Instructor Manual: Warren/Jones/Tayler, Survey of Accounting, 11e, 2027, 9798214052908; Chapter 1: The Role of Accounting in Business
Instructor Manual
Warren/Jones/Tayler, Survey of Accounting, 11e, 2027, 9798214052908; Chapter 1: The Role of
Accounting in Business
TABLE OF CONTENTS
Purpose and Perspective of the Chapter......................................................................2
Chapter Objectives........................................................................................................2
List of Chapter Activities..............................................................................................3
Key Terms.....................................................................................................................3
What's New in This Chapter........................................................................................7
Chapter Outline.............................................................................................................8
Additional Discussion Questions................................................................................16
Additional Activities and Assignments.......................................................................17
© 2027 Cengage Learning Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a 1
publicly accessible website, in whole or in part.
, Instructor Manual: Warren/Jones/Tayler, Survey of Accounting, 11e, 2027, 9798214052908; Chapter 1: The Role of Accounting in Business
PURPOSE AND PERSPECTIVE OF THE CHAPTER
The purpose of Chapter 1 is to explore the role of accounting in business, which is to provide information
about the financing, investing, and operating activities of a company to its stakeholders. The text focuses
on accounting and its role in business. However, many of the concepts discussed also apply to
individuals, governments, and not-for-profit organizations.
The chapter defines and describes the types and forms of businesses and business stakeholders that exist
and provides examples of each. It then explores the three business activities of financing, investing, and
operating.
Often called the “language of business,” accounting is defined and its role explored along with the
specific objectives of financial accounting: to report the financial condition of a business at a point in
time, and to report changes in the financial condition of a business over a period of time.
The objectives of accounting are achieved by (1) recording the economic events affecting a business and
then (2) summarizing the impact of these events on the business in financial reports, called financial
statements. These financial statements are described and illustrated within the chapter. The text explores
the four basic types of financial statements and their relationship to the objectives of financial accounting.
The chapter then goes on to explain the concept of generally accepted accounting principles (GAAP),
standards boards, and regulatory agencies. The rules underlying financial reporting rely on eight
accounting concepts, which are described by the text.
Finally, the chapter explains how metric-based analysis makes use of quantitative measures known as
metrics to assess a company’s financial condition, performance, and decisions. This is illustrated through
the use of return on assets to perform analyses at the financial statement level.
CHAPTER OBJECTIVES
The following objectives are addressed in this chapter:
Obj. 1 Describe the types and forms of businesses and business stakeholders.
Obj. 2 Describe the three business activities of financing, investing, and operating.
Obj. 3 Describe the role of accounting in business.
Obj. 4 Illustrate how the basic financial statements are integrated.
Obj. 5 Describe eight accounting concepts underlying financial reporting.
Obj. 6 Use return on assets to analyze a company’s performance.
LIST OF CHAPTER ACTIVITIES
The following table organizes activities and assessments in the PowerPoint by objective, so that you can
see how all this content relates to objectives and make decisions about which content you would like to
emphasize in your class based on your objectives. For additional activities, refer to the Teaching Online
Guide and the Educator Guide.
© 2027 Cengage Learning Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a 2
publicly accessible website, in whole or in part.
, Instructor Manual: Warren/Jones/Tayler, Survey of Accounting, 11e, 2027, 9798214052908; Chapter 1: The Role of Accounting in Business
Chapter Activity/Assessment Source (i.e., PPT slide, Workbook)
Objective
Obj. 1 Knowledge Check Activity 1 PPT Slides 11–12
Obj. 2 Knowledge Check Activity 2 PPT Slides 19–20
Obj. 3 Discussion Activity 1 PPT Slides 25–26
Obj. 4 Knowledge Check Activity 3 PPT Slides 39–40
Obj. 5 Discussion Activity 2 PPT Slides 46–47
[return to top]
KEY TERMS
Accounting: An information system that provides reports to stakeholders about the economic activities
and condition of a business.
Accounting equation: Assets = Liabilities + Stockholders’ Equity.
Accounting period concept: An accounting concept in which accounting data are recorded and
summarized in a period process.
Accounts payable: Liabilities for amounts incurred from purchases of products or services in the
normal operations of a business.
Accounts receivable: Receivables created by selling merchandise or services on credit.
Adequate disclosure concept: An accounting concept that requires financial statements to include
all relevant data a reader needs to understand the financial condition and performance of a business.
Administrative expenses: Expenses incurred in the administration or general operations of the
business; costs not directly related to selling, such as officer salaries.
Assets: The resources owned by a business.
Balance sheet: A list of the assets, liabilities, and owner’s equity as of a specific date, usually at the
close of the last day of a month or a year.
Bonds payable: A type of long-term debt financing with a face amount that is in the future, with
interest that is normally paid semiannually.
Business: An organization in which basic resources (inputs), such as materials and labor, are assembled
and processed to provide goods and services (outputs) to customers.
