TEST BANK #z
Financial Accounting
#z
by Robert Libby, Patricia Libby, Frank Hodge
#z #z #z #z #z #z
11th Edition.
#z
FULL TEST BANK!!!
#z #z
, FULL SOLUTION MANUAL FOR
#z #z #z
Financial Accounting 11th Edition Robert Libby,
#z #z #z #z #z
Patricia Libby, Frank Hodge
#z #z #z #z
Chapter 1 #z
Financial Statements and Business Decisions
#z #z #z #z
ANSWERS TO QUESTIONS
#z #z
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 their ownership interest in 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.
NURSEDOCS@2024
,5. In #za #zsociety, #zeach #zorganization #zcan #zbe #zdefined #zas #za #zseparate #zaccounting
#zentity. #zAn #zaccounting #zentity #zis #zthe #zorganization #zfor #zwhich #zfinancial #zdata #zare
#zto #zbe #zcollected. #zTypical #zaccounting #zentities #zare #za #zbusiness, #za #zchurch, #za
#zgovernmental #zunit, #za #zuniversity #zand #zother #znonprofit #zorganizations #zsuch #zas #za
#zhospital #zand #za #zwelfare #zorganization. #zA #zbusiness #ztypically #zis #zdefined #zand
#ztreated #zas #za #zseparate #zentity #zbecause #zthe #zowners, #zcreditors, #zinvestors, #zand
#zother #zinterested #zparties #zneed #zto #zevaluate #zits #zperformance #zand #zits #zpotential
#zseparately #zfrom #zother #zentities #zand #zfrom #zits #zowners.
6. Name #zof #zStatement Alternative #zTitle
(a) Income #zStatement (a) #zStatement #zof #zEarnings; #zStatement #zof
Income; #zStatement #zof #zOperations
(b) Balance #zSheet (b) #zStatement #zof #zFinancial #zPosition
(c) Cash #zFlow #zStatement (c) # z Statement #zof #zCash #zFlows
7. The #zheading #zof #zeach #zof #zthe #zfour #zrequired #zfinancial #zstatements #zshould
#zinclude #zthe #zfollowing:
(a) Name #zof #zthe #zentity
(b) Name #zof #zthe #zstatement
(c) Date #zof #zthe #zstatement, #zor #zthe #zperiod #zof #ztime
(d) Unit #zof #zmeasure
8. (a) The #zpurpose #zof #zthe #zincome #zstatement #zis #zto #zpresent #zinformation #zabout
#zthe #zrevenues, #zexpenses, #zand #zthe #znet #zincome #zof #zan #zentity #zfor #za
#zspecified #zperiod #zof #ztime.
(b) The #zpurpose #zof #zthe #zbalance #zsheet #zis #zto #zreport #zthe #zfinancial #zposition #zof
#zan #zentity #zat #za #zgiven #zdate, #zthat #zis, #zto #zreport #zinformation #zabout #zthe
#zassets, #zliabilities #zand #zstockholders’ #zequity #zof #zthe #zentity #zas #zof #za #zspecific
#zdate.
(c) The #zpurpose #zof #zthe #zstatement #zof #zcash #zflows #zis #zto #zpresent #zinformation
#zabout #zthe #zflow #zof #zcash #zinto #zthe #zentity #z(sources), #zthe #zflow #zof #zcash #zout
#zof #zthe #zentity #z(uses), #zand #zthe #znet #zincrease #zor #zdecrease #zin #zcash #zduring
#zthe #zperiod.
(d) The #zstatement #zof #zstockholders’ #zequity #zreports #zthe #zchanges #zin #zeach #zof
#zthe #zcompany’s #zstockholders’ #zequity #zaccounts #zduring #zthe #zaccounting
#zperiod, #zincluding #zissue #zand #zrepurchase #zof #zstock #zand #zthe #zway #zthat #znet
#zincome #zand #zdistribution #zof #zdividends #zaffected #zthe #zretained #zearnings #zof
#zthe #zcompany #zduring #zthat #zperiod.
