Solution Manual for Financial Accounting, 7th Canadian Edition by Libby, Hodge, Kanaan, Sterling All Chapters 1-13, Complete

Solution Manual
Financial Accounting, 7th Canadian Edition
by Libby, Hodge, Kanaan, Sterling
All Chapters 1-13, Complete




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,TABLE OF CONTENTS
T T T




CHAPTERTONE
FinancialTStatementsTandTBusinessTDecisions

CHAPTERTTWO
InvestingTandTFinancingTDecisionsTandTtheTAccountingTSystem

CHAPTERTTHREE
OperatingTDecisionsTandTtheTAccountingTSystem

CHAPTERTFOUR
Adjustments,TFinancialTStatements,TandTtheTClosingTProcess

CHAPTERTFIVE
ReportingTandTInterpretingTSalesTRevenue,TReceivables,TandTCash

CHAPTERTSIX
ReportingTandTInterpretingTCostTofTSalesTandTInventory

CHAPTERTSEVEN
ReportingTandTInterpretingTLong-LivedTAssets

CHAPTERTEIGHT
ReportingTandTInterpretingTCurrentTLiabilities

CHAPTERTNINE
ReportingTandTInterpretingTNon-currentTLiabilities

CHAPTERTTEN
ReportingTandTInterpretingTShareholders'TEquity

CHAPTERTELEVEN
StatementTofTCashTFlows

CHAPTERTTWELVE
CommunicatingTAccountingTInformationTandTAnalyzingTFinancialTStatements

CHAPTERTTHIRTEEN
ReportingTandTInterpretingTInvestmentsTinTOtherTCorporations



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,CHAPTER ONE T



Financial Statements and Business Decisions
T T T T




ANSWERSTTOTQUESTIONS

1. AccountingTisTaTsystemTthatTcollectsTandTprocessesT(analyzes,Tmeasures,TandTrecords)Tfin
ancialTinformationTaboutTanTorganizationTandTreportsTthatTinformationTtoTdecisionTmakers.

2. FinancialTaccountingTinvolvesTpreparationTofTtheTfourTbasicTfinancialTstatementsTandTrelated
TdisclosuresTforTexternalTdecisionTmakers.TManagerialTaccountingTinvolvesTtheTpreparationT
ofTdetailedTplans,Tbudgets,Tforecasts,TandTperformanceTreportsTforTinternalTdecisionTmaker
s.

3. FinancialTreportsTareTusedTbyTbothTinternalTandTexternalTgroupsTandTindividuals.TTheTinternalT
groupsTareTcomprisedTofTtheTvariousTmanagersTofTtheTentity.TTheTexternalTgroupsTincludeTth
eTowners,Tinvestors,Tcreditors,TgovernmentalTagencies,TotherTinterestedTparties,TandTtheTpu
blicTatTlarge.

4. InvestorsTpurchaseTallTorTpartTofTaTbusinessTandThopeTtoTgainTbyTreceivingTpartTofTwhatTtheTc
ompanyTearnsTand/orTsellingTtheTcompanyTinTtheTfutureTatTaThigherTpriceTthanTtheyTpaid.TCre
ditorsTlendTmoneyTtoTaTcompanyTforTaTspecificTlengthTofTtimeTandThopeTtoTgainTbyTchargingTin
terestTonTtheTloan.

5. InTaTsocietyTeachTorganizationTcanTbeTdefinedTasTaTseparateTaccountingTentity.TAnTaccountin
gTentityTisTtheTorganizationTforTwhichTfinancialTdataTareTtoTbeTcollected.TTypicalTaccountingTe
ntitiesTareTaTbusiness,TaTchurch,TaTgovernmentalTunit,TaTuniversityTandTotherTnonprofitTorgan
izationsTsuchTasTaThospitalTandTaTwelfareTorganization.TATbusinessTtypicallyTisTdefinedTandTt
reatedTasTaTseparateT entityTbecauseTtheTowners,Tcreditors,Tinvestors,TandTotherTinterestedT
partiesTneedTtoTevaluateTitsTperformanceTandTitsTpotentialTseparatelyTfromTotherTentitiesTan
dTfromTitsTowners.

