Solution Manual for Financial Accounting 11th Edition Robert Libby, Patricia Libby, Complete Chapters 1 - 13,|newest edition 100% verified by experts A+

Financial Accounting 11th Edition Robert juki juki juki juki




Libby,Patricia Libby, Frank Hodge
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Chapter 1 juki




Financial Statements and Business Decisions juki juki juki juki




ANSWERS TO QUESTIONS juki juki




1. Accounting is a system that collects and processes (analyzes, measures,
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and records) financial information about an organization and reports
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that information to decision makers.
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2. Financial accounting involves preparation of the four basic financial
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statements and related disclosures for external decision makers.
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Managerial accounting involves the preparation of detailed plans,
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budgets, forecasts, and performance reports for internal decision makers.
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3. Financial reports are used by both internal and external groups and
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individuals. The internal groups are comprised of the various managers
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of the entity. The external groups include the owners, investors,
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creditors, governmental agencies, other interested parties, and the public
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at large.
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4. Investors purchase all or part of a business and hope to gain by
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receiving part of what the company earns and/or selling their
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ownership interest in the company in the future at a higher price than
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they paid. Creditors lend money to a company for a specific length of
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time and hope to gain by charging interest on the loan.
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, 5. In a society, each organization can be defined as a separate accounting
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entity. An accounting entity is the organization for which financial data
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are to be collected. Typical accounting entities are a business, a church,
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a governmental unit, a university and other nonprofit organizations such
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as a hospital and a welfare organization. A business typically is defined
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and treated as a separate entity because the owners, creditors, investors,
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and other interested parties need to evaluate its performance and its
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potential separately from other entities and from its owners.
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6. Name of Statement juki juki Alternative Title juki



(a) Income Statement juki (a) Statement of Earnings; Statement of
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Income; Statement of Operations juki juki juki juki



(b) Balance Sheet juki (b) Statement of Financial Position
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(c) Cash Flow Statement juki juki (c) Statement of Cash Flows
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7. The heading of each of the four required financial statements should
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include the following:
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(a) Name of the entity juki juki juki juki



(b) Name of the statement juki juki juki juki



(c) Date of the statement, or the period of time
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(d) Unit of measure juki juki juki




8. (a) The purpose of the income statement is to present information
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about the revenues, expenses, and the net income of an entity for
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a specified period of time.
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(b) The purpose of the balance sheet is to report the financial position
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of an entity at a given date, that is, to report information about the
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assets, liabilities and stockholders’ equity of the entity as of a
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specific date.
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(c) The purpose of the statement of cash flows is to present information
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about the flow of cash into the entity (sources), the flow of cash
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out of the entity (uses), and the net increase or decrease in cash
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during the period.
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(d) The statement of stockholders’ equity reports the changes in each of
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the company’s stockholders’ equity accounts during the accounting
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period, including issue and repurchase of stock and the way that
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net income and distribution of dividends affected the retained
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earnings of the company during that period.
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9. The income statement and the statement of cash flows are dated ―For
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the Year Ended December 31‖ because they report the inflows and
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outflows of resources during a period of time. In contrast, the balance
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sheet is dated ―At December 31‖because it represents the resources,
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obligations, and stockholders’ equity at a specific date.
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, 10. Assets are important to creditors and investors because assets provide a
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basis for judging whether sufficient resources are available to operate
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the company. Assets are also important because they could be sold for
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cash in the event the company goes out of business. Liabilities are
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important to creditors and investors because the company must be able
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to generate sufficient cash from operations or further borrowing to
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meet the payments required by debt agreements. If a business does not
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pay its creditors, the law may give the creditors the right to force the
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sale of assets sufficient to meet their claims.
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11. Net income is the excess of total revenues over total expenses. Net
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loss is the excess of total expenses over total revenues.
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12. The equation for the income statement is Revenues - Expenses = Net
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Income (or Net Loss if the amount is negative). Thus, the three major
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items reported on the income statement are (1) revenues, (2) expenses,
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and (3) net income.
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13. The equation for the balance sheet (also known as the basic accounting
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equation) is: Assets = Liabilities + Stockholders’ Equity. Assets are the
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probable (expected) future economic benefits owned by the entity as a
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result of past transactions. They are the resources owned by the
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business at a given point in time such as cash, receivables, inventory,
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machinery, buildings, land, and patents. Liabilities are probable
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(expected) debts or obligations of the entity as a result of past
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transactions that will be paid with assets or services in the future. They
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are the obligations of the entity such as accounts payable, notes payable,
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and bonds payable. Stockholders’ equity is financing provided by owners
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of the business and operations. It is the claim of the owners to the
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assets of the business after the creditors’ claims have been satisfied. It
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may be thought of as the residual interest because it represents assets
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minus liabilities.
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14. The equation for the statement of cash flows is: Cash flows from operating
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activities
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+ Cash flows from investing activities + Cash flows from financing
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activities = Change in cash for the period. The net cash flows for the
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period represent the increase or decrease in cash that occurred during
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the period. Cash flows from operating activities are cash flows directly
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related to earning income (normal business activity including interest
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paid and income taxes paid). Cash flows from investing activities
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include cash flows that are related to the acquisition or sale of
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productive assets used by the company. Cash flows from financing
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activities are directly related to the financing of the enterprise itself.
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15. The retained earnings equation is: Beginning Retained Earnings + Net
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Income - Dividends = Ending Retained Earnings. It begins with
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, beginning-of-the-year Retained Earnings which is the prior year’s
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ending retained earnings reported on the balance sheet. The current
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year's Net Income reported on the income statement is added and the
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current year's Dividends are subtracted from this amount. The ending
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Retained Earnings amount is reported on the end-of-period balance
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sheet.
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