Solutions Manual For Survey of Accounting 7th Edition by Thomas Edmonds, Christopher Edmonds, Philip Olds|complete guide graded A+

, Survey 7e – Chapter 1 – Solutions Manual ki ki ki ki ki ki ki




SOLUTIONS TO QUESTIONS - CHAPTER 1 ki ki ki ki ki




1. Stakeholders are the parties that use accounting information. ki ki ki ki ki ki ki




Stakeholders with a direct interest include owners, managers, creditors, ki ki ki ki ki ki ki ki




suppliers, and employees. These individuals are directly affected by
ki ki ki ki ki ki ki ki ki




what happens to the business.
ki ki ki ki ki




Stakeholders with an indirect interest include financial analysts, ki ki ki ki ki ki ki




brokers, attorneys, government regulators, and news reporters. These
ki ki ki ki ki ki ki ki




individuals use information in the financial reports to advise and
ki ki ki ki ki ki ki ki ki ki




influence their clients.
ki ki ki




Students may give many different answers under the above ki ki ki ki ki ki ki ki




categories depending on their level of experience in business.
ki ki ki ki ki ki ki ki ki




All students are direct users of accounting information related to tuition
ki ki ki ki ki ki ki ki ki ki




and fees, financial aid, and account balances.
ki ki ki ki ki ki ki




2. Accounting provides information that is useful in making decisions ki ki ki ki ki ki ki ki




by all participants in the market for resource goods and services,
ki ki ki ki ki ki ki ki ki ki ki




both profit-oriented and nonprofit oriented. Because accounting’s
ki ki ki ki ki k i ki




role is so important, it is often called the language of business.
ki ki ki ki ki ki ki ki ki ki ki ki




3. The primary mechanism used to allocate resources in the U.S. is
ki ki ki ki ki ki ki ki ki ki




competition for resources in the open market.
ki ki ki ki ki ki ki




4. A market is a group of people or organizations that come together for
ki ki ki ki ki ki ki ki ki ki ki ki




the purpose of exchanging items of value.
ki ki ki ki ki ki ki




5. The market for business resources involves three distinct
ki ki ki ki ki ki ki




participants: consumers, conversion agents, and resource owners.
ki ki ki ki ki ki ki




See Exhibit 1-1 that illustrates how market trilogy is involved in
ki ki ki ki ki ki ki ki ki ki ki




resource allocation.
ki ki




1-1

,6. Financial Resource: money k i k i




Physical Resource: natural resources (i.e. land, forests, mine ore,
ki ki ki ki ki ki ki ki




petroleum, etc.), buildings, machinery and equipment, furniture and
ki ki ki ki ki ki ki ki




fixtures
ki




Labor Resource: includes both intellectual and physical labor; i.e.
ki ki ki ki ki ki ki ki




employees
ki




7. Investors expect a distribution of the business’s profits as a return
ki ki ki ki ki ki ki ki ki ki




on their financial investment (capital allocation).
ki ki ki ki ki ki




Creditors lend financial resources to businesses and receive interest as
ki ki ki ki ki ki ki ki ki




a return or profit on the loan.
ki ki ki ki ki ki ki




8. Financial accounting provides information that is useful to external
ki ki ki ki ki ki ki ki




resource providers.
ki ki




Managerial accounting provides information that is useful to
ki ki ki ki ki ki ki




managers in operating an organization (i.e., internal users).
ki ki ki ki ki ki ki ki




9. Not-for-profit or nonprofit entities provide goods or services to ki ki ki ki ki ki ki ki




consumers for humanitarian or special reasons rather than to earn a
ki ki ki ki ki ki ki ki ki ki ki




profit for owners. For example, certain not-for-profit entities
ki ki ki ki ki ki ki ki




allocate resources to provide for research of diseases or
ki ki ki ki ki ki ki ki ki




social/environmental welfare; others allocate resources to promote
ki ki ki ki ki ki ki




the arts and provide education.
ki ki ki ki ki




10. The U.S. rules of accounting information measurement are called
ki ki ki ki ki ki ki ki




generally accepted accounting principles (GAAP).
ki ki ki ki ki




1-2

, Survey 7e – Chapter 1 – Solutions Manual ki ki ki ki ki ki ki




11. Careers in public accounting consist of providing services to the
ki ki ki ki ki ki ki ki ki




general public from a public accounting firm. These services include
ki ki ki ki ki ki ki ki ki ki




auditing, tax, and consulting services. Careers in private accounting
ki ki ki ki ki ki ki ki ki




usually consist of working for a specific company (which would be a
ki ki ki ki ki ki ki ki ki ki ki ki




client of the public accounting firm) providing a wide variety of
ki ki ki ki ki ki ki ki ki ki ki




services to the company including recording transactions, preparing
ki ki ki ki ki ki ki ki




financial statements, internal auditing, and others.
ki ki ki ki ki ki




12. The three elements of the accounting equation are:
ki ki ki ki ki ki ki




1. Assets
2. Liabilities
3. Stockholders’ Equity ki




Accounts are specific items or subclassifications of the elements.
ki ki ki ki ki ki ki ki




Examples of accounts include cash, land, and accounts payable.
ki ki ki ki ki ki ki ki ki




13. Assets, the economic resources of a business, are used to produce
ki ki ki ki ki ki ki ki ki ki




earnings.
ki




14. The assets of a business belong to that business entity and there
ki ki ki ki ki ki ki ki ki ki ki




may be claims on the assets. Claims on the assets belong to
ki ki ki ki ki ki k i ki ki ki ki ki




resource providers.
ki ki




15. Creditors are individuals and/or institutions that have provided goods
ki ki ki ki ki ki ki ki




or services to the business which are not yet paid for, or loaned money
ki ki ki ki ki ki ki ki ki ki ki ki ki ki




to the business. These parties have first claim to the assets of the
ki ki ki k i ki ki ki ki ki ki ki ki ki




business, and the owners have a residual interest in the assets.
ki ki ki ki ki ki ki ki ki ki ki




16. The term “liabilities” is used to describe creditors' claims on the
ki ki ki ki ki ki ki ki ki ki




assets of a business. ki ki ki




1-3