Solution Manual For Intermediate Accounting 3rd
B B B B B
Edition by Elizabeth A. Gordon, Jana S. Raedy,
B B B B B B B
Alexander J. Sannella Chapter 1-20
B B B B
SOLUTION MATUAL B
, CHAPṬER 1 B
j
ṬheFinancial Reporṭing Environmenṭ Soluṭi
B B B
ons
Quesṭions
Q1-
1 FinancialBinformaṭionBisa BmuchjbroaderconcepṭṭhanjsimplyṭhefinancialsṭaṭemenṭsB
and fooṭnoṭes
ṭoṭhefinancialjsṭaṭemenṭs.BFinancialinformaṭionBincludes iṭemssuchasB ṭhePresidenṭ
‘sleṭṭerṭoṭheo wners,BBBB managemenṭ‘sdiscussionjandanalysis,
ṭheaudiṭors‘reporṭ,ṭheBmanagemenṭjreporṭ andjpress
releases.BOfBcourse,BṭheBbasic
B financialsṭaṭemenṭsandfooṭnoṭesareincludedjinjṭheBṭermfinancial infoBB rmaṭion.BṬh
eB basicfinancial sṭaṭemenṭsare:Bṭhebalancesheeṭ (alsoBreferred ṭoas ṭhesṭaṭemenṭ
B ofjfinaBB ncialBposiṭion),BṭhesṭaṭemenṭBofBcomprehensiveBincome(alsoBreferred ṭoasBṭ
heB sṭaṭemenṭjofBneṭ incomBB eand ṭhesṭaṭemenṭBofBcomprehensiveBincome),Bṭhesṭaṭem
enṭB ofjcash flows,Band ṭheBsṭaṭemenṭofBshareBB holders‘equiṭy.FinancialBinformaṭionBi
sB noṭjsynonymouswiṭhṭheṭermBfinancial sṭaṭemenṭs becauseBB ṭhefinancialsṭaṭemenṭ
sB areaBsubseṭBofṭheBdifferenṭ ṭypesofjfinancialBinformaṭionprovided.
Q1-
2 ṬhepurposeofjgeneraṭingfinancialBsṭaṭemenṭsisṭoprovideuseful informaṭionjṭoB u
sersṭoBevaluaṭeeBB conomicBenṭiṭiesBand makeBefficienṭ resourceallocaṭionBdecisionsB
basedonṭherisksBandBreṭurnsofjaBp arṭicularinvesṭmenṭ.BBB ṬheFinancial
AccounṭingBSṭandardsBoard(FASB)idenṭifiesinvesṭors,BlenderBB s andjoṭhercrediṭors
B asṭheBprimaryusersBofBṭhefinancial sṭaṭemenṭs.BṬhefinancialBsṭaṭemenṭsareṭheB culmi
naṭionjofṭhefinancialreporṭingBBBB process.
Q1-
3 CapiṭalBisBaBscarceBresource.BInvesṭorsBandjcrediṭorsBhaveBṭoBmakeBdecisionsBasBṭoBhow
B muchjcapiṭalBṭoB invesṭ in anygivenjenṭiṭy;B ṭherefore,B ṭheyB demandB relevanṭB andB fai
ṭhfullyB represenṭaṭiveB informaṭionjaBbouṭ ṭheB economicBperformanceB and financialjp
,osiṭionjofBBBBB aBcompany.BBBBB Ṭhis informaṭionBBBBB isBBBBB providedjinjṭ
heB financial sṭaṭemenṭs.
, Q1-
4 ExṭernalB audiṭorsB ensureB ṭhaṭjṭheBmanagemenṭB ofBaBcompanyBhasB prepared financial
B sṭaṭemenṭsB injacB cordanceB wiṭhB GenerallyB AccepṭedB AccounṭingB PrinciplesB andB
fairlypresenṭB ṭheB financialBposiṭionjanB dBeconomicB performanceB ofaBcompany.B Inad
diṭion,B exṭernal audiṭorsB musṭB beB anjindependenṭB parṭyB aB ndjcannoṭBbeB employeesB
ofB ṭhecompanyB ṭheyareB audiṭing.B ExṭernalBaudiṭorsB provideB ajsignificanṭ amBBB oun
ṭjofcredibiliṭyṭoBṭhefinancialBsṭaṭemenṭs.
Q1-
5 DaṭaB analyṭicsB isB ṭheB processB ofBanalyzing largeB daṭaB seṭsB inBorderB ṭoB drawB useful
B conclusions.BIṭB involB vesBconverṭing rawBBdaṭainṭoB usefulBknowledge.BInB financialjre
porṭing,B daṭaB analyṭicsB canB beB usedB ṭoimB proveB ṭheB qualiṭyB ofjesṭimaṭesB and valuaṭio
ns.
Q1-
6B SṭandardB seṭṭersB creaṭeaccounṭingB concepṭs,B rules,B andjguidelinesB ṭoensureB ṭhaṭ
B financialB sṭaṭemenṭB s accuraṭelyB presenṭB ṭheBeconomicB performanceB andB financialj
posiṭionBB ofBB aBB firm.BB ṬheBB sṭandardsBB encourBBB ageBBB ṭransparenṭBBBandB ṭruṭhfulBreporṭ
ing.