9. The #zincome #zstatement #zand #zthe #zstatement #zof #zcash #zflows #zare #zdated #z―For
#zthe #zYear #zEnded #zDecember #z31‖ #zbecause #zthey #zreport #zthe #zinflows #zand
#zoutflows #zof #zresources #zduring #za #zperiod #zof #ztime. #zIn #zcontrast, #zthe #zbalance
#zsheet #zis #zdated #z―At #zDecember #z31‖ #zbecause #zit #zrepresents #zthe #zresources,
#zobligations, #zand #zstockholders’ #zequity #zat #za #zspecific #zdate.
, 10. Assets #zare #zimportant #zto #zcreditors #zand #zinvestors #zbecause #zassets #zprovide #za
#zbasis #zfor #zjudging #zwhether #zsufficient #zresources #zare #zavailable #zto #zoperate #zthe
#zcompany. #zAssets #zare #zalso #zimportant #zbecause #zthey #zcould #zbe #zsold #zfor #zcash
#zin #zthe #zevent #zthe #zcompany #zgoes #zout #zof #zbusiness. #zLiabilities #zare #zimportant
#zto #zcreditors #zand #zinvestors #zbecause #zthe #zcompany #zmust #zbe #zable #zto #zgenerate
#zsufficient #zcash #zfrom #zoperations #zor #zfurther #zborrowing #zto #zmeet #zthe #zpayments
#zrequired #zby #zdebt #zagreements. #zIf #za #zbusiness #zdoes #znot #zpay #zits #zcreditors, #zthe
#zlaw #zmay #zgive #zthe #zcreditors #zthe #zright #zto #zforce #zthe #zsale #zof #zassets #zsufficient
#zto #zmeet #ztheir #zclaims.
11. Net #zincome #zis #zthe #zexcess #zof #ztotal #zrevenues #zover #ztotal #zexpenses. #zNet
#zloss #zis #zthe #zexcess #zof #ztotal #zexpenses #zover #ztotal #zrevenues.
12. The #zequation #zfor #zthe #zincome #zstatement #zis #zRevenues #z- #zExpenses #z= #zNet
#zIncome #z(or #zNet #zLoss #zif #zthe #zamount #zis #znegative). #zThus, #zthe #zthree #zmajor
#zitems #zreported #zon #zthe #zincome #zstatement #zare #z(1) #zrevenues, #z(2) #zexpenses,
#zand #z(3) #znet #zincome.
13. The #zequation #zfor #zthe #zbalance #zsheet #z(also #zknown #zas #zthe #zbasic #zaccounting
#zequation) #zis: #zAssets #z= #zLiabilities #z+ #zStockholders’ #zEquity. #zAssets #zare #zthe
#zprobable #z(expected) #zfuture #zeconomic #zbenefits #zowned #zby #zthe #zentity #zas #za
#zresult #zof #zpast #ztransactions. # z They #zare #zthe #zresources #zowned #zby #zthe #zbusiness
#zat #za #zgiven #zpoint #zin #ztime #zsuch #zas #zcash, #zreceivables, #zinventory, #zmachinery,
#zbuildings, #zland, #zand #zpatents. #zLiabilities #zare #zprobable #z(expected) #zdebts #zor
#zobligations #zof #zthe #zentity #zas #za #zresult #zof #zpast #ztransactions #zthat #zwill #zbe #zpaid
#zwith #zassets #zor #zservices #zin #zthe #zfuture. #zThey #zare #zthe #zobligations #zof #zthe #zentity
#zsuch #zas #zaccounts #zpayable, #znotes #zpayable, #zand #zbonds #zpayable.
#zStockholders’ #zequity #zis #zfinancing #zprovided #zby #zowners #zof #zthe #zbusiness #zand
#zoperations. #zIt #zis #zthe #zclaim #zof #zthe #zowners #zto #zthe #zassets #zof #zthe #zbusiness
#zafter #zthe #zcreditors’ #zclaims #zhave #zbeen #zsatisfied. #zIt #zmay #zbe #zthought #zof #zas #zthe
#zresidual #zinterest #zbecause #zit #zrepresents #zassets #zminus #zliabilities.
