Instructor’s Manual / Solutions Manual
, Instructor’s Manual / Solutions Manual
Full Solution Manual For Accounting What The Numbers Mean 13th Edition David Marshall
CHAPTER
Accounting—Present And
1 Past
CHAPTER OUTLINE:
I. What Is Accounting?
A. Definition
B. Uses Of Accounting Information
C. Classifications
1. Financial Accounting
2. Managerial Accounting / Cost Accounting
3. Auditing — Public Accounting
4. Internal Auditing
5. Governmental And Not-For-Profit Accounting
6. Income Tax Accounting
II. How Has Accounting Developed?
A. Early History
B. The Accounting Profession In The United States
C. Financial Accounting Standard Setting At The Present Time
1. Financial Accounting Standards Board
2. Standards Are Evolving
D. Standards For Other Types Of Accounting
1. Managerial Accounting / Cost Accounting
2. Auditing
3. Governmental And Not-For-Profit Accounting
4. Income Tax Accounting
E. International Accounting Standards
F. Ethics And The Accounting Profession
III. The Conceptual Framework
A. Context
B. Summary Of Concepts Statement No. 8, Chapter 1 — The Objective Of General
Purpose Financial Reporting
C. Objectives Of Financial Reporting For Nonbusiness Organizations
IV. Plan Of The Book
, Instructor’s Manual / Solutions Manual
TEACHING/LEARNING OBJECTIVES:
Principal:
1. To Present A Definition Of Accounting.
2. To Identify And Describe Different Classifications Of Accounting.
3. To Emphasize That Financial Accounting Standards Are Not A ―Fixed Code Of Rules,‖
But Are Established In Response To User Needs And Business Developments. Accountants
Need To Apply Professional Judgment In The Application Of Accounting Principles.
4. To Emphasize The Role And Sources Of Ethics For The Accounting Profession.
Supporting:
5. To Summarize How Accounting Has Evolved Over Time.
6. To Identify Sources Of Standards For Other Types Of Accounting And To Contrast
These With Financial Accounting Standards.
7. To Introduce The Issues Associated With The Development Of International
Accounting Standards.
8. To Describe The Context Of The FASB Conceptual Framework Project.
9. To Summarize Concepts Statement No. 8, Chapter 1 — The Objective Of General
Purpose Financial Reporting.
10. To Relate The Objectives Of Financial Reporting For Nonbusiness Organizations To
Those Of Business Enterprises.
TEACHING OBSERVATIONS/ASSIGNMENT SUGGESTIONS:
1. Students Should Be Put On Notice About The Jargon Of Accounting, The Use Of
Synonymous Terms, The Importance Of The Context Within Which A Term Is Used, And
The Need For Precision In The Use Of Terminology. The First Example Of Jargon Is The
Term Entity.
2. When Discussing "Auditing — Public Accounting," Have Students Find The Auditors'
Opinion In The Campbell Soup Company 2020 Annual Report (See Pages 87-88 Of The
Appendix). Emphasize That A "Clean Opinion" Is Not A "Clean Bill Of Health."
3. Discuss The Summary Of Concepts Statement No. 8, Chapter 1 — The Objective Of
Financial Reporting, In Detail.
, Instructor’s Manual / Solutions Manual
4. Assign Exercise 1-1. Encourage Students To Experiment With Websites That Are Of
Interest. In Addition, Or As An Alternative To Having Students Request Their Own
Annual Reports, Distribute Reports That Have Been Obtained By The Instructor.
5. Use Exercise 1-5 To Generate Discussion About The Importance Of Ethical Standards In
General And Independence (In Both Appearance And Fact) In Particular. Follow Up With
A Brief Look At Exercise 1-7 Concerning Audit Independence Standards.
SOLUTIONS:
E1.3. This Exercise Provides An Opportunity To Gauge Where The Students Are In
Terms Of Their Prior Background In Accounting, Be It Practical Or Educational,
And To Clear
Up Some Of The Common Misconceptions (I.E., To Explain That Accounting
Goes Beyond The ―How To‖ Aspects Of Bookkeeping And Involves The Use Of
Judgment).
