Solution Manual For Financial Accounting,
7th Canadian Edition by Libby, Hodge,
Kanaan, Sterling Chapters 1 - 13, Complete
1-1
,TABLE OF CONTENTS e e e
CHAPTER eONE
Financial eStatements eand eBusiness eDecisions
CHAPTER eTWO
Investing eand eFinancing eDecisions eand ethe eAccounting eSystem
CHAPTER eTHREE
Operating eDecisions eand ethe eAccounting eSystem
CHAPTER eFOUR
Adjustments, eFinancial eStatements, eand ethe eClosing eProcess
CHAPTER eFIVE
Reporting eand eInterpreting eSales eRevenue, eReceivables, eand eCash
CHAPTER eSIX
Reporting eand eInterpreting eCost eof eSales eand eInventory
CHAPTER eSEVEN
Reporting eand eInterpreting eLong-Lived eAssets
CHAPTER eEIGHT
Reporting eand eInterpreting eCurrent eLiabilities
CHAPTER eNINE
Reporting eand eInterpreting eNon-current eLiabilities
CHAPTER eTEN
Reporting eand eInterpreting eShareholders' eEquity
CHAPTER eELEVEN
Statement eof eCash eFlows
CHAPTER eTWELVE
Communicating eAccounting eInformation eand eAnalyzing eFinancial eStatements
CHAPTER eTHIRTEEN
Reporting eand eInterpreting eInvestments ein eOther eCorporations
1-2
,CHAPTER ONE e
Financial Statements and Business Decisions
e e e e
ANSWERS eTO eQUESTIONS
1. Accounting eis ea esystem ethat ecollects eand eprocesses e(analyzes, emeasures, eand
erecords) efinancial einformation eabout ean eorganization eand ereports ethat
einformation etoedecision emakers.
2. Financial eaccounting einvolves epreparation eof ethe efour ebasic efinancial estatements
eanderelated edisclosures efor eexternal edecision emakers. eManagerial eaccounting
einvolves ethe epreparation eof edetailed eplans, ebudgets, eforecasts, eand eperformance
ereports efor einternal edecision emakers.
3. Financial ereports eare eused eby eboth einternal eand eexternal egroups eand eindividuals.
eTheeinternal egroups eare ecomprised eof ethe evarious emanagers eof ethe eentity. eThe
eexternal egroups einclude ethe eowners, einvestors, ecreditors, egovernmental
eagencies, eother einterested eparties, eand ethe epublic eat elarge.
4. Investors epurchase eall eor epart eof ea ebusiness eand ehope eto egain eby ereceiving epart
eof ewhat ethe ecompany eearns eand/or eselling ethe ecompany ein ethe efuture eat ea
ehigher eprice ethan ethey epaid. e Creditors elend emoney eto ea ecompany efor ea especific
elength eof etime eandehope eto egain eby echarging einterest eon ethe eloan.
5. In ea esociety eeach eorganization ecan ebe edefined eas ea eseparate eaccounting eentity.
eAn eaccounting eentity eis ethe eorganization efor ewhich efinancial edata eare eto ebe
ecollected. eTypical eaccounting eentities eare ea ebusiness, ea echurch, ea egovernmental
eunit, ea euniversity eand eother enonprofit eorganizations esuch eas ea ehospital eand ea
ewelfare eorganization. eA ebusiness etypically eis edefined eand etreated eas ea eseparate
e entity ebecause ethe eowners, ecreditors, einvestors, eand eother einterested eparties
eneed eto eevaluate eits eperformance eand eits epotential eseparately efrom eother eentities
eand efrom eitseowners.