14. The #zequation #zfor #zthe #zstatement #zof #zcash #zflows #zis: #zCash #zflows #zfrom #zoperating #zactivities
+ #zCash #zflows #zfrom #zinvesting #zactivities #z+ #zCash #zflows #zfrom #zfinancing #zactivities
#z= #zChange #zin #zcash #zfor #zthe #zperiod. #zThe #znet #zcash #zflows #zfor #zthe #zperiod
#zrepresent #zthe #zincrease #zor #zdecrease #zin #zcash #zthat #zoccurred #zduring #zthe #zperiod.
#zCash #zflows #zfrom #zoperating #zactivities #zare #zcash #zflows #zdirectly #zrelated #zto
#zearning #zincome #z(normal #zbusiness #zactivity #zincluding #zinterest #zpaid #zand #zincome
#ztaxes #zpaid). #zCash #zflows #zfrom #zinvesting #zactivities #zinclude #zcash #zflows #zthat #zare
#zrelated #zto #zthe #zacquisition #zor #zsale #zof #zproductive #zassets #zused #zby #zthe #zcompany.
#zCash #zflows #zfrom #zfinancing #zactivities #zare #zdirectly #zrelated #zto #zthe #zfinancing #zof
#zthe #zenterprise #zitself.
15. The #zretained #zearnings #zequation #zis: #zBeginning #zRetained #zEarnings #z+ #zNet
#zIncome #z- #zDividends #z= #zEnding #zRetained #zEarnings. #zIt #zbegins #zwith
#zbeginning-of-the-year #zRetained #zEarnings #zwhich #zis #zthe #zprior #zyear’s #zending
#zretained #zearnings #zreported #zon #zthe #zbalance #zsheet. # z The #zcurrent #zyear's #zNet
#zIncome #zreported #zon #zthe #zincome #zstatement #zis #zadded #zand #zthe #zcurrent
#zyear's #zDividends #zare #zsubtracted #zfrom #zthis #zamount. #zThe #zending #zRetained
NURSEDOCS@2024
Financial Accounting
#z
by Robert Libby, Patricia Libby, Frank Hodge
#z #z #z #z #z #z
11th Edition.
#z
FULL TEST BANK!!!
#z #z
, FULL SOLUTION MANUAL FOR
#z #z #z
Financial Accounting 11th Edition Robert Libby,
#z #z #z #z #z
Patricia Libby, Frank Hodge
#z #z #z #z
Chapter 1 #z
Financial Statements and Business Decisions
#z #z #z #z
ANSWERS TO QUESTIONS
#z #z
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 their ownership interest in 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.
NURSEDOCS@2024
,5. In #za #zsociety, #zeach #zorganization #zcan #zbe #zdefined #zas #za #zseparate #zaccounting
#zentity. #zAn #zaccounting #zentity #zis #zthe #zorganization #zfor #zwhich #zfinancial #zdata #zare
#zto #zbe #zcollected. #zTypical #zaccounting #zentities #zare #za #zbusiness, #za #zchurch, #za
#zgovernmental #zunit, #za #zuniversity #zand #zother #znonprofit #zorganizations #zsuch #zas #za
#zhospital #zand #za #zwelfare #zorganization. #zA #zbusiness #ztypically #zis #zdefined #zand
#ztreated #zas #za #zseparate #zentity #zbecause #zthe #zowners, #zcreditors, #zinvestors, #zand
#zother #zinterested #zparties #zneed #zto #zevaluate #zits #zperformance #zand #zits #zpotential
#zseparately #zfrom #zother #zentities #zand #zfrom #zits #zowners.