E1.4. This Exercise Provides An Opportunity To Align Student And Instructor
Expectations. For First-Time Instructors In This Course, Or For Those Having A
Diverse Student Group, You Will Get A Glimpse At The Common Perceptions
Students Have
Concerning The Course Content, Level Of Difficulty, And Methods Of
Presentation, Testing/Evaluation, And Grading.
E1.5. The Principal Factors Jim Sandrolini Must Consider Are His Competence And
Independence. Is He Competent To Prepare Financial Statements For A Company
That Operates In A Different Industry Than The One In Which He Works?
Accepting A
Contingent Fee Arrangement Would Normally Cause An Impairment Of His
Independence Because He Would Directly Benefit If The Loan Were To Be
Approved.
, Instructor’s Manual / Solutions Manual
E1.6. Suggested Discussion Strategy:
Q: Why Does A Business Have Value?
A: It Provides The Owners An Opportunity To Earn A Profit, An Opportunity
For Personal Fulfillment From Being In Charge, And An Opportunity To
Provide A Product Or Service That Is Useful To Others.
Q: How Can This Value Be Measured?
A: Financial Information Will Have The Most To Do With Evaluating The
Firm‘S Profitability, And The Financial Statements Include This Information.
Q: How Is An Asking Price For The Sale Of A Business Established?
A: The Asking Price Should Be A Function Of The Profit, Resources, And
Obligations Related To The Business As Shown In The Financial Statements.
Note: This Exercise Also Provides An Opportunity To Point Out Some Of The
Basic Limitations Of The Data Provided By The Accounting Process (E.G.,
Historical Cost Information — How Useful Are Past Earnings Results In
Predicting Future Earnings
And Cash Flows?). Be Careful Not To Get Too Carried Away With Details. Let
The Students Lead This Discussion.
, Instructor’s Manual / Solutions Manual
E1.7. Answers Will Vary Depending On The Search Engines Used By Students To
Locate The Requested Information.
E1.8. Answers Will Vary Depending On The Company Selected. Note That
Requirement D
Provides An Opportunity To Discuss Some Of The Financial Statement Terms
That Are Introduced In Chapter 2, For Those Instructors Wishing To Get A
Head Start.
CHAPTER
2 Financial Statements And
Accounting Concepts/Principles
CHAPTER OUTLINE:
I. Financial Statements
A. From Transactions To Financial Statements
B. Financial Statements Illustrated
1. Explanations And Definitions
a. Balance Sheet
b. Income Statement
c. Statement Of Changes In Stockholders' Equity
d. Statement Of Cash Flows
2. Comparative Statements In Subsequent Years
3. Illustration Of Financial Statement Relationships
II. Accounting Concepts And Principles
A. Schematic Model Of Concepts And Principles
B. Concepts/Principles Related To The Entire Model
C. Concepts/Principles Related To Transactions
D. Concepts/Principles Related To Bookkeeping Procedures And The Accounting Process
E. Concepts/Principles Related To Financial Statements
F. Limitations Of Financial Statements
III. The Corporation‘S Annual Report
, Instructor’s Manual / Solutions Manual
TEACHING/LEARNINGOBJECTIVES:
Principal:
1. To Illustratetheffour Principalfinancialstatements Andtheir Basic Form.
2. To Introduce Studentstothe Terminologyof Financialstatements.
3. To Present Thefaccounting Equation.
4. To Explainseveralofthefconceptsoffinancial Accounting And Financialstatement
Pre Sentation.
Supporting:
5. To Explainthat Financialstatements Arefthe Productoffinancialaccountingand Thatthe
Stat Ements Represent Afhistorical Summaryof Transactions.
