Solution Manual For
Intermediate Accounting 9th Edition By Spicelan
Chapter 1-2
Business ExamsPreparing for business exams involves mastering both conceptual understanding and practical application. Students are encouraged to study theories and frameworks but also to keep up-
to-date with current business trends. Case studies from leading businesses can be helpful, as they illustrate how business concepts are applied in real-world scenarios. Group d
QUESTIONS FOR REVIEW OF KEY TOPICS
Question 1–1
Financial accounting is concerned with providing relevant financial information
about various kinds of organizations to different types of external users. The primary
focus of financial accounting is on the financial information provided by profit-
oriented companies to their present and potential investors and creditors.
Question 1–2
Resources are efficiently allocated if they are given to enterprises that will use
them to provide goods and services desired by society and not to enterprises that will
waste them. The capital markets are the mechanism that fosters this efficient
allocation of resources.
Question 1–3
Two extremely important variables that must be considered in any investment
decision are the expected rate of return and the uncertainty or risk of that expected
return.
Question 1–4
In the long run, a company will be able to provide investors and creditors with a
rate of return only if it can generate a profit. That is, it must be able to use the
resources provided to it to generate cash receipts from selling a product or service that
exceed the cash disbursements necessary to provide that product or service.
Question 1–5
The primary objective of financial accounting is to provide investors and
creditors with information that will help them make investment and credit decisions.
,Question 1–6
Net operating cash flows are the difference between cash receipts and cash
disbursements during a period of time from transactions related to providing goods
and services to customers. Net operating cash flows may not be a good indicator of
future cash flows because, by ignoring uncompleted transactions, they may not match
the accomplishments and sacrifices of the period.
Business ExamsPreparing for business exams involves mastering both conceptual understanding and practical application. Students are encouraged to study theories and frameworks but also to keep up-
to-date with current business trends. Case studies from leading businesses can be helpful, as they illustrate how business concepts are applied in real-world scenarios. Group d
Question 1–7
GAAP (generally accepted accounting principles) are a dynamic set of both
broad and specific guidelines that a company should follow in measuring and
reporting the information in their financial statements and related notes. It is
important that all companies follow GAAP so that investors can compare financial
information across companies to make their resource allocation decisions.
Question 1–8
In 1934, Congress created the SEC and gave it the job of setting accounting and
reporting standards for companies whose securities are publicly traded. The SEC has
retained the power, but has relied on private sector bodies to create the standards. The
current private sector body responsible for setting accounting standards is the FASB.
Question 1–9
Auditors are independent, professional accountants who examine financial
statements to express an opinion. The opinion reflects the auditors’ assessment of the
statements' fairness, which is determined by the extent to which they are prepared in
compliance with GAAP. The auditor adds credibility to the financial statements,
which increases the confidence of capital market participants relying on that
information.
Business ExamsPreparing for business exams involves mastering both conceptual understanding and practical application. Students are encouraged to study theories and frameworks but also
to keep up-to-date with current business trends. Case studies from leading businesses can be helpful, as they illustrate how business concepts are applied in real-world scenarios. Group d
, Question 1–10
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of
2002. The most dramatic change to federal securities laws since the 1930s, the Act
radically redesigns federal regulation of public company corporate governance and
reporting obligations. It also significantly tightens accountability standards for
directors and officers, auditors, securities analysts, and legal counsel. Student opinions
as to the relative importance of the key provisions of the act will vary. Key provisions
in the order of presentation in the text are:
Creation of an Oversight Board
Corporate executive accountability
Nonaudit services
Retention of work papers
Auditor rotation
Conflicts of interest
Hiring of auditor
Internal control
Question 1–11
New accounting standards, or changes in standards, can have significant
differential effects oncompanies, investors and creditors, and other interest groups by
causing redistribution of wealth. There also is the possibility that standards could
harm the economy as a whole by causing companies to change their behavior.
Question 1–12
The FASB undertakes a series of elaborate information gathering steps before
issuing an accounting standard to determine consensus as to the preferred method of
accounting, as well as to anticipate adverse economic consequences.
Question 1–13
The purpose of the conceptual framework is to guide the Board in developing
accounting standards by providing an underlying foundation and basic reasoning on
which to consider merits of alternatives. The framework does not prescribe GAAP.