6. Name #zof #zStatement Alternative #zTitle
(a) Income #zStatement (a) #zStatement #zof #zEarnings; #zStatement #zof
Income; #zStatement #zof #zOperations
(b) Balance #zSheet (b) #zStatement #zof #zFinancial #zPosition
(c) Cash #zFlow #zStatement (c) # z Statement #zof #zCash #zFlows
7. The #zheading #zof #zeach #zof #zthe #zfour #zrequired #zfinancial #zstatements #zshould
#zinclude #zthe #zfollowing:
(a) Name #zof #zthe #zentity
(b) Name #zof #zthe #zstatement
(c) Date #zof #zthe #zstatement, #zor #zthe #zperiod #zof #ztime
(d) Unit #zof #zmeasure
8. (a) The #zpurpose #zof #zthe #zincome #zstatement #zis #zto #zpresent #zinformation #zabout
#zthe #zrevenues, #zexpenses, #zand #zthe #znet #zincome #zof #zan #zentity #zfor #za
#zspecified #zperiod #zof #ztime.
(b) The #zpurpose #zof #zthe #zbalance #zsheet #zis #zto #zreport #zthe #zfinancial #zposition #zof
#zan #zentity #zat #za #zgiven #zdate, #zthat #zis, #zto #zreport #zinformation #zabout #zthe
#zassets, #zliabilities #zand #zstockholders’ #zequity #zof #zthe #zentity #zas #zof #za #zspecific
#zdate.
(c) The #zpurpose #zof #zthe #zstatement #zof #zcash #zflows #zis #zto #zpresent #zinformation
#zabout #zthe #zflow #zof #zcash #zinto #zthe #zentity #z(sources), #zthe #zflow #zof #zcash #zout
#zof #zthe #zentity #z(uses), #zand #zthe #znet #zincrease #zor #zdecrease #zin #zcash #zduring
#zthe #zperiod.
(d) The #zstatement #zof #zstockholders’ #zequity #zreports #zthe #zchanges #zin #zeach #zof
#zthe #zcompany’s #zstockholders’ #zequity #zaccounts #zduring #zthe #zaccounting
#zperiod, #zincluding #zissue #zand #zrepurchase #zof #zstock #zand #zthe #zway #zthat #znet
#zincome #zand #zdistribution #zof #zdividends #zaffected #zthe #zretained #zearnings #zof
#zthe #zcompany #zduring #zthat #zperiod.
9. The #zincome #zstatement #zand #zthe #zstatement #zof #zcash #zflows #zare #zdated #z―For
#zthe #zYear #zEnded #zDecember #z31‖ #zbecause #zthey #zreport #zthe #zinflows #zand
#zoutflows #zof #zresources #zduring #za #zperiod #zof #ztime. #zIn #zcontrast, #zthe #zbalance
#zsheet #zis #zdated #z―At #zDecember #z31‖ #zbecause #zit #zrepresents #zthe #zresources,
#zobligations, #zand #zstockholders’ #zequity #zat #za #zspecific #zdate.
, 10. Assets #zare #zimportant #zto #zcreditors #zand #zinvestors #zbecause #zassets #zprovide #za
#zbasis #zfor #zjudging #zwhether #zsufficient #zresources #zare #zavailable #zto #zoperate #zthe
#zcompany. #zAssets #zare #zalso #zimportant #zbecause #zthey #zcould #zbe #zsold #zfor #zcash
#zin #zthe #zevent #zthe #zcompany #zgoes #zout #zof #zbusiness. #zLiabilities #zare #zimportant
#zto #zcreditors #zand #zinvestors #zbecause #zthe #zcompany #zmust #zbe #zable #zto #zgenerate
#zsufficient #zcash #zfrom #zoperations #zor #zfurther #zborrowing #zto #zmeet #zthe #zpayments
#zrequired #zby #zdebt #zagreements. #zIf #za #zbusiness #zdoes #znot #zpay #zits #zcreditors, #zthe
#zlaw #zmay #zgive #zthe #zcreditors #zthe #zright #zto #zforce #zthe #zsale #zof #zassets #zsufficient
#zto #zmeet #ztheir #zclaims.
11. Net #zincome #zis #zthe #zexcess #zof #ztotal #zrevenues #zover #ztotal #zexpenses. #zNet
#zloss #zis #zthe #zexcess #zof #ztotal #zexpenses #zover #ztotal #zrevenues.