Business entity concept: An accounting concept that limits the economic data in the accounting
system of a specific business or entity to data related directly to the activities of that business or entity.
Business stakeholder: A person or entity that has an interest in the economic performance of a
business.
Chief financial officer (CFO): The head of the accounting department in a company; also called the
comptroller.
© 2027 Cengage Learning Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a 3
publicly accessible website, in whole or in part.
, Instructor Manual: Warren/Jones/Tayler, Survey of Accounting, 11e, 2027, 9798214052908; Chapter 1: The Role of Accounting in Business
Common stock: The basic type of stock issued to stockholders of a corporation when a corporation
has issued only one class of stock.
Comptroller: The head of the accounting department in a company; also called the chief financial
officer.
Corporation: A business organized under state or federal statutes as a separate legal entity.
Cost concept: An accounting concept that determines the amount initially entered into the accounting
records for purchases.
Cost of goods sold: The cost of products sold; also may be referred to as cost of merchandise sold or
cost of sales.
Cost of merchandise sold: The cost of products sold; also may be referred to as cost of sales or cost
of goods sold.
Cost of sales: The cost of products sold; also may be referred to as cost of merchandise sold or cost of
goods sold.
Data analytics: The science of analyzing raw data to discover patterns, identify anomalies, or gain
other useful insights.
Dividends: Distributions of the earnings of a corporation to its stockholders.
Expense recognition principle: An accounting principle that states that the expenses incurred in
generating revenue should be reported in the same period as the related revenue; by matching revenues
and expenses, net income or loss for the period can properly be determined and reported.
Expenses: Costs used to earn (generate) revenues.
Fees earned: Revenues received from providing services.
Financial accounting: The area of accounting that focuses on recording transactions and events so
that general-purpose financial statements can be prepared.
Financial Accounting Standards Board (FASB): The authoritative body that has the primary
responsibility for developing accounting principles.
Financial statements: Financial reports that summarize the effects of events on a business.
Financing activities: Business activities that involve obtaining funds to begin and operate a business.
Generally accepted accounting principles (GAAP): Rules for the way financial statements
should be prepared.
Going concern concept: An accounting concept that assumes that a company will continue in
business indefinitely.
Income statement: A summary of the revenue and expenses for a specific period of time, such as a
month or a year.
Intangible assets: Long-lived assets that are useful in the operations of a business, are not held for
sale, and are without physical qualities.
© 2027 Cengage Learning Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a 4
publicly accessible website, in whole or in part.
Instructor Manual
Warren/Jones/Tayler, Survey of Accounting, 11e, 2027, 9798214052908; Chapter 1: The Role of
Accounting in Business
TABLE OF CONTENTS
Purpose and Perspective of the Chapter......................................................................2
Chapter Objectives........................................................................................................2
List of Chapter Activities..............................................................................................3
Key Terms.....................................................................................................................3
What's New in This Chapter........................................................................................7
Chapter Outline.............................................................................................................8
Additional Discussion Questions................................................................................16
Additional Activities and Assignments.......................................................................17
© 2027 Cengage Learning Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a 1
publicly accessible website, in whole or in part.
, Instructor Manual: Warren/Jones/Tayler, Survey of Accounting, 11e, 2027, 9798214052908; Chapter 1: The Role of Accounting in Business
PURPOSE AND PERSPECTIVE OF THE CHAPTER
The purpose of Chapter 1 is to explore the role of accounting in business, which is to provide information
about the financing, investing, and operating activities of a company to its stakeholders. The text focuses
on accounting and its role in business. However, many of the concepts discussed also apply to
individuals, governments, and not-for-profit organizations.
The chapter defines and describes the types and forms of businesses and business stakeholders that exist
and provides examples of each. It then explores the three business activities of financing, investing, and
operating.
Often called the “language of business,” accounting is defined and its role explored along with the
specific objectives of financial accounting: to report the financial condition of a business at a point in
time, and to report changes in the financial condition of a business over a period of time.
The objectives of accounting are achieved by (1) recording the economic events affecting a business and
then (2) summarizing the impact of these events on the business in financial reports, called financial
statements. These financial statements are described and illustrated within the chapter. The text explores
the four basic types of financial statements and their relationship to the objectives of financial accounting.
The chapter then goes on to explain the concept of generally accepted accounting principles (GAAP),
standards boards, and regulatory agencies. The rules underlying financial reporting rely on eight
accounting concepts, which are described by the text.
Finally, the chapter explains how metric-based analysis makes use of quantitative measures known as
metrics to assess a company’s financial condition, performance, and decisions. This is illustrated through
the use of return on assets to perform analyses at the financial statement level.
CHAPTER OBJECTIVES
The following objectives are addressed in this chapter:
Obj. 1 Describe the types and forms of businesses and business stakeholders.
