemlFo
cuslCompany:lChipotlelMexicanlGrill
CHAPTERl3:lOperatinglDecisionslandlthelAccountinglSystemlFo
cuslCompany:lChipotlelMexicanlGrill
CHAPTERl4:lAdjustments,lFinanciallStatements,landlthelClosinglProcesslFocu
slCompany:lChipotlelMexicanlGrill
CHAPTERl5:lCommunicatinglandlAnalyzinglAccountinglInformationl
FocuslCompany:lApplelInc.
CHAPTERl6:lReportinglandlInterpretinglSaleslRevenue,lReceivables,landlCashlFocu
slCompany:lSkecherslU.S.A.
CHAPTERl7:lReportinglandlInterpretinglCostloflGoodslSoldlandlInventorylFoc
uslCompany:lHarley-Davidson,lInc.
CHAPTERl8:lReportinglandlInterpretinglProperty,lPlant,landlEquipment;lIntangibles;landlNaturallReso
urces
FocuslCompany:lFedExlCorporation
CHAPTERl9:lReportinglandlInterpretinglLiabilitieslF
ocuslCompany:lStarbucks
CHAPTERl10:lReportinglandlInterpretinglBondlSecuritieslFocus
l Company:lAmazon
CHAPTERl11:lReportinglandlInterpretinglStockholders’lEquityl
FocuslCompany:lMicrosoft
CHAPTERl12:lStatementloflCashlFlows
FocuslCompany:lNationallBeveragelCorporationlCH
APTERl13:lAnalyzinglFinanciallStatementslFocuslCo
mpany:lThelHomelDepot

,Chapter 1 l


Financial Statements and Business Decisions
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ANSWERSlTOlQUESTIONS

1. Accountinglislalsystemlthatlcollectslandlprocessesl(analyzes,lmeasures,landlrecords
)lfinanciallinformationlaboutlanlorganizationlandlreportslthatlinformationltoldecisionlm
akers.

2. Financiallaccountinglinvolveslpreparationloflthelfourlbasiclfinanciallstatementslandlrel
atedldisclosureslforlexternalldecisionlmakers.lManageriallaccountinglinvolveslthelpre
parationlofldetailedlplans,lbudgets,lforecasts,landlperformancelreportslforlinternallde
cisionlmakers.

3. Financiallreportslarelusedlbylbothlinternallandlexternallgroupslandlindividuals.lThelinte
rnallgroupslarelcomprisedloflthelvariouslmanagersloflthelentity.lThelexternallgroupslin
cludelthelowners,linvestors,lcreditors,lgovernmentallagencies,lotherlinterestedlpartie
s,landlthelpubliclatllarge.

4. Investorslpurchaselalllorlpartloflalbusinesslandlhopeltolgainlbylreceivinglpartloflwhatl
thelcompanylearnsland/orlsellingltheirlownershiplinterestlinlthelcompanylinlthelfutur
elatlalhigherlpricelthanltheylpaid.lCreditorsllendlmoneyltolalcompanylforlalspecificllen
gthlofltimelandlhopeltolgainlbylcharginglinterestlonlthelloan.

, 5. Inlalsociety,leachlorganizationlcanlbeldefinedlaslalseparatelaccountinglentity.lAnlacco
untinglentitylislthelorganizationlforlwhichlfinancialldatalareltolbelcollected.lTypicallacc
ountinglentitieslarelalbusiness,lalchurch,lalgovernmentallunit,laluniversitylandlotherlno
nprofitlorganizationslsuchlaslalhospitallandlalwelfarelorganization.lAlbusinessltypicall
ylisldefinedlandltreatedlaslalseparatelentitylbecauselthelowners,lcreditors,linvestors,la
ndlotherlinterestedlpartieslneedltolevaluatelitslperformancelandlitslpotentiallseparatel
ylfromlotherlentitieslandlfromlitslowners.

6. NameloflStatement AlternativelTitle
(a) IncomelStatement (a)lStatementloflEarnings;lStatementlof
Income;lStatementloflOperations
(b) BalancelSheet (b)lStatementloflFinanciallPosition
(c) CashlFlowlStatement (c)l StatementloflCashlFlows

7. Thelheadinglofleachloflthelfourlrequiredlfinanciallstatementslshouldlincludelthelfoll
owing:
(a) Nameloflthelentity
(b) Nameloflthelstatement
(c) Dateloflthelstatement,lorlthelperiodlofltime
(d) Unitloflmeasure

8. (a)
Thelpurposeloflthelincomelstatementlisltolpresentlinformationlaboutlthelrev
enues,lexpenses,landlthelnetlincomeloflanlentitylforlalspecifiedlperiodlofltime.
(b) Thelpurposeloflthelbalancelsheetlisltolreportlthelfinanciallpositionloflanlentitylatlal
givenldate,lthatlis,ltolreportlinformationlaboutlthelassets,lliabilitieslandlstockhold
ers’lequityloflthelentitylasloflalspecificldate.
(c) Thelpurposeloflthelstatementloflcashlflowslisltolpresentlinformationlaboutlthelflo
wloflcashlintolthelentityl(sources),lthelflowloflcashloutloflthelentityl(uses),landlthel
netlincreaselorldecreaselinlcashlduringlthelperiod.
(d) Thelstatementloflstockholders’lequitylreportslthelchangeslinleachloflthelcompa
ny’slstockholders’lequitylaccountslduringlthelaccountinglperiod,lincludinglissuel
andlrepurchaseloflstocklandlthelwaylthatlnetlincomelandldistributionlofldividend
slaffectedlthelretainedlearningsloflthelcompanylduringlthatlperiod.

9. Thelincomelstatementlandlthelstatementloflcashlflowslareldatedl―ForlthelYearlEnd
edlDecemberl31‖lbecauseltheylreportlthelinflowslandloutflowsloflresourceslduringl
alperiodlofltime.lInlcontrast,lthelbalancelsheetlisldatedl―AtlDecemberl31‖lbecauselitl
representslthelresources,lobligations,landlstockholders’lequitylatlalspecificldate.