Solution Manual For Financial Accounting,
8th Canadian Edition by Libby, Hodge,
Kanaan, Sterling Chapters 1 - 13, Complete
1-1
,TABLE OF CONTENTS
CHAPTER ONE
Financial Statements and Business Decisions
CHAPTER TWO
Investing and Financing Decisions and the Accounting System
CHAPTER THREE
Operating Decisions and the Accounting System
CHAPTER FOUR
Adjustments, Financial Statements, and the Closing Process
CHAPTER FIVE
Reporting and Interpreting Sales Revenue, Receivables, and Cash
CHAPTER SIX
Reporting and Interpreting Cost of Sales and Inventory
CHAPTER SEVEN
Reporting and Interpreting Long-Lived Assets
CHAPTER EIGHT
Reporting and Interpreting Current Liabilities
CHAPTER NINE
Reporting and Interpreting Non-current Liabilities
CHAPTER TEN
Reporting and Interpreting Shareholders' Equity
CHAPTER ELEVEN
Statement of Cash Flows
CHAPTER TWELVE
Communicating Accounting Information and Analyzing Financial Statements
CHAPTER THIRTEEN
Reporting and Interpreting Investments in Other Corporations
1-2
,CHAPTER ONE
Financial Statements and Business Decisions
ANSWERS TO QUESTIONS
1. Accounting is a system that collects and processes (analyzes, measures, and
records) financial information about an organization and reports that information to
decision makers.
2. Financial accounting involves preparation of the four basic financial statements and
related disclosures for external decision makers. Managerial accounting involves
the preparation of detailed plans, budgets, forecasts, and performance reports for
internal decision makers.
3. Financial reports are used by both internal and external groups and individuals. The
internal groups are comprised of the various managers of the entity. The external
groups include the owners, investors, creditors, governmental agencies, other
interested parties, and the public at large.
4. Investors purchase all or part of a business and hope to gain by receiving part of
what the company earns and/or selling the company in the future at a higher price
than they paid. Creditors lend money to a company for a specific length of time and
hope to gain by charging interest on the loan.
5. In ia isociety ieach iorganization ican ibe idefined ias ia iseparate iaccounting ientity. iAn
iaccounting ientity iis ithe iorganization ifor iwhich ifinancial idata iare ito ibe icollected.
iTypical iaccounting ientities iare ia ibusiness, ia ichurch, ia igovernmental iunit, ia
iuniversity iand iother inonprofit iorganizations isuch ias ia ihospital iand ia iwelfare
iorganization. iA ibusiness itypically iis idefined iand itreated ias ia iseparate i entity
ibecause ithe iowners, icreditors, iinvestors, iand iother iinterested iparties ineed ito
ievaluate iits iperformance iand iits ipotential iseparately ifrom iother ientities iand ifrom
iitsiowners.
1-3
, 6. Name iof iStatement Alternative iTitle
(a) Income iStatement (a) iStatement iof iEarnings; iStatement iof
Income; iStatement iof iOperations
(b) Balance iSheet (b) iStatement iof iFinancial iPosition
(c) Audit iReport (c) i Report iof iIndependent iAccountants
1-4
8th Canadian Edition by Libby, Hodge,
Kanaan, Sterling Chapters 1 - 13, Complete
1-1
,TABLE OF CONTENTS
CHAPTER ONE
Financial Statements and Business Decisions
CHAPTER TWO
Investing and Financing Decisions and the Accounting System
CHAPTER THREE
Operating Decisions and the Accounting System
CHAPTER FOUR
Adjustments, Financial Statements, and the Closing Process
CHAPTER FIVE
Reporting and Interpreting Sales Revenue, Receivables, and Cash
CHAPTER SIX
Reporting and Interpreting Cost of Sales and Inventory
CHAPTER SEVEN
Reporting and Interpreting Long-Lived Assets
CHAPTER EIGHT
Reporting and Interpreting Current Liabilities
CHAPTER NINE
Reporting and Interpreting Non-current Liabilities
CHAPTER TEN
Reporting and Interpreting Shareholders' Equity
CHAPTER ELEVEN
Statement of Cash Flows
CHAPTER TWELVE
Communicating Accounting Information and Analyzing Financial Statements
CHAPTER THIRTEEN
Reporting and Interpreting Investments in Other Corporations
1-2
,CHAPTER ONE
Financial Statements and Business Decisions
ANSWERS TO QUESTIONS
1. Accounting is a system that collects and processes (analyzes, measures, and
records) financial information about an organization and reports that information to
decision makers.
2. Financial accounting involves preparation of the four basic financial statements and
related disclosures for external decision makers. Managerial accounting involves
the preparation of detailed plans, budgets, forecasts, and performance reports for
internal decision makers.
3. Financial reports are used by both internal and external groups and individuals. The
internal groups are comprised of the various managers of the entity. The external
groups include the owners, investors, creditors, governmental agencies, other
interested parties, and the public at large.
4. Investors purchase all or part of a business and hope to gain by receiving part of
what the company earns and/or selling the company in the future at a higher price
than they paid. Creditors lend money to a company for a specific length of time and
hope to gain by charging interest on the loan.
5. In ia isociety ieach iorganization ican ibe idefined ias ia iseparate iaccounting ientity. iAn
iaccounting ientity iis ithe iorganization ifor iwhich ifinancial idata iare ito ibe icollected.
iTypical iaccounting ientities iare ia ibusiness, ia ichurch, ia igovernmental iunit, ia
iuniversity iand iother inonprofit iorganizations isuch ias ia ihospital iand ia iwelfare
iorganization. iA ibusiness itypically iis idefined iand itreated ias ia iseparate i entity
ibecause ithe iowners, icreditors, iinvestors, iand iother iinterested iparties ineed ito
ievaluate iits iperformance iand iits ipotential iseparately ifrom iother ientities iand ifrom
iitsiowners.
1-3
, 6. Name iof iStatement Alternative iTitle
(a) Income iStatement (a) iStatement iof iEarnings; iStatement iof
Income; iStatement iof iOperations
(b) Balance iSheet (b) iStatement iof iFinancial iPosition
(c) Audit iReport (c) i Report iof iIndependent iAccountants
1-4