1-3
, 6. Name eof eStatement Alternative eTitle
(a) Income eStatement (a) e Statement eof eEarnings; eStatement eof
Income; eStatement eof eOperations
(b) Balance eSheet (b) e Statement eof eFinancial ePosition
(c) Audit eReport (c) e Report eof eIndependent eAccountants
1-4
7th Canadian Edition by Libby, Hodge,
Kanaan, Sterling Chapters 1 - 13, Complete
1-1
,TABLE OF CONTENTS e e e
CHAPTER eONE
Financial eStatements eand eBusiness eDecisions
CHAPTER eTWO
Investing eand eFinancing eDecisions eand ethe eAccounting eSystem
CHAPTER eTHREE
Operating eDecisions eand ethe eAccounting eSystem
CHAPTER eFOUR
Adjustments, eFinancial eStatements, eand ethe eClosing eProcess
CHAPTER eFIVE
Reporting eand eInterpreting eSales eRevenue, eReceivables, eand eCash
CHAPTER eSIX
Reporting eand eInterpreting eCost eof eSales eand eInventory
CHAPTER eSEVEN
Reporting eand eInterpreting eLong-Lived eAssets
CHAPTER eEIGHT
Reporting eand eInterpreting eCurrent eLiabilities
CHAPTER eNINE
Reporting eand eInterpreting eNon-current eLiabilities
CHAPTER eTEN
Reporting eand eInterpreting eShareholders' eEquity
CHAPTER eELEVEN
Statement eof eCash eFlows
CHAPTER eTWELVE
Communicating eAccounting eInformation eand eAnalyzing eFinancial eStatements
CHAPTER eTHIRTEEN
Reporting eand eInterpreting eInvestments ein eOther eCorporations
1-2
,CHAPTER ONE e
Financial Statements and Business Decisions
e e e e
ANSWERS eTO eQUESTIONS
1. Accounting eis ea esystem ethat ecollects eand eprocesses e(analyzes, emeasures, eand
erecords) efinancial einformation eabout ean eorganization eand ereports ethat
einformation etoedecision emakers.
2. Financial eaccounting einvolves epreparation eof ethe efour ebasic efinancial estatements
eanderelated edisclosures efor eexternal edecision emakers. eManagerial eaccounting
einvolves ethe epreparation eof edetailed eplans, ebudgets, eforecasts, eand eperformance
ereports efor einternal edecision emakers.
3. Financial ereports eare eused eby eboth einternal eand eexternal egroups eand eindividuals.
eTheeinternal egroups eare ecomprised eof ethe evarious emanagers eof ethe eentity. eThe
eexternal egroups einclude ethe eowners, einvestors, ecreditors, egovernmental
eagencies, eother einterested eparties, eand ethe epublic eat elarge.
4. Investors epurchase eall eor epart eof ea ebusiness eand ehope eto egain eby ereceiving epart
eof ewhat ethe ecompany eearns eand/or eselling ethe ecompany ein ethe efuture eat ea
ehigher eprice ethan ethey epaid. e Creditors elend emoney eto ea ecompany efor ea especific
elength eof etime eandehope eto egain eby echarging einterest eon ethe eloan.
5. In ea esociety eeach eorganization ecan ebe edefined eas ea eseparate eaccounting eentity.
eAn eaccounting eentity eis ethe eorganization efor ewhich efinancial edata eare eto ebe
ecollected. eTypical eaccounting eentities eare ea ebusiness, ea echurch, ea egovernmental
eunit, ea euniversity eand eother enonprofit eorganizations esuch eas ea ehospital eand ea
ewelfare eorganization. eA ebusiness etypically eis edefined eand etreated eas ea eseparate
e entity ebecause ethe eowners, ecreditors, einvestors, eand eother einterested eparties
eneed eto eevaluate eits eperformance eand eits epotential eseparately efrom eother eentities
eand efrom eitseowners.
1-3
, 6. Name eof eStatement Alternative eTitle
(a) Income eStatement (a) e Statement eof eEarnings; eStatement eof
Income; eStatement eof eOperations
(b) Balance eSheet (b) e Statement eof eFinancial ePosition
(c) Audit eReport (c) e Report eof eIndependent eAccountants
1-4