6. To Explain Some Ofthe Limitations Offinancialstatements.
7. To Illustratethat The Financialstatements Are Included Inthe Corporation‘S Annualreport.
8. To Introduce And Explainseveral Businessprocedures Andftheir Terminology.
Teachingfobservations:
1. This Is Thekeystone Chapter Ofthetext, And The Materialpresented Herebecomesa
Foundation For All Subsequent Financial Accounting Topics. The Instructor Must Resist
Trying Tofteachfthe Entir E Course From Thisfone Chapter! Instead, Tryto Help Students
Sort Out The Keyideas That Must Befle Arned Now Fromthose That Theyshould Be
Acquainted With, But That Will Reallybe Learned When Su Bsequentfmaterial Is Covered.
Items To Be Learned Now Include:
a. What Atransaction Is.
b. Thefnameof Each Financialstatement And What It Shows.
c. Theaccounting Equation.
d. Financialstatement Relationships.
e. Limitationsoffinancialstatements.
2. A Significant Amountfof Time Should Be Spent Illustrating And Explainingthe Purpose And
Content— Byaccount Category(Asset, Liability, Stockholders' Equity, Revenue, Expense)—
Ofeach Financialstatement, Andhowthe Financialstatementstietogether. Some
Instructorsmaywis Htofdiscuss Gains And Losses At This Point, But The Key Is To Keep It As
Simple As Possible!
, Instructor’s Manual / Solutions Manual
3. It Is Recommended That The Following Modelsbefemphasized:
A. Balance Sheet:
Assets = Liabilities + Stockholders' Equity
Beginning Of Period Ch $ $ $
Angesfduringfperiod +/- +/- +/-
End Of Period $F $F $
B. Income Statement: Revenues
- Expenses
= Net Income
c. Statement Of Changes In Stockholders’ Equity:
Beginning Balance Of Stockholders' Equity
+ Stockholders' Investment
+ Net Income
- Dividends
= Ending Balance Of Stockholders' Equity
(Aswiththe Discussionofgains And Losses, Some Instructors Maywishtofacknowledge
―Other‖ Sourcesofchangesfinstockholders‘ Equitysuchas Treasurystock, Accumulatedother
Co Mprehensive Income, Prior Period Adjustments, Etc. This Is A Function Of Instructor
Preference An D The Extent To Which Students Havefbeen Previously Exposed To Real World
Financial Statements. A Nearlydose Of ―Reality‖ Can Befrefreshing For Graduate Students,
But Might Be Distracting To A Yo Unger, Less Experiencedfaudience.)
d. Statement Of Cash Flows:
Netfincome
+/- Net Cashprovided (Used) Byoperating Activities
+/- Netfcashfprovided (Used) Byinvestingactivities
+/- Netcashprovided (Used) Byfinancingfactivities
= Net Increasef(Decrease) Incash Forthe Year
4. It Is Helpfultospendtime Withtheconceptsandprinciples Model, Explainingwhat Each
Con Cept/Principle Means And Showingfhow It Relates To Thef"Transactions
Toffinancial Stateme Nts" Process.
5. It Is Appropriateto Emphasizethe Limitationsoffinancialstatementsnow, Becausetheycan
Cre Ate A Mindsetfthat Helps Students Understand More Specific Accounting Principles
When They Ar E Covered Later.
6. Thefbusiness In Practice Boxes Are Designed To Enhance Student Understanding
Byremovingfsom E Jargonfand Explanation Fromfthe Flow Ofthetext Material,
Whileprovidinga Context For That Mat Erial. Thesefprovide Goodfclassfdiscussion Topics.
, Instructor’s Manual / Solutions Manual
ASSIGNMENT OVERVIEW:
This Chapter Provides A Wide Varietyof Assignments To Choose From—
Rangingffrom The Basic Association-Typemini-
Exercisesandfexercises, Tothemorechallenging, Analytical-Typeproblems. Be Careful Not To
Over- Assign Or Under-Assignfhomework From Thisfchapter.
LEARNING OBJ DIFFICULTY & T Otherfcomment S
NO. ECTIVES IMEESTIMATE
M2.1. 2, 3 Easy, 3-5 Min. Similar To E2.11.-E2.16.
