Solution manual for Fundamentals of financial accounting 6th edition by Fred Phillips and Robert Libby All Chapters 1-13 Covered

Solution manual
Fundamentals of financial accounting 6th edition

by Fred Phillips and Robert Libby All Chapters 1-13 Covered

,undamentalsHOfHFinancialHAccountingH6CEHFredHPhillips,HRobertHLibby,HPatriciaHLibby,HBrandyHMac

kintosh

Chapter 1-13 H




Chapter 1 H



Business Decisions and Financial Accounting
H H H H




ANSWERSHTOHQUESTIONS

1. AccountingHisHaHsystemHofHanalyzing,Hrecording,HandHsummarizingHtheHresultsHofH
aHbusiness‘sHactivitiesHandHthenHreportingHthemHtoHdecisionHmakers.

2. AnHadvantageHofHoperatingHasHaHsoleHproprietorship,HratherHthanHaHcorporation,HisHthatHit
HisHeasyHtoHestablish.HAnotherHadvantageHisHthatHincomeHfromHaHsoleHproprietorshipHisHta

xedHonlyHonceHinHtheHhandsHofHtheHindividualHproprietorH(incomeHfromHaHcorporationHisHt
axedHinHtheHcorporationHandHthenHagainHinHtheHhandsHofHtheHindividualHproprietor).HAHdis
advantageHofHoperatingHasHaHsoleHproprietorship,HratherHthanHaHcorporation,HisHthatHtheHi
ndividualHproprietorHcanHbeHheldHresponsibleHforHtheHdebtsHofHtheHbusiness.

3. FinancialHaccountingHfocusesHonHpreparingHandHusingHtheHfinancialHstatementsHthatHareH
madeHavailableHtoHownersHandHexternalHusersHsuchHasHcustomers,Hcreditors,HandHpotenti
alHinvestorsHwhoHareHinterestedHinHreadingHthem.HManagerialHaccountingHfocusesHonHoth
erHaccountingHreportsHthatHareHnotHreleasedHtoHtheHgeneralHpublic,HbutHinsteadHareHprepa
redHandHusedHbyHemployees,Hsupervisors,HandHmanagersHwhoHrunHtheHcompany.

4. FinancialHreportsHareHusedHbyHbothHinternalHandHexternalHgroupsHandHindividuals.HTheHint
ernalHgroupsHareHcomprisedHofHtheHvariousHmanagersHofHtheHbusiness.HTheHexternalHgrou
psHincludeHinvestors,Hcreditors,HgovernmentalHagencies,HotherHinterestedHparties,HandHthe
HpublicHatHlarge.



5. TheHbusinessHitself,HnotHtheHindividualHshareholdersHwhoHownHtheHbusiness,HisHviewedHasH
owningHtheHassetsHandHowingHtheHliabilitiesHonHitsHbalanceHsheet.HAHbusiness‘sHbalanceHs
heetHincludesHtheHassets,Hliabilities,HandHshareholders‘HequityHofHonlyHthatHbusinessHandHn
otHtheHpersonalHassets,Hliabilities,HandHequityHofHtheHshareholders.H TheHfinancialHstateme
ntsHofHaHcompanyHshowHtheHresultsHofHtheHbusinessHactivitiesHofHonlyHthatHcompany.

6. (a)H OperatingH–
HTheseHactivitiesHareHdirectlyHrelatedHtoHearningHprofits.HTheyHincludeHbuyingHsupplies,Hmak

ingHproducts,HservingHcustomers,HcleaningHtheHpremises,Hadvertising,HrentingHaHbuilding,Hre
pairingHequipment,HandHobtainingHinsuranceHcoverage.

,ChapterH02H-
HTheHBalanceHSheet

(b) InvestingH–
HTheseHactivitiesHinvolveHbuyingHandHsellingHproductiveHresourcesHwithHlongHlivesH(suchHasH

buildings,Hland,Hequipment,HandHtools),HpurchasingHinvestments,HandHlendingHtoHothers.
(c) FinancingH–
HAnyHborrowingHfromHbanks,HrepayingHbankHloans,HreceivingHcontributionsHfromHsha

reholders,HorHpayingHdividendsHtoHshareholdersHareHconsideredHfinancingHactivities.