12. The #zequation #zfor #zthe #zincome #zstatement #zis #zRevenues #z- #zExpenses #z= #zNet
#zIncome #z(or #zNet #zLoss #zif #zthe #zamount #zis #znegative). #zThus, #zthe #zthree #zmajor
#zitems #zreported #zon #zthe #zincome #zstatement #zare #z(1) #zrevenues, #z(2) #zexpenses,
#zand #z(3) #znet #zincome.
13. The #zequation #zfor #zthe #zbalance #zsheet #z(also #zknown #zas #zthe #zbasic #zaccounting
#zequation) #zis: #zAssets #z= #zLiabilities #z+ #zStockholders’ #zEquity. #zAssets #zare #zthe
#zprobable #z(expected) #zfuture #zeconomic #zbenefits #zowned #zby #zthe #zentity #zas #za
#zresult #zof #zpast #ztransactions. # z They #zare #zthe #zresources #zowned #zby #zthe #zbusiness
#zat #za #zgiven #zpoint #zin #ztime #zsuch #zas #zcash, #zreceivables, #zinventory, #zmachinery,
#zbuildings, #zland, #zand #zpatents. #zLiabilities #zare #zprobable #z(expected) #zdebts #zor
#zobligations #zof #zthe #zentity #zas #za #zresult #zof #zpast #ztransactions #zthat #zwill #zbe #zpaid
#zwith #zassets #zor #zservices #zin #zthe #zfuture. #zThey #zare #zthe #zobligations #zof #zthe #zentity
#zsuch #zas #zaccounts #zpayable, #znotes #zpayable, #zand #zbonds #zpayable.
#zStockholders’ #zequity #zis #zfinancing #zprovided #zby #zowners #zof #zthe #zbusiness #zand
#zoperations. #zIt #zis #zthe #zclaim #zof #zthe #zowners #zto #zthe #zassets #zof #zthe #zbusiness
#zafter #zthe #zcreditors’ #zclaims #zhave #zbeen #zsatisfied. #zIt #zmay #zbe #zthought #zof #zas #zthe
#zresidual #zinterest #zbecause #zit #zrepresents #zassets #zminus #zliabilities.
14. The #zequation #zfor #zthe #zstatement #zof #zcash #zflows #zis: #zCash #zflows #zfrom #zoperating #zactivities
+ #zCash #zflows #zfrom #zinvesting #zactivities #z+ #zCash #zflows #zfrom #zfinancing #zactivities
#z= #zChange #zin #zcash #zfor #zthe #zperiod. #zThe #znet #zcash #zflows #zfor #zthe #zperiod
#zrepresent #zthe #zincrease #zor #zdecrease #zin #zcash #zthat #zoccurred #zduring #zthe #zperiod.
#zCash #zflows #zfrom #zoperating #zactivities #zare #zcash #zflows #zdirectly #zrelated #zto
#zearning #zincome #z(normal #zbusiness #zactivity #zincluding #zinterest #zpaid #zand #zincome
#ztaxes #zpaid). #zCash #zflows #zfrom #zinvesting #zactivities #zinclude #zcash #zflows #zthat #zare
#zrelated #zto #zthe #zacquisition #zor #zsale #zof #zproductive #zassets #zused #zby #zthe #zcompany.
#zCash #zflows #zfrom #zfinancing #zactivities #zare #zdirectly #zrelated #zto #zthe #zfinancing #zof
#zthe #zenterprise #zitself.
15. The #zretained #zearnings #zequation #zis: #zBeginning #zRetained #zEarnings #z+ #zNet
#zIncome #z- #zDividends #z= #zEnding #zRetained #zEarnings. #zIt #zbegins #zwith
#zbeginning-of-the-year #zRetained #zEarnings #zwhich #zis #zthe #zprior #zyear’s #zending
#zretained #zearnings #zreported #zon #zthe #zbalance #zsheet. # z The #zcurrent #zyear's #zNet
#zIncome #zreported #zon #zthe #zincome #zstatement #zis #zadded #zand #zthe #zcurrent
#zyear's #zDividends #zare #zsubtracted #zfrom #zthis #zamount. #zThe #zending #zRetained
NURSEDOCS@2024