M2.2. 2, 3 Easy, 3-5 Min. Seefm2.1. Goodfin-Class Demo Exercise.
M2.3. 2, 3 Med., 7-10fmin. Challengingfmini-Exercise. Requires Clear-Cut Understanding
Of Income Statement Relationships. Encouragefuseof Exhibit
2-
2 Asa Solution Model.
M2.4. 2, 3 Med., 7-10fmin. Seefm2.3. Goodfwayto Review Andfreinforce Thefstructure Of
The Income Statement In Class.
M2.5. 2. 4 Easy, 3-5 Min. Emphasizefthefstructure Of The Statement Of Cashfflows.
M2.6. 2, 4 Easy, 3-5 Min. Seefm2.5. Good In-Class Demo Exercise. Refer To Exhibit 2-4.
M2.7. 2, 4 Easy, 2-3 Min. Basic Identification Of Asset Accounts.
M2.8. 2, 4 Easy, 2-3 Min. Basic Identification Of Income Statementfaccounts.
E2.9. 2, 4 Easy, 3-5 Min. Simple Accountfidentification Exercise.
E2.10. 2, 4 Easy, 3-5 Min. Seefe2.9.
E2.11. 2, 3 Med., 5-8 Min. Reinforces The Balance Sheetfequation, And Stresses The Distinction
Betweenfpic And RE.
E2.12. 2, 3 Med., 5-8 Min. Seefe2.11. Goodfhomeworkfassignment.
E2.13. 2, 3 Easy, 3-5 Min. ―Reis Affected Onlyfbynet Income(Loss) Andfdividends.‖ This Isfa
Bit Of Affiction, But It Works Effectively Infthe Chapterf2.
Otherfeffectsfon R Etainedfearnings (I.E., Stockfdividends, Certain
Treasury Stock Transacti Ons, And Prior Periodfadjustments)Fare
Not Discussed
Until Chapter 8.
E2.14. 2, 3 Easy, 3-5 Min. Seefe2.13. Goodfhomeworkfassignment.
E2.15. 2, 3 Med., 5-10fmin. Thefworksheet Format Is Used To Help Students Understand Financial
Statementrelationships. Explainthat―Net Assets‖ =A-L= SE.
E2.16. 2, 3 Med., 5-10fmin. Seefe2.15. Goodfin-Class Demonstration Exercise.
P2.17. 2, 3, 6 Med., 7-10fmin. Not Explicitly Covered In Chapter 2. Most Instructors Omit P.2.17.
Andfp2.18. Can Befused To Emphasize The Difference Between Cash
Andf
Stockholders‘ Equity.
P2.18. 2, 3, 6 Hard, 15-20fmin. Seefp2.17. Interestingfapplicationfof The Accounting Equation.
P2.19. 2, 3, 4 Med., 15-20fmin. Straight-Forward Problem Emphasizing Financial Statement
Relationships. Students Respond Well.
P2.20. 2, 3, 4 Med., 15-20fmin. Seefp2.19.
P2.21. 2, 3, 4 Med., 20-25 Min. Similar To P2.17., P2.186. But Requires Thefpreparation Of Financial
Statements. Good For In-Class Demonstration.
P2.22. 2, 3, 4 Med., 20-25 Min. Seefp2.21. Good Homework Assignment.
P2.23. 2, 3 Med., 5-8 Min. Can Use Laterfas A Chapter 4 Assignment.
P2.24. 2, 3, 6 Med.-Hard, 15-20. Group Learning Problem. Good In-Class Demonstration Problem.
P2.25. 2, 3, 5 Med., 7-10fmin. Stress The Importance Of The Historical Cost Principle.
P2.26. 2, 3, 5, 6 Med., 10-12 Min. Group Learning Problem. See P2.25.
P2.27. 2, 4 Med., 10-12 Min. Group Learning Problem. Emphasizes The Structure Ofthe Income
State Ment.