7. TheHheadingHofHeachHofHtheHfourHprimaryHfinancialHstatementsHshouldHincludeHtheHfollowing:
(a) NameHofHtheHbusiness
(b) NameHofHtheHstatement
(c) DateHofHtheHstatement,HorHtheHperiodHofHtime

8. (a)H TheHpurposeHofHtheHbalanceHsheetHisHtoHreportHtheHfinancialHpositionH(assets,H liabiliti
esHandHshareholders‘Hequity)HofHaHbusinessHatHaHpointHinHtime.
(b) TheHpurposeHofHtheHincomeHstatementHisHtoHpresentHinformationHaboutHtheHrevenue
s,Hexpenses,HandHnetHincomeHofHaHbusinessHforHaHspecifiedHperiodHofHtime.
(c) TheHstatementHofHretainedHearningsHreportsHtheHwayHthatHnetHincomeHandHtheHdistrib
utionHofHdividendsHaffectedHtheHfinancialHpositionHofHtheHcompanyHduringHtheHperiod.
(d) TheHpurposeHofHtheHstatementHofHcashHflowsHisHtoHsummarizeHhowHaHbusiness‘sHo
perating,Hinvesting,HandHfinancingHactivitiesHcausedHitsHcashHbalanceHtoHchangeHoverHa
HparticularHperiodHofHtime.



9. TheHincomeHstatement,HstatementHofHretainedHearnings,HandHstatementHofHcashHflowsHwou
ldHbeHdatedH―ForHtheHYearHEndedHDecemberH31,H2020,‖HbecauseHtheyHreportHtheHinflowsH
andHoutflowsHofHresourcesHduringHaHperiodHofHtime.HInHcontrast,HtheHbalanceHsheetHwouldH
beHdatedH―AtHDecemberH31,H2020,‖HbecauseHitHrepresentsHtheHassets,HliabilitiesHandHshar
eholders‘HequityHatHaHspecificHdate.

10. NetHincomeHisHtheHexcessHofHtotalHrevenuesHoverHtotalHexpenses.HAHnetHlossHoccursHifHto
talHexpensesHexceedHtotalHrevenues.

11. TheHaccountingHequationHforHtheHbalanceHsheetHis:HAssetsH=HLiabilitiesH+HShareholders‘
HEquity.H AssetsHareHtheHeconomicHresourcesHcontrolledHbyHtheHcompany.

LiabilitiesHare
HamountsHowedHbyHtheHbusiness.H Shareholders‘HequityHisHtheHowners‘HclaimsHtoHtheHb

usiness.HItHincludesHamountsHcontributedHtoHtheHbusinessH(byHinvestorsHthroughHpurch
asingHtheHcompany‘sHshares)HandHtheHamountsHearnedHandHaccumulatedHthroughHprof
itableHbusinessHoperations.

12. TheHequationHforHtheHincomeHstatementHisHRevenuesH–
HExpensesH=HNetHIncome.HRevenuesHareHincreasesHinHaHcompany‘sHresources,HarisingHp

rimarilyHfromHitsHoperatingHactivities.H ExpensesHareHdecreasesHinHaHcompany‘sHresource
PhillipsHetHal.HFundamentalsHofHFinancialHAccounting,H SolutionsHManua
6ceHCopyrightHMcGrawHHill.,H2021 l
PageH2-2

, ChapterH02H-
HTheHs,Harising
Balance HprimarilyHfromHitsHoperatingHactivities.HNetHIncomeHisHequalHtoHrevenuesHminus
HSheet

Hexpenses.H (IfHexpensesHareHgreaterHthanHrevenues,HtheHcompanyHhasHaHNetHLoss.)




PhillipsHetHal.HFundamentalsHofHFinancialHAccounting,H SolutionsHManua
6ceHCopyrightHMcGrawHHill.,H2021 l
PageH2-3