SOLUTIONS MANUAL for Accounting 28th Edition
nm nm nm nm nm nm
by Carl Warren, Christine Jonick & Jennifer
nm n m nm nm nm nm nm nm n m nm
Schneider. (Complete Chapters 1-26)
nm n m nm nm
, CHAPTER 1 nm
INTRODUCTION TO ACCOUNTING AND BUSINESS nm nm nm nm
DISCUSSION QUESTIONS nm
1. Some users of accounting information include managers, employees, investors,
nm nm nm nm nm nm nm nm
creditors, customers, and the government.
nm n m nm n m nm
2. The role of accounting is to provide information for managers to use in operating the
nm nm nm nm nm nm nm nm nm nm nm nm nm nm
business.
nm In addition, accounting provides information to others to use in
n m nm nm nm nm nm nm nm nm nm
assessing the economic
nm performance and condition of the business.
nm nm n m nm nm nm nm nm
3. The corporate form allows the company to obtain large amounts of resources by
nm nm nm nm nm nm nm nm nm nm nm nm
issuing stock.
nm For this reason, most companies that require large investments in
nm n m nm nm nm nm nm nm nm nm nm
property, plant, and equipment are organized as corporations.
nm nm nm nm n m nm n m nm
4. No. The business entity concept limits the recording of economic data to transactions
nm nm nm nm nm nm nm nm nm nm nm nm
directly
nm affecting the activities of the business. The payment of the interest of
n m nm nm nm nm nm nm nm nm nm nm nm
$4,500 is a personal
nm nm transaction of Josh Reilly and should not be recorded by
nm nm n m nm nm nm nm nm nm nm nm nm
Dispatch Delivery Service.
nm nm nm
5. The land should be recorded at its cost of $167,500 to Reliable Repair Service. This is
nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm
consistent
nm with the cost concept.n m nm nm nm
6. a. No. The offer of $2,000,000 and the increase in the assessed value should not be
nm nm nm nm nm nm nm nm nm nm nm nm nm nm
recognized
nm in the accounting records because land is recorded on the cost
n m nm nm nm nm nm nm nm nm nm nm
basis.
nm
b. Cash would increase by $2,125,000, land would decrease by $900,000, and
nm nm nm nm nm nm nm nm nm nm
owner’s equity would increase by $1,225,000.
nm nm n m nm n m n m
7. An account receivable is a claim against a customer for goods or services sold. An
nm nm nm nm nm nm nm nm nm nm nm nm nm nm
account
nm payable is an amount owed to a creditor for goods or services purchased.
n m nm nm nm nm nm nm nm nm nm nm nm nm
Therefore, an account
nm receivable in the records of the seller is an account payable in
nm nm n m nm nm nm nm nm nm nm nm nm nm nm
the records of the purchaser.
nm nm nm nm nm
8. (b) n m The business realized net income of $91,000 ($679,000 – $588,000).
nm nm nm nm nm nm nm nm nm
9. (a) The business incurred a net loss of $75,000 ($640,000 – $715,000).
nm nm nm nm nm nm nm nm nm nm nm
10. (a) Net income or net loss
nm nm nm nm nm
(b) Owner’s equity at the end of the period
nm nm nm nm nm nm nm
(c) Cash at the end of the period
nm nm nm nm nm nm
,1-1
,
nm nm nm nm nm nm
by Carl Warren, Christine Jonick & Jennifer
nm n m nm nm nm nm nm nm n m nm
Schneider. (Complete Chapters 1-26)
nm n m nm nm
, CHAPTER 1 nm
INTRODUCTION TO ACCOUNTING AND BUSINESS nm nm nm nm
DISCUSSION QUESTIONS nm
1. Some users of accounting information include managers, employees, investors,
nm nm nm nm nm nm nm nm
creditors, customers, and the government.
nm n m nm n m nm
2. The role of accounting is to provide information for managers to use in operating the
nm nm nm nm nm nm nm nm nm nm nm nm nm nm
business.
nm In addition, accounting provides information to others to use in
n m nm nm nm nm nm nm nm nm nm
assessing the economic
nm performance and condition of the business.
nm nm n m nm nm nm nm nm
3. The corporate form allows the company to obtain large amounts of resources by
nm nm nm nm nm nm nm nm nm nm nm nm
issuing stock.
nm For this reason, most companies that require large investments in
nm n m nm nm nm nm nm nm nm nm nm
property, plant, and equipment are organized as corporations.
nm nm nm nm n m nm n m nm
4. No. The business entity concept limits the recording of economic data to transactions
nm nm nm nm nm nm nm nm nm nm nm nm
directly
nm affecting the activities of the business. The payment of the interest of
n m nm nm nm nm nm nm nm nm nm nm nm
$4,500 is a personal
nm nm transaction of Josh Reilly and should not be recorded by
nm nm n m nm nm nm nm nm nm nm nm nm
Dispatch Delivery Service.
nm nm nm
5. The land should be recorded at its cost of $167,500 to Reliable Repair Service. This is
nm nm nm nm nm nm nm nm nm nm nm nm nm nm nm
consistent
nm with the cost concept.n m nm nm nm
6. a. No. The offer of $2,000,000 and the increase in the assessed value should not be
nm nm nm nm nm nm nm nm nm nm nm nm nm nm
recognized
nm in the accounting records because land is recorded on the cost
n m nm nm nm nm nm nm nm nm nm nm
basis.
nm
b. Cash would increase by $2,125,000, land would decrease by $900,000, and
nm nm nm nm nm nm nm nm nm nm
owner’s equity would increase by $1,225,000.
nm nm n m nm n m n m
7. An account receivable is a claim against a customer for goods or services sold. An
nm nm nm nm nm nm nm nm nm nm nm nm nm nm
account
nm payable is an amount owed to a creditor for goods or services purchased.
n m nm nm nm nm nm nm nm nm nm nm nm nm
Therefore, an account
nm receivable in the records of the seller is an account payable in
nm nm n m nm nm nm nm nm nm nm nm nm nm nm
the records of the purchaser.
nm nm nm nm nm
8. (b) n m The business realized net income of $91,000 ($679,000 – $588,000).
nm nm nm nm nm nm nm nm nm
9. (a) The business incurred a net loss of $75,000 ($640,000 – $715,000).
nm nm nm nm nm nm nm nm nm nm nm
10. (a) Net income or net loss
nm nm nm nm nm
(b) Owner’s equity at the end of the period
nm nm nm nm nm nm nm
(c) Cash at the end of the period
nm nm nm nm nm nm
,1-1
,
