Financial Accounting Tools For Business Decision
Making 10th Edition By Kimmel, Weygandt &
Mitchell Chapter 1-13
SOLUTION MANUAL
, Tables of Contents
Chapter 1: Introduction to Financial Statements
Chapter 2: A Further Look at Financial
Statements
Chapter 3: The Accounting Information System
Chapter 4: Accrual Accounting Concepts
Chapter 5: Merchandising Operations and the
Multiple-Step Income Statement
Chapter 6: Reporting and Analyzing Inventory
Chapter 7: Fraud, Internal Control, and Cash
Chapter 8: Reporting and Analyzing Receivables
Chapter 9: Reporting and Analyzing Long-Lived
Assets
Chapter 10: Reporting and Analyzing Liabilities
Chapter 11: Reporting and Analyzing
Stockholders’ Equity
Chapter 12: Statement of Cash Flows
Chapter 13: Financial Analysis: The Big Picture
,CHAPTER 1
Introduction to Financial Statements
Learning Objectives
1. Identify͎ the forms of business organization and the uses of accounting information.
2. Explain the three principal ty͎pes of business activity͎.
3. Describe the four financial statements and how they͎ are prepared.
*4. Explain the career opportunities in accounting.
ANSWERS TO QUESTIONS
1. The three basic forms of business organizations are (1) sole proprietorship, (2) partnership, and
(3) corporation.
LO 1 BT: K Difficulty͎: E TOT: 1 min. AACSB: Knowledge AICPA BC: Governance Perspective
2. Advantages of a corporation are limited liability͎ (stockholders not being personally͎ liable for cor- porate
debts), easy͎ transferability͎ of ownership, and ease of raising funds. Disadvantages of a corporation are
increased taxation and government regulations.
LO 1 BT: K Difficulty͎: E TOT: 1 min. AACSB: Knowledge AICPA BC: Governance Perspective
3. Proprietorships and partnerships receive favorable tax treatment compared to corporations and are easier to
form than corporations. They͎ are also owner controlled. Disadvantages of proprietorships and partnerships
are unlimited liability͎ (proprietors/partners are personally͎ liable for all debts) and difficulty͎ in obtaining
financing compared to corporations.
LO 1 BT: K Difficulty͎: E TOT: 1 min. AACSB: Knowledge AICPA BC: Governance Perspective
4. Y͎es. Companies can choose one of the hy͎brid business forms, limited liability͎ corporations (LLCs) or
subchapter S corporations, which combine the tax advantages of partnerships with the limited liability͎ of
corporations.
LO 1 BT: K Difficulty͎: E TOT: 1 min. AACSB: Knowledge AICPA BC: Governance Perspective
5. Y͎es. A person cannot earn a living, spend money͎, buy͎ on credit, make an investment, or pay͎ taxes without
receiving, using, or dispensing financial information. Accounting provides financial information to
interested users through the preparation and distribution of financial statements.
LO 1 BT: C Difficulty͎: E TOT: 1 min. AACSB: Knowledge AICPA AC: Reporting
, 6. Internal users are managers who plan, organize, and run a business. To assist management, accounting
provides timely͎ internal reports. Examples include financial comparisons of operating
Making 10th Edition By Kimmel, Weygandt &
Mitchell Chapter 1-13
SOLUTION MANUAL
, Tables of Contents
Chapter 1: Introduction to Financial Statements
Chapter 2: A Further Look at Financial
Statements
Chapter 3: The Accounting Information System
Chapter 4: Accrual Accounting Concepts
Chapter 5: Merchandising Operations and the
Multiple-Step Income Statement
Chapter 6: Reporting and Analyzing Inventory
Chapter 7: Fraud, Internal Control, and Cash
Chapter 8: Reporting and Analyzing Receivables
Chapter 9: Reporting and Analyzing Long-Lived
Assets
Chapter 10: Reporting and Analyzing Liabilities
Chapter 11: Reporting and Analyzing
Stockholders’ Equity
Chapter 12: Statement of Cash Flows
Chapter 13: Financial Analysis: The Big Picture
,CHAPTER 1
Introduction to Financial Statements
Learning Objectives
1. Identify͎ the forms of business organization and the uses of accounting information.
2. Explain the three principal ty͎pes of business activity͎.
3. Describe the four financial statements and how they͎ are prepared.
*4. Explain the career opportunities in accounting.
ANSWERS TO QUESTIONS
1. The three basic forms of business organizations are (1) sole proprietorship, (2) partnership, and
(3) corporation.
LO 1 BT: K Difficulty͎: E TOT: 1 min. AACSB: Knowledge AICPA BC: Governance Perspective
2. Advantages of a corporation are limited liability͎ (stockholders not being personally͎ liable for cor- porate
debts), easy͎ transferability͎ of ownership, and ease of raising funds. Disadvantages of a corporation are
increased taxation and government regulations.
LO 1 BT: K Difficulty͎: E TOT: 1 min. AACSB: Knowledge AICPA BC: Governance Perspective
3. Proprietorships and partnerships receive favorable tax treatment compared to corporations and are easier to
form than corporations. They͎ are also owner controlled. Disadvantages of proprietorships and partnerships
are unlimited liability͎ (proprietors/partners are personally͎ liable for all debts) and difficulty͎ in obtaining
financing compared to corporations.
LO 1 BT: K Difficulty͎: E TOT: 1 min. AACSB: Knowledge AICPA BC: Governance Perspective
4. Y͎es. Companies can choose one of the hy͎brid business forms, limited liability͎ corporations (LLCs) or
subchapter S corporations, which combine the tax advantages of partnerships with the limited liability͎ of
corporations.
LO 1 BT: K Difficulty͎: E TOT: 1 min. AACSB: Knowledge AICPA BC: Governance Perspective
5. Y͎es. A person cannot earn a living, spend money͎, buy͎ on credit, make an investment, or pay͎ taxes without
receiving, using, or dispensing financial information. Accounting provides financial information to
interested users through the preparation and distribution of financial statements.
LO 1 BT: C Difficulty͎: E TOT: 1 min. AACSB: Knowledge AICPA AC: Reporting
, 6. Internal users are managers who plan, organize, and run a business. To assist management, accounting
provides timely͎ internal reports. Examples include financial comparisons of operating