Business ExamsPreparing for business exams involves mastering both conceptual understanding and practical application. Students are encouraged to study theories and frameworks but also
to keep up-to-date with current business trends. Case studies from leading businesses can be helpful, as they illustrate how business concepts are applied in real-world scenarios. Group d
Intermediate Accounting 9th Edition By Spicelan
Chapter 1-2
Business ExamsPreparing for business exams involves mastering both conceptual understanding and practical application. Students are encouraged to study theories and frameworks but also to keep up-
to-date with current business trends. Case studies from leading businesses can be helpful, as they illustrate how business concepts are applied in real-world scenarios. Group d
QUESTIONS FOR REVIEW OF KEY TOPICS
Question 1–1
Financial accounting is concerned with providing relevant financial information
about various kinds of organizations to different types of external users. The primary
focus of financial accounting is on the financial information provided by profit-
oriented companies to their present and potential investors and creditors.
Question 1–2
Resources are efficiently allocated if they are given to enterprises that will use
them to provide goods and services desired by society and not to enterprises that will
waste them. The capital markets are the mechanism that fosters this efficient
allocation of resources.
Question 1–3
Two extremely important variables that must be considered in any investment
decision are the expected rate of return and the uncertainty or risk of that expected
return.
Question 1–4
In the long run, a company will be able to provide investors and creditors with a
rate of return only if it can generate a profit. That is, it must be able to use the
resources provided to it to generate cash receipts from selling a product or service that
exceed the cash disbursements necessary to provide that product or service.
Question 1–5
The primary objective of financial accounting is to provide investors and
creditors with information that will help them make investment and credit decisions.
,Question 1–6
Net operating cash flows are the difference between cash receipts and cash
disbursements during a period of time from transactions related to providing goods
and services to customers. Net operating cash flows may not be a good indicator of
future cash flows because, by ignoring uncompleted transactions, they may not match
the accomplishments and sacrifices of the period.
Business ExamsPreparing for business exams involves mastering both conceptual understanding and practical application. Students are encouraged to study theories and frameworks but also to keep up-
to-date with current business trends. Case studies from leading businesses can be helpful, as they illustrate how business concepts are applied in real-world scenarios. Group d
Question 1–7
GAAP (generally accepted accounting principles) are a dynamic set of both
broad and specific guidelines that a company should follow in measuring and
reporting the information in their financial statements and related notes. It is
important that all companies follow GAAP so that investors can compare financial
information across companies to make their resource allocation decisions.
Question 1–8
In 1934, Congress created the SEC and gave it the job of setting accounting and
reporting standards for companies whose securities are publicly traded. The SEC has
retained the power, but has relied on private sector bodies to create the standards. The
current private sector body responsible for setting accounting standards is the FASB.
Question 1–9
Auditors are independent, professional accountants who examine financial
statements to express an opinion. The opinion reflects the auditors’ assessment of the
statements' fairness, which is determined by the extent to which they are prepared in
compliance with GAAP. The auditor adds credibility to the financial statements,
which increases the confidence of capital market participants relying on that
information.
Business ExamsPreparing for business exams involves mastering both conceptual understanding and practical application. Students are encouraged to study theories and frameworks but also
to keep up-to-date with current business trends. Case studies from leading businesses can be helpful, as they illustrate how business concepts are applied in real-world scenarios. Group d
, Question 1–10
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of
2002. The most dramatic change to federal securities laws since the 1930s, the Act
radically redesigns federal regulation of public company corporate governance and
reporting obligations. It also significantly tightens accountability standards for
directors and officers, auditors, securities analysts, and legal counsel. Student opinions
as to the relative importance of the key provisions of the act will vary. Key provisions
in the order of presentation in the text are:
Creation of an Oversight Board
Corporate executive accountability
Nonaudit services
Retention of work papers
Auditor rotation
Conflicts of interest
Hiring of auditor
Internal control
Question 1–11
New accounting standards, or changes in standards, can have significant
differential effects oncompanies, investors and creditors, and other interest groups by
causing redistribution of wealth. There also is the possibility that standards could
harm the economy as a whole by causing companies to change their behavior.
Question 1–12
The FASB undertakes a series of elaborate information gathering steps before
issuing an accounting standard to determine consensus as to the preferred method of
accounting, as well as to anticipate adverse economic consequences.
Question 1–13
The purpose of the conceptual framework is to guide the Board in developing
accounting standards by providing an underlying foundation and basic reasoning on
which to consider merits of alternatives. The framework does not prescribe GAAP.
Business ExamsPreparing for business exams involves mastering both conceptual understanding and practical application. Students are encouraged to study theories and frameworks but also
to keep up-to-date with current business trends. Case studies from leading businesses can be helpful, as they illustrate how business concepts are applied in real-world scenarios. Group d