6. NameTofTStatement AlternativeTTitle
(a) IncomeTStatement (a)T StatementTofTEarnings;TStatementTof
Income;TStatementTofTOperations
(b) BalanceTSheet (b)T StatementTofTFinancialTPosition
(c) AuditTReport (c)T ReportTofTIndependentTAccountants




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, 7. TheTheadingTofTeachTofTtheTfourTrequiredTfinancialTstatementsTshouldTincludeTtheTfollowi
ng:
(a) NameTofTtheTentity
(b) NameTofTtheTstatement
(c) DateTofTtheTstatement,TorTtheTperiodTofTtime
(d) UnitTofTmeasure

8. (a)
TheTpurposeTofTtheTincomeTstatementTisTtoTpresentTinformationTaboutTtheTrevenue
s,Texpenses,TandTtheTnetTincomeTofTtheTentityTforTaTspecifiedTperiodTofTtime.
(b) TheTpurposeTofTtheTbalanceTsheetTisTtoTreportTtheTfinancialTpositionTofTanTentityTatTaTgi
venTdate,TthatTis,TtoTreportTinformationTaboutTtheTassets,TobligationsTandTstockholder
s’TequityTofTtheTentityTasTofTaTspecificTdate.
(c) TheTpurposeTofTtheTstatementTofTcashTflowsTisTtoTpresentTinformationTaboutTtheTflowTo
fTcashTintoTtheTentityT(sources),TtheTflowTofTcashToutTofTtheTentityT(uses),TandTtheTnetTi
ncreaseTorTdecreaseTinTcashTduringTtheTperiod.
(d) TheTstatementTofTretainedTearningsTreportsTtheTwayTthatTnetTincomeTandTdistribution
TofTdividendsTaffectedTtheTretainedTearningsTofTtheTcompanyTduringTtheTaccountingTpe

riod.

9. TheTincomeTstatementTandTtheTstatementTofTcashTflowsTareTdatedT“ForTtheTYearTEnded
DecemberT31,T2010,”TbecauseTtheyTreportTtheTinflowsTandToutflowsTofTresourcesTduri
T

ngTaTperiodTofTtime.TInTcontrast,TtheTbalanceTsheetTisTdatedT“AtTDecemberT31,T2010,”T
becauseTitTrepresentsTtheTresources,TobligationsTandTstockholders’TequityTatTaTspecifi
cTdate.

10. AssetsTareTimportantTtoTcreditorsTandTinvestorsTbecauseTassetsTprovideTaTbasisTforTjudging
TwhetherTsufficientTresourcesTareTavailableTtoToperateTtheTcompany.TAssetsTareTalsoTimpor
tantTbecauseTtheyTcouldTbeTsoldTforTcashTinTtheTeventTtheTcompanyTgoesToutTofTbusiness.T
LiabilitiesTareTimportantTtoTcreditorsTandTinvestorsTbecauseTtheTcompanyTmustTbeTableTtoT
generateTsufficientTcashTfromToperationsTorTfurtherTborrowingTtoTmeetTtheTpaymentsTrequir
edTbyTdebtTagreements.TIfTaTbusinessTdoesTnotTpayTitsTcreditors,TtheTlawTmayTgiveTtheTcredi
torsTtheTrightTtoTforceTtheTsaleTofTassetsTsufficientTtoTmeetTtheirTclaims.

11. NetTincomeTisTtheTexcessTofTtotalTrevenuesToverTtotalTexpenses.TNetTlossTisTtheTexces
sTofTtotalTexpensesToverTtotalTrevenues.

12. TheTequationTforTtheTincomeTstatementTisTRevenuesT-
ExpensesT=TNetTIncomeT(orTNetTLossTifTtheTamountTisTnegative).TThus,TtheTthreeTmajorTite
T

msTreportedTonTtheTincomeTstatementTareT(1)Trevenues,T(2)Texpenses,TandT(3)T netTincom
e.




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