P2.28. 2, 4 Med., 10-12 Min. Explainfwhy―Other Income, Net‖ Is Excludedfromfoperating
Income.
C2.29. 2, 4, 6, 7 Med., 15-20fmin. Excellentfconceptualfcase But Be Sure To Relate Student
Responses Back To The Terminology Introduced In The
, Instructor’s Manual / Solutions Manual
Chapter.
, Instructor’s Manual / Solutions Manual
Full Solution Manual For Accounting What The Numbers Mean 13th Edition David Marshall
CHAPTER
Accounting—Present And
1 Past
CHAPTER OUTLINE:
I. What Is Accounting?
A. Definition
B. Uses Of Accounting Information
C. Classifications
1. Financial Accounting
2. Managerial Accounting / Cost Accounting
3. Auditing — Public Accounting
4. Internal Auditing
5. Governmental And Not-For-Profit Accounting
6. Income Tax Accounting
II. How Has Accounting Developed?
A. Early History
B. The Accounting Profession In The United States
C. Financial Accounting Standard Setting At The Present Time
1. Financial Accounting Standards Board
2. Standards Are Evolving
D. Standards For Other Types Of Accounting
1. Managerial Accounting / Cost Accounting
2. Auditing
3. Governmental And Not-For-Profit Accounting
4. Income Tax Accounting
E. International Accounting Standards
F. Ethics And The Accounting Profession
III. The Conceptual Framework
A. Context
B. Summary Of Concepts Statement No. 8, Chapter 1 — The Objective Of General
Purpose Financial Reporting
C. Objectives Of Financial Reporting For Nonbusiness Organizations
IV. Plan Of The Book
, Instructor’s Manual / Solutions Manual
TEACHING/LEARNING OBJECTIVES:
Principal:
1. To Present A Definition Of Accounting.
2. To Identify And Describe Different Classifications Of Accounting.
3. To Emphasize That Financial Accounting Standards Are Not A ―Fixed Code Of Rules,‖
But Are Established In Response To User Needs And Business Developments. Accountants
Need To Apply Professional Judgment In The Application Of Accounting Principles.
4. To Emphasize The Role And Sources Of Ethics For The Accounting Profession.
Supporting:
5. To Summarize How Accounting Has Evolved Over Time.
6. To Identify Sources Of Standards For Other Types Of Accounting And To Contrast
These With Financial Accounting Standards.
7. To Introduce The Issues Associated With The Development Of International
Accounting Standards.
8. To Describe The Context Of The FASB Conceptual Framework Project.
9. To Summarize Concepts Statement No. 8, Chapter 1 — The Objective Of General
Purpose Financial Reporting.
10. To Relate The Objectives Of Financial Reporting For Nonbusiness Organizations To
Those Of Business Enterprises.
TEACHING OBSERVATIONS/ASSIGNMENT SUGGESTIONS:
1. Students Should Be Put On Notice About The Jargon Of Accounting, The Use Of
Synonymous Terms, The Importance Of The Context Within Which A Term Is Used, And
The Need For Precision In The Use Of Terminology. The First Example Of Jargon Is The
Term Entity.
2. When Discussing "Auditing — Public Accounting," Have Students Find The Auditors'
Opinion In The Campbell Soup Company 2020 Annual Report (See Pages 87-88 Of The
Appendix). Emphasize That A "Clean Opinion" Is Not A "Clean Bill Of Health."
3. Discuss The Summary Of Concepts Statement No. 8, Chapter 1 — The Objective Of
Financial Reporting, In Detail.
, Instructor’s Manual / Solutions Manual
4. Assign Exercise 1-1. Encourage Students To Experiment With Websites That Are Of
Interest. In Addition, Or As An Alternative To Having Students Request Their Own
Annual Reports, Distribute Reports That Have Been Obtained By The Instructor.