Obj. 2 Describe the three business activities of financing, investing, and operating.
Obj. 3 Describe the role of accounting in business.
Obj. 4 Illustrate how the basic financial statements are integrated.
Obj. 5 Describe eight accounting concepts underlying financial reporting.
Obj. 6 Use return on assets to analyze a company’s performance.
LIST OF CHAPTER ACTIVITIES
The following table organizes activities and assessments in the PowerPoint by objective, so that you can
see how all this content relates to objectives and make decisions about which content you would like to
emphasize in your class based on your objectives. For additional activities, refer to the Teaching Online
Guide and the Educator Guide.
© 2027 Cengage Learning Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a 2
publicly accessible website, in whole or in part.
, Instructor Manual: Warren/Jones/Tayler, Survey of Accounting, 11e, 2027, 9798214052908; Chapter 1: The Role of Accounting in Business
Chapter Activity/Assessment Source (i.e., PPT slide, Workbook)
Objective
Obj. 1 Knowledge Check Activity 1 PPT Slides 11–12
Obj. 2 Knowledge Check Activity 2 PPT Slides 19–20
Obj. 3 Discussion Activity 1 PPT Slides 25–26
Obj. 4 Knowledge Check Activity 3 PPT Slides 39–40
Obj. 5 Discussion Activity 2 PPT Slides 46–47
[return to top]
KEY TERMS
Accounting: An information system that provides reports to stakeholders about the economic activities
and condition of a business.
Accounting equation: Assets = Liabilities + Stockholders’ Equity.
Accounting period concept: An accounting concept in which accounting data are recorded and
summarized in a period process.
Accounts payable: Liabilities for amounts incurred from purchases of products or services in the
normal operations of a business.
Accounts receivable: Receivables created by selling merchandise or services on credit.
Adequate disclosure concept: An accounting concept that requires financial statements to include
all relevant data a reader needs to understand the financial condition and performance of a business.
Administrative expenses: Expenses incurred in the administration or general operations of the
business; costs not directly related to selling, such as officer salaries.
Assets: The resources owned by a business.
Balance sheet: A list of the assets, liabilities, and owner’s equity as of a specific date, usually at the
close of the last day of a month or a year.
Bonds payable: A type of long-term debt financing with a face amount that is in the future, with
interest that is normally paid semiannually.
Business: An organization in which basic resources (inputs), such as materials and labor, are assembled
and processed to provide goods and services (outputs) to customers.
Business entity concept: An accounting concept that limits the economic data in the accounting
system of a specific business or entity to data related directly to the activities of that business or entity.
Business stakeholder: A person or entity that has an interest in the economic performance of a
business.
Chief financial officer (CFO): The head of the accounting department in a company; also called the
comptroller.
© 2027 Cengage Learning Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a 3
publicly accessible website, in whole or in part.
, Instructor Manual: Warren/Jones/Tayler, Survey of Accounting, 11e, 2027, 9798214052908; Chapter 1: The Role of Accounting in Business
Common stock: The basic type of stock issued to stockholders of a corporation when a corporation
has issued only one class of stock.
Comptroller: The head of the accounting department in a company; also called the chief financial
officer.
Corporation: A business organized under state or federal statutes as a separate legal entity.
Cost concept: An accounting concept that determines the amount initially entered into the accounting
records for purchases.
Cost of goods sold: The cost of products sold; also may be referred to as cost of merchandise sold or
cost of sales.
Cost of merchandise sold: The cost of products sold; also may be referred to as cost of sales or cost
of goods sold.
Cost of sales: The cost of products sold; also may be referred to as cost of merchandise sold or cost of
goods sold.
Data analytics: The science of analyzing raw data to discover patterns, identify anomalies, or gain
other useful insights.
Dividends: Distributions of the earnings of a corporation to its stockholders.
Expense recognition principle: An accounting principle that states that the expenses incurred in
generating revenue should be reported in the same period as the related revenue; by matching revenues
and expenses, net income or loss for the period can properly be determined and reported.
Expenses: Costs used to earn (generate) revenues.
Fees earned: Revenues received from providing services.
Financial accounting: The area of accounting that focuses on recording transactions and events so
that general-purpose financial statements can be prepared.
Financial Accounting Standards Board (FASB): The authoritative body that has the primary
responsibility for developing accounting principles.
Financial statements: Financial reports that summarize the effects of events on a business.
Financing activities: Business activities that involve obtaining funds to begin and operate a business.
Generally accepted accounting principles (GAAP): Rules for the way financial statements
should be prepared.
Going concern concept: An accounting concept that assumes that a company will continue in
business indefinitely.
Income statement: A summary of the revenue and expenses for a specific period of time, such as a
month or a year.
Intangible assets: Long-lived assets that are useful in the operations of a business, are not held for
sale, and are without physical qualities.
© 2027 Cengage Learning Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a 4
publicly accessible website, in whole or in part.