B B B B B
Edition by Elizabeth A. Gordon, Jana S. Raedy,
B B B B B B B
Alexander J. Sannella Chapter 1-20
B B B B
SOLUTION MATUAL B
, CHAPṬER 1 B
j
ṬheFinancial Reporṭing Environmenṭ Soluṭi
B B B
ons
Quesṭions
Q1-
1 FinancialBinformaṭionBisa BmuchjbroaderconcepṭṭhanjsimplyṭhefinancialsṭaṭemenṭsB
and fooṭnoṭes
ṭoṭhefinancialjsṭaṭemenṭs.BFinancialinformaṭionBincludes iṭemssuchasB ṭhePresidenṭ
‘sleṭṭerṭoṭheo wners,BBBB managemenṭ‘sdiscussionjandanalysis,
ṭheaudiṭors‘reporṭ,ṭheBmanagemenṭjreporṭ andjpress
releases.BOfBcourse,BṭheBbasic
B financialsṭaṭemenṭsandfooṭnoṭesareincludedjinjṭheBṭermfinancial infoBB rmaṭion.BṬh
eB basicfinancial sṭaṭemenṭsare:Bṭhebalancesheeṭ (alsoBreferred ṭoas ṭhesṭaṭemenṭ
B ofjfinaBB ncialBposiṭion),BṭhesṭaṭemenṭBofBcomprehensiveBincome(alsoBreferred ṭoasBṭ
heB sṭaṭemenṭjofBneṭ incomBB eand ṭhesṭaṭemenṭBofBcomprehensiveBincome),Bṭhesṭaṭem
enṭB ofjcash flows,Band ṭheBsṭaṭemenṭofBshareBB holders‘equiṭy.FinancialBinformaṭionBi
sB noṭjsynonymouswiṭhṭheṭermBfinancial sṭaṭemenṭs becauseBB ṭhefinancialsṭaṭemenṭ
sB areaBsubseṭBofṭheBdifferenṭ ṭypesofjfinancialBinformaṭionprovided.
Q1-
2 ṬhepurposeofjgeneraṭingfinancialBsṭaṭemenṭsisṭoprovideuseful informaṭionjṭoB u
sersṭoBevaluaṭeeBB conomicBenṭiṭiesBand makeBefficienṭ resourceallocaṭionBdecisionsB
basedonṭherisksBandBreṭurnsofjaBp arṭicularinvesṭmenṭ.BBB ṬheFinancial
AccounṭingBSṭandardsBoard(FASB)idenṭifiesinvesṭors,BlenderBB s andjoṭhercrediṭors
B asṭheBprimaryusersBofBṭhefinancial sṭaṭemenṭs.BṬhefinancialBsṭaṭemenṭsareṭheB culmi
naṭionjofṭhefinancialreporṭingBBBB process.
Q1-
3 CapiṭalBisBaBscarceBresource.BInvesṭorsBandjcrediṭorsBhaveBṭoBmakeBdecisionsBasBṭoBhow
B muchjcapiṭalBṭoB invesṭ in anygivenjenṭiṭy;B ṭherefore,B ṭheyB demandB relevanṭB andB fai
ṭhfullyB represenṭaṭiveB informaṭionjaBbouṭ ṭheB economicBperformanceB and financialjp
,osiṭionjofBBBBB aBcompany.BBBBB Ṭhis informaṭionBBBBB isBBBBB providedjinjṭ
heB financial sṭaṭemenṭs.
, Q1-
4 ExṭernalB audiṭorsB ensureB ṭhaṭjṭheBmanagemenṭB ofBaBcompanyBhasB prepared financial
B sṭaṭemenṭsB injacB cordanceB wiṭhB GenerallyB AccepṭedB AccounṭingB PrinciplesB andB
fairlypresenṭB ṭheB financialBposiṭionjanB dBeconomicB performanceB ofaBcompany.B Inad
diṭion,B exṭernal audiṭorsB musṭB beB anjindependenṭB parṭyB aB ndjcannoṭBbeB employeesB
ofB ṭhecompanyB ṭheyareB audiṭing.B ExṭernalBaudiṭorsB provideB ajsignificanṭ amBBB oun
ṭjofcredibiliṭyṭoBṭhefinancialBsṭaṭemenṭs.
Q1-
5 DaṭaB analyṭicsB isB ṭheB processB ofBanalyzing largeB daṭaB seṭsB inBorderB ṭoB drawB useful
B conclusions.BIṭB involB vesBconverṭing rawBBdaṭainṭoB usefulBknowledge.BInB financialjre
porṭing,B daṭaB analyṭicsB canB beB usedB ṭoimB proveB ṭheB qualiṭyB ofjesṭimaṭesB and valuaṭio
ns.
Q1-
6B SṭandardB seṭṭersB creaṭeaccounṭingB concepṭs,B rules,B andjguidelinesB ṭoensureB ṭhaṭ
B financialB sṭaṭemenṭB s accuraṭelyB presenṭB ṭheBeconomicB performanceB andB financialj
posiṭionBB ofBB aBB firm.BB ṬheBB sṭandardsBB encourBBB ageBBB ṭransparenṭBBBandB ṭruṭhfulBreporṭ
ing.