5. Use Exercise 1-5 To Generate Discussion About The Importance Of Ethical Standards In
General And Independence (In Both Appearance And Fact) In Particular. Follow Up With
A Brief Look At Exercise 1-7 Concerning Audit Independence Standards.
SOLUTIONS:
E1.3. This Exercise Provides An Opportunity To Gauge Where The Students Are In
Terms Of Their Prior Background In Accounting, Be It Practical Or Educational,
And To Clear
Up Some Of The Common Misconceptions (I.E., To Explain That Accounting
Goes Beyond The ―How To‖ Aspects Of Bookkeeping And Involves The Use Of
Judgment).
E1.4. This Exercise Provides An Opportunity To Align Student And Instructor
Expectations. For First-Time Instructors In This Course, Or For Those Having A
Diverse Student Group, You Will Get A Glimpse At The Common Perceptions
Students Have
Concerning The Course Content, Level Of Difficulty, And Methods Of
Presentation, Testing/Evaluation, And Grading.
E1.5. The Principal Factors Jim Sandrolini Must Consider Are His Competence And
Independence. Is He Competent To Prepare Financial Statements For A Company
That Operates In A Different Industry Than The One In Which He Works?
Accepting A
Contingent Fee Arrangement Would Normally Cause An Impairment Of His
Independence Because He Would Directly Benefit If The Loan Were To Be
Approved.
, Instructor’s Manual / Solutions Manual
E1.6. Suggested Discussion Strategy:
Q: Why Does A Business Have Value?
A: It Provides The Owners An Opportunity To Earn A Profit, An Opportunity
For Personal Fulfillment From Being In Charge, And An Opportunity To
Provide A Product Or Service That Is Useful To Others.
Q: How Can This Value Be Measured?
A: Financial Information Will Have The Most To Do With Evaluating The
Firm‘S Profitability, And The Financial Statements Include This Information.
Q: How Is An Asking Price For The Sale Of A Business Established?
A: The Asking Price Should Be A Function Of The Profit, Resources, And
Obligations Related To The Business As Shown In The Financial Statements.
Note: This Exercise Also Provides An Opportunity To Point Out Some Of The
Basic Limitations Of The Data Provided By The Accounting Process (E.G.,
Historical Cost Information — How Useful Are Past Earnings Results In
Predicting Future Earnings
And Cash Flows?). Be Careful Not To Get Too Carried Away With Details. Let
The Students Lead This Discussion.
, Instructor’s Manual / Solutions Manual
E1.7. Answers Will Vary Depending On The Search Engines Used By Students To
Locate The Requested Information.
E1.8. Answers Will Vary Depending On The Company Selected. Note That
Requirement D
Provides An Opportunity To Discuss Some Of The Financial Statement Terms
That Are Introduced In Chapter 2, For Those Instructors Wishing To Get A
Head Start.
CHAPTER
2 Financial Statements And
Accounting Concepts/Principles
CHAPTER OUTLINE:
I. Financial Statements
A. From Transactions To Financial Statements
B. Financial Statements Illustrated
1. Explanations And Definitions
a. Balance Sheet
b. Income Statement
c. Statement Of Changes In Stockholders' Equity
d. Statement Of Cash Flows
2. Comparative Statements In Subsequent Years
3. Illustration Of Financial Statement Relationships
II. Accounting Concepts And Principles
A. Schematic Model Of Concepts And Principles
B. Concepts/Principles Related To The Entire Model
C. Concepts/Principles Related To Transactions
D. Concepts/Principles Related To Bookkeeping Procedures And The Accounting Process
E. Concepts/Principles Related To Financial Statements
F. Limitations Of Financial Statements
III. The Corporation‘S Annual Report
, Instructor’s Manual / Solutions Manual
TEACHING/LEARNINGOBJECTIVES:
Principal:
1. To Illustratetheffour Principalfinancialstatements Andtheir Basic Form.
2. To Introduce Studentstothe Terminologyof Financialstatements.
3. To Present Thefaccounting Equation.
4. To Explainseveralofthefconceptsoffinancial Accounting And Financialstatement
Pre Sentation.
