Solution Manual For Intermediate Accounting, 11th Edition by David Spiceland, Mark Nelson, Verified Chapters 1 - 21 & Appendix A, Complete Newest Version

SolutionmManualmFormIntermediatemAccounting,m11thmEditio
nmbymDavidmSpiceland,mMarkmNelson,mWaynemThomas,mJenni
fer

,Chapterm1mEnvironmentmandmTheoreticalmStructure
m FinancialmAccounting

Questionm1–1
Financialmaccountingmismconcernedmwithmprovidingmrelevantmfinancialminfor
mationmaboutmvariousmkindsmofmorganizationsmtomdifferentmtypesmofmexternalmus
ers.mThemprimarymfocusmofmfinancialmaccountingmismonmthemfinancialminformatio
nmprovidedmbymprofit-
morientedmcompaniesmtomtheirmpresentmandmpotentialminvestorsmandmcreditors.

Questionm1–2
Resourcesmaremefficientlymallocatedmifmtheymaremgivenmtomenterprisesmthatm
willmusemthemmtomprovidemgoodsmandmservicesmdesiredmbymsocietymandmnotmtom
enterprisesmthatmwillmwastemthem.mThemcapitalmmarketsmaremthemmechanismmthat
mfostersmthismefficientmallocationmofmresources.

Questionm1–3
Twomextremelymimportantmvariablesmthatmmustmbemconsideredminmanyminves
tmentmdecisionmaremthemexpectedmratemofmreturnmandmthemuncertaintymormriskmo
fmthatmexpectedmreturn.

Questionm1–4
Inmthemlongmrun,mamcompanymwillmbemablemtomprovideminvestorsmandmcredi
torsmwithmamratemofmreturnmonlymifmitmcanmgeneratemamprofit.mThatmis,mitmmustm
bemablemtomusemthemresourcesmprovidedmtomitmtomgeneratemcashmreceiptsmfromms
ellingmamproductmormservicemthatmexceedmthemcashmdisbursementsmnecessarymtom
providemthatmproductmormservice.

Questionm1–5
Themprimarymobjectivemofmfinancialmaccountingmismtomprovideminvestorsman
dmcreditorsmwithminformationmthatmwillmhelpmthemmmakeminvestmentmandmcredit
mdecisions.

Questionm1–6
Netmoperatingmcashmflowsmaremthemdifferencembetweenmcashmreceiptsmandmc
ashmdisbursementsmduringmamperiodmofmtimemfrommtransactionsm relatedmtomprovi
dingmgoodsmandmservicesmtomcustomers.mNetmoperatingmcashmflowsmmaymnotmbe
mamgoodmindicatormofmfuturemcashmflowsmbecause,mbymignoringmuncompletedmtra
nsactions,mtheymmaymnotmmatchmthemaccomplishmentsmandmsacrificesmofmthemper
iod.

,Questionm1–7
GAAPm(generallymacceptedmaccountingmprinciples)maremamdynamicmsetm ofm
bothmbroadmandmspecificmguidelinesmthatmamcompanymshouldmfollowminmmeasuri
ngmandmreportingmtheminformationminmtheirmfinancialmstatementsmandmrelatedmnot
es.mItmismimportantmthatmallmcompaniesmfollowmGAAPmsomthatminvestorsmcanmco
mparemfinancialminformationmacrossmcompaniesmtommakemtheirmresourcemallocati
onmdecisions.

Questionm1–8
Inm1934,mCongressmcreatedmthemSECmandmgavemitmthemjobmofmsettingmacco
untingmandmreportingmstandardsmformcompaniesmwhosemsecuritiesmarempubliclymtr
aded.mThemSECmhasmretainedmthempower,mbutmhasmreliedmonmprivatemsectormbodi
esmtomcreatemthemstandards.mThemcurrentmprivatemsectormbodymresponsiblemformse
ttingmaccountingmstandardsmismthemFASB.

Questionm1–9
Auditorsmaremindependent,mprofessionalmaccountantsmwhomexaminemfinancial
mstatementsmtomexpressmanmopinion.mThemopinionmreflectsmthemauditors‘massessm
entmofmthemstatements'mfairness,mwhichmismdeterminedmbymthemextentmtomwhichm
theymarempreparedminmcompliancemwithmGAAP.mThemauditormaddsmcredibilitymto
mthemfinancialmstatements,mwhichmincreasesmthemconfidencemofmcapitalmmarketmp
articipantsmrelyingmonmthatminformation.

, Questionm1–10
Keymprovisionsmincludedminmthemtextmare:
 CreationmofmthemPublicmCompanymAccountingmOversightmBoard
 Regulatemtypesmofmnon-auditmauditmservices
 Requiremleadmauditmpartnermrotationmeverym5myear
 Corporatem executivem accountability
 Addressesmconflictsmofminterestmformsecuritymanalysts
 Internalmcontrolmreportingmandmauditormopinionmaboutmcontrols

Questionm1–11
Newmaccountingmstandards,mormchangesminmstandards,mcanmhavemsignificant
mdifferentialmeffectsmonmcompanies,minvestorsmandmcreditors,mandmotherminterestm
groupsmbymcausingmredistributionmofmwealth.m Theremalsomismthempossibilitymthat
mstandardsmcouldmharmmthemeconomymasmamwholembymcausingmcompaniesmtomch
angemtheirmbehavior.

Questionm1–12
ThemFASBmundertakesmamseriesmofmelaborateminformationmgatheringmstepsm
beforemissuingmanmaccountingmstandardmtomdeterminemconsensusmasmtomthemprefe
rredmmethodmofmaccounting,masmwellmasmtomanticipatemadversemeconomicmconse
quences.

Questionm1–13
ThempurposemofmthemconceptualmframeworkmismtomguidemthemBoardminmdev
elopingmaccountingmstandardsmbymprovidingmanmunderlyingmfoundationmandmbasi
cmreasoningmonmwhichmtomconsidermmeritsmofmalternatives.m Themframeworkmdoe
smnotmprescribemGAAP.