Financial Accounting
1st Canadian Edition
by Robert Kemp
Complete Chapter Solutions Manual
are included (Ch 1 to 12)
** Immediate Download
** Swift Response
** All Chapters included
** Exercises and Problems
, Chapter 1: Business, Accounting, and You
Discussion Questions: Key Points
1. The economic events that affect a business are communicated through the accounting
function. Language helps us to make sense of the world around us. If we don’t know the
language, we will be limited in our ability to operate effectively in the business
environment.
2. Valid arguments can be made on both sides of this question. Without technical knowledge
an accountant will not be able to provide much value. Without ethics, however, an
accountant can be dangerous. Accounting exists because of a need for an objective account
of the economic events that affect an entity.
3. Financial statements seek to provide information about events that have already occurred.
For example, the cost principle may be used to carry assets on the books. It is up to the user
to make projections as to how past transactions are likely to affect future events.
4. Reasons why—reliability, verifiability. Disadvantages—relevance, usefulness for making
decisions.
5. Financial statement uses discussed in the text: allow investors and creditors to make
investment decisions, enable suppliers and customers to determine the financial condition of
a business, and report to regulatory agencies.
6. It is a separate legal entity from its owners. Factors—liability of owners for business
activities, taxation, distribution of income.
7. A = L + SE. Assets—things of value a company has. Liabilities—amount a business owes to
third parties. Shareholder’s equity—the amount of assets that is owned by the shareholders.
8. The transactions would have the following effects:
a. A+, SE+
b. A+, L+
c. A+, SE+
d. A+, A−
9. Statement of Earnings, Statement of Changes in Equity, Statement of Financial Position,
Statement of Cash Flows. The financial statements articulate (join together). The statement
of earnings needs to be prepared in order to produce the net income amount that is reported
on the statement of changes in equity. The ending balance in the statement of changes in
equity is needed in order to prepare the statement of financial position. The ending balance
in cash on the statement of financial position and other information are needed for the
statement of cash flows.
10. The financial statements are
a. Statement of financial position
b. Statement of changes in equity
c. Statement of cash flows
d. Statement of earnings
Financial Accounting Ce 1-1
, Short Exercises
(5–10 min.) S1-1
1. d
2. a
3. c
4. b
(5–10 min.) S1-2
Answer: b. Going-concern
(10–15 min.) S1-3
1. e
2. f
3. d
4. g
5. b
6. c
7. a
(5–10 min.) S1-4
a. $82,000 ($106,000 − $24,000)
b. $91,000 ($63,000 + $28,000)
c. $49,000 ($94,000 − $45,000)
(5–10 min.) S1-5
Assets = Liabilities + Shareholders’ Equity
Accounts Notes Shareholders’
Cash + Equipment = payable + payable + equity
$13,000 + $35,000 = $9,000 + $5,000 + $34,000
Based on the accounting equation, Ellen has $34,000 of equity in the business. Assets of $48,000
($13,000 + $35,000) − Liabilities of $14,000 ($9,000 + $5,000) = Shareholders’ equity of $34,000.
1-2 Solutions Manual
1st Canadian Edition
by Robert Kemp
Complete Chapter Solutions Manual
are included (Ch 1 to 12)
** Immediate Download
** Swift Response
** All Chapters included
** Exercises and Problems
, Chapter 1: Business, Accounting, and You
Discussion Questions: Key Points
1. The economic events that affect a business are communicated through the accounting
function. Language helps us to make sense of the world around us. If we don’t know the
language, we will be limited in our ability to operate effectively in the business
environment.
2. Valid arguments can be made on both sides of this question. Without technical knowledge
an accountant will not be able to provide much value. Without ethics, however, an
accountant can be dangerous. Accounting exists because of a need for an objective account
of the economic events that affect an entity.
3. Financial statements seek to provide information about events that have already occurred.
For example, the cost principle may be used to carry assets on the books. It is up to the user
to make projections as to how past transactions are likely to affect future events.
4. Reasons why—reliability, verifiability. Disadvantages—relevance, usefulness for making
decisions.
5. Financial statement uses discussed in the text: allow investors and creditors to make
investment decisions, enable suppliers and customers to determine the financial condition of
a business, and report to regulatory agencies.
6. It is a separate legal entity from its owners. Factors—liability of owners for business
activities, taxation, distribution of income.
7. A = L + SE. Assets—things of value a company has. Liabilities—amount a business owes to
third parties. Shareholder’s equity—the amount of assets that is owned by the shareholders.
8. The transactions would have the following effects:
a. A+, SE+
b. A+, L+
c. A+, SE+
d. A+, A−
9. Statement of Earnings, Statement of Changes in Equity, Statement of Financial Position,
Statement of Cash Flows. The financial statements articulate (join together). The statement
of earnings needs to be prepared in order to produce the net income amount that is reported
on the statement of changes in equity. The ending balance in the statement of changes in
equity is needed in order to prepare the statement of financial position. The ending balance
in cash on the statement of financial position and other information are needed for the
statement of cash flows.
10. The financial statements are
a. Statement of financial position
b. Statement of changes in equity
c. Statement of cash flows
d. Statement of earnings
Financial Accounting Ce 1-1
, Short Exercises
(5–10 min.) S1-1
1. d
2. a
3. c
4. b
(5–10 min.) S1-2
Answer: b. Going-concern
(10–15 min.) S1-3
1. e
2. f
3. d
4. g
5. b
6. c
7. a
(5–10 min.) S1-4
a. $82,000 ($106,000 − $24,000)
b. $91,000 ($63,000 + $28,000)
c. $49,000 ($94,000 − $45,000)
(5–10 min.) S1-5
Assets = Liabilities + Shareholders’ Equity
Accounts Notes Shareholders’
Cash + Equipment = payable + payable + equity
$13,000 + $35,000 = $9,000 + $5,000 + $34,000
Based on the accounting equation, Ellen has $34,000 of equity in the business. Assets of $48,000
($13,000 + $35,000) − Liabilities of $14,000 ($9,000 + $5,000) = Shareholders’ equity of $34,000.
1-2 Solutions Manual