Supporting:
5. To Explainthat Financialstatements Arefthe Productoffinancialaccountingand Thatthe
Stat Ements Represent Afhistorical Summaryof Transactions.
6. To Explain Some Ofthe Limitations Offinancialstatements.
7. To Illustratethat The Financialstatements Are Included Inthe Corporation‘S Annualreport.
8. To Introduce And Explainseveral Businessprocedures Andftheir Terminology.
Teachingfobservations:
1. This Is Thekeystone Chapter Ofthetext, And The Materialpresented Herebecomesa
Foundation For All Subsequent Financial Accounting Topics. The Instructor Must Resist
Trying Tofteachfthe Entir E Course From Thisfone Chapter! Instead, Tryto Help Students
Sort Out The Keyideas That Must Befle Arned Now Fromthose That Theyshould Be
Acquainted With, But That Will Reallybe Learned When Su Bsequentfmaterial Is Covered.
Items To Be Learned Now Include:
a. What Atransaction Is.
b. Thefnameof Each Financialstatement And What It Shows.
c. Theaccounting Equation.
d. Financialstatement Relationships.
e. Limitationsoffinancialstatements.
2. A Significant Amountfof Time Should Be Spent Illustrating And Explainingthe Purpose And
Content— Byaccount Category(Asset, Liability, Stockholders' Equity, Revenue, Expense)—
Ofeach Financialstatement, Andhowthe Financialstatementstietogether. Some
Instructorsmaywis Htofdiscuss Gains And Losses At This Point, But The Key Is To Keep It As
Simple As Possible!
, Instructor’s Manual / Solutions Manual
3. It Is Recommended That The Following Modelsbefemphasized:
A. Balance Sheet:
Assets = Liabilities + Stockholders' Equity
Beginning Of Period Ch $ $ $
Angesfduringfperiod +/- +/- +/-
End Of Period $F $F $
B. Income Statement: Revenues
- Expenses
= Net Income
c. Statement Of Changes In Stockholders’ Equity:
Beginning Balance Of Stockholders' Equity
+ Stockholders' Investment
+ Net Income
- Dividends
= Ending Balance Of Stockholders' Equity
(Aswiththe Discussionofgains And Losses, Some Instructors Maywishtofacknowledge
―Other‖ Sourcesofchangesfinstockholders‘ Equitysuchas Treasurystock, Accumulatedother
Co Mprehensive Income, Prior Period Adjustments, Etc. This Is A Function Of Instructor
Preference An D The Extent To Which Students Havefbeen Previously Exposed To Real World
Financial Statements. A Nearlydose Of ―Reality‖ Can Befrefreshing For Graduate Students,
But Might Be Distracting To A Yo Unger, Less Experiencedfaudience.)
d. Statement Of Cash Flows:
Netfincome
+/- Net Cashprovided (Used) Byoperating Activities
+/- Netfcashfprovided (Used) Byinvestingactivities
+/- Netcashprovided (Used) Byfinancingfactivities
= Net Increasef(Decrease) Incash Forthe Year
4. It Is Helpfultospendtime Withtheconceptsandprinciples Model, Explainingwhat Each
Con Cept/Principle Means And Showingfhow It Relates To Thef"Transactions
Toffinancial Stateme Nts" Process.
5. It Is Appropriateto Emphasizethe Limitationsoffinancialstatementsnow, Becausetheycan
Cre Ate A Mindsetfthat Helps Students Understand More Specific Accounting Principles
When They Ar E Covered Later.
6. Thefbusiness In Practice Boxes Are Designed To Enhance Student Understanding
Byremovingfsom E Jargonfand Explanation Fromfthe Flow Ofthetext Material,
Whileprovidinga Context For That Mat Erial. Thesefprovide Goodfclassfdiscussion Topics.
