Solution Manual for Financial Statement Analysis 13th Edition by Charles H. Gibson

Solution Manual For Financial Statement Analysis,
13th Edition
By Charles H. Gibson, Verified Chapter's 1 - 13 | Complete

, Chapter 1
Introduction to Financial Reporting


QUESTIONS

1- 1. a.
TheAAICPAAisAanAorganizationAofACPAsAthatApriorAtoA1973AacceptedAtheA
primaryAresponsibilityAforAtheAdevelopmentAofAgenerallyAacceptedAaccount
ingAprinciples.ATheirAroleAwasAsubstantiallyAreducedAinA1973AwhenAtheAFin
ancialAAccountingAStandardsABoardAwasAestablished.A TheirAroleAwasAfurt
herAreducedAwithAtheAestablishmentAofAtheAPublicACompanyAAccountingAO
versightABoardAwasAestablishedAinA2002.

b. TheAFinancialAAccountingAStandardsABoardAreplacedAtheAAccounting
APrinciplesABoardAasAtheAprimaryArule-

makingAbodyAforAaccountingAstandards.AItAisAanAindependentAorganiz
ationAandAincludesAmembersAotherAthanApublicAaccountants.

c. TheASECAhasAtheAauthorityAtoAdetermineAgenerallyAacceptedAaccounting
AprinciplesAandAtoAregulateAtheAaccountingAprofession.ATheASECAhasAele

ctedAtoAleaveAmuchAofAtheAdeterminationAofAgenerallyAacceptedAaccounti
ngAprinciplesAtoAtheAprivateAsector.A TheAFinancialAAccountingAStandard
sABoardAhasAplayedAtheAmajorAroleAinAestablishingAaccountingAstandards
AsinceA1973.A RegulationAofAtheAaccountingAprofessionAwasAsubstantially

AturnedAoverAtoAtheAPublicACompanyAAccountingAOversightABoardAinA200

2.

1-A2.
ConsistencyAisAobtainedAthroughAtheAapplicationAofAtheAsameAaccountingA
principleAfromAperiodAtoAperiod.A AAchangeAinAprincipleArequiresAstatement
Adisclosure.




1-A3.
TheAconceptAofAhistoricalAcostAdeterminesAtheAbalanceAsheetAvaluationAofAland.A
TheArealizationAconceptArequiresAthatAaAtransactionAneedsAtoAoccurAforAtheAprofit
AtoAbeArecognized.




1-A4. a.A Entity e.A HistoricalAcost

b. Realization f.A HistoricalAcost

c. Materiality g.A Disclosure

d. Conservatism

,1-A5. EntityAconcept

, 1-A6.
GenerallyAacceptedAaccountingAprinciplesAdoAnotAapplyAwhenAaAfirmAdoesAnot
AappearAtoAbeAaAgoingAconcern.A IfAtheAdecisionAisAmadeAthatAthisAisAnotAaAgoin
gAconcern,AthenAtheAuseAofAGAAPAwouldAnotAbeAappropriate.

1-A7.
WithAtheAtimeAperiodAassumption,AinaccuraciesAofAaccountingAforAtheAentity,Ash
ortAofAitsAcompleteAlifeAspan,AareAaccepted.ATheAassumptionAisAmadeAthatAtheAe
ntityAcanAbeAaccountedAforAreasonablyAaccuratelyAforAaAparticularAperiodAofAtime
.A InAotherAwords,AtheAdecisionAisAmadeAtoAacceptAsomeAinaccuracyAbecauseAofA
incompleteAinformationAaboutAtheAfutureAinAexchangeAforAmoreAtimelyAreporting.
A TheAstatementsAareAconsideredAtoAbeAmeaningfulAbecauseAmaterialAinaccurac

iesAareAnotAacceptable.

1- 8.A A ItAisAtrueAthatAtheAonlyAaccurateAwayAtoAaccountAforAtheAsuccessAorAfailureAofAanAe
ntityAisAtoAaccumulateAallAtransactionsAfromAtheAopeningAofAbusinessAuntilAtheAb
usinessAeventuallyAliquidates.A ButAitAisAnotAnecessaryAthatAtheAstatementsAbeAc
ompletelyAaccurateAinAorderAforAthemAtoAbeAmeaningful.

1- 9. a. AAyearAthatAendsAwhenAoperationsAareAatAaAlowAebbAforAtheAyear.

b. TheAaccountingAtimeAperiodAisAendedAonADecemberA31.

c. AAtwelve-
monthAaccountingAperiodAthatAendsAatAtheAendAofAaAmonthAotherAthanADec
emberA31.
1-10. Money.

1-
11.A A WhenAmoneyAdoesAnotAholdAaAstableAvalue,AtheAfinancialAstatementsAca
nAloseAmuchAofAtheirAsignificance.A ToAtheAextentAthatAmoneyAdoesAnotAremainA
stable,AitAlosesAusefulnessAasAtheAstandardAforAmeasuringAfinancialAtransactio
ns.

1-12.
No.A ThereAisAaAproblemAwithAdeterminingAtheAindexAinAorderAtoAadjustAtheAstat
ements.A TheAitemsAthatAareAincludedAinAtheAindexAmustAbeArepresentative.AInA
addition,AtheApricesAofAitemsAchangeAbecauseAofAvariousAfactors,AsuchAasAquali
ty,Atechnology,AandAinflation.

Yes.AAAreasonableAadjustmentAtoAtheAstatementsAcanAbeAmadeAforAinflation.

1-13. False.A AnAarbitraryAwrite-
offAofAinventoryAcannotAbeAjustifiedAunderAtheAconservatismAconcept.A TheAcon
servatismAconceptAcanAonlyAbeAappliedAwhereAthereAareAalternativeAmeasurem
entsAandAeachAofAtheseAalternativeAmeasurementsAhasAreasonableAsupport.