, Instructor’s Manual / Solutions Manual
ASSIGNMENT OVERVIEW:
This Chapter Provides A Wide Varietyof Assignments To Choose From—
Rangingffrom The Basic Association-Typemini-
Exercisesandfexercises, Tothemorechallenging, Analytical-Typeproblems. Be Careful Not To
Over- Assign Or Under-Assignfhomework From Thisfchapter.
LEARNING OBJ DIFFICULTY & T Otherfcomment S
NO. ECTIVES IMEESTIMATE
M2.1. 2, 3 Easy, 3-5 Min. Similar To E2.11.-E2.16.
M2.2. 2, 3 Easy, 3-5 Min. Seefm2.1. Goodfin-Class Demo Exercise.
M2.3. 2, 3 Med., 7-10fmin. Challengingfmini-Exercise. Requires Clear-Cut Understanding
Of Income Statement Relationships. Encouragefuseof Exhibit
2-
2 Asa Solution Model.
M2.4. 2, 3 Med., 7-10fmin. Seefm2.3. Goodfwayto Review Andfreinforce Thefstructure Of
The Income Statement In Class.
M2.5. 2. 4 Easy, 3-5 Min. Emphasizefthefstructure Of The Statement Of Cashfflows.
M2.6. 2, 4 Easy, 3-5 Min. Seefm2.5. Good In-Class Demo Exercise. Refer To Exhibit 2-4.
M2.7. 2, 4 Easy, 2-3 Min. Basic Identification Of Asset Accounts.
M2.8. 2, 4 Easy, 2-3 Min. Basic Identification Of Income Statementfaccounts.
E2.9. 2, 4 Easy, 3-5 Min. Simple Accountfidentification Exercise.
E2.10. 2, 4 Easy, 3-5 Min. Seefe2.9.
E2.11. 2, 3 Med., 5-8 Min. Reinforces The Balance Sheetfequation, And Stresses The Distinction
Betweenfpic And RE.
E2.12. 2, 3 Med., 5-8 Min. Seefe2.11. Goodfhomeworkfassignment.
E2.13. 2, 3 Easy, 3-5 Min. ―Reis Affected Onlyfbynet Income(Loss) Andfdividends.‖ This Isfa
Bit Of Affiction, But It Works Effectively Infthe Chapterf2.
Otherfeffectsfon R Etainedfearnings (I.E., Stockfdividends, Certain
Treasury Stock Transacti Ons, And Prior Periodfadjustments)Fare
Not Discussed
Until Chapter 8.
E2.14. 2, 3 Easy, 3-5 Min. Seefe2.13. Goodfhomeworkfassignment.
E2.15. 2, 3 Med., 5-10fmin. Thefworksheet Format Is Used To Help Students Understand Financial
Statementrelationships. Explainthat―Net Assets‖ =A-L= SE.
E2.16. 2, 3 Med., 5-10fmin. Seefe2.15. Goodfin-Class Demonstration Exercise.
P2.17. 2, 3, 6 Med., 7-10fmin. Not Explicitly Covered In Chapter 2. Most Instructors Omit P.2.17.
Andfp2.18. Can Befused To Emphasize The Difference Between Cash
Andf
Stockholders‘ Equity.
P2.18. 2, 3, 6 Hard, 15-20fmin. Seefp2.17. Interestingfapplicationfof The Accounting Equation.
P2.19. 2, 3, 4 Med., 15-20fmin. Straight-Forward Problem Emphasizing Financial Statement
Relationships. Students Respond Well.
P2.20. 2, 3, 4 Med., 15-20fmin. Seefp2.19.
P2.21. 2, 3, 4 Med., 20-25 Min. Similar To P2.17., P2.186. But Requires Thefpreparation Of Financial
Statements. Good For In-Class Demonstration.
P2.22. 2, 3, 4 Med., 20-25 Min. Seefp2.21. Good Homework Assignment.
P2.23. 2, 3 Med., 5-8 Min. Can Use Laterfas A Chapter 4 Assignment.
P2.24. 2, 3, 6 Med.-Hard, 15-20. Group Learning Problem. Good In-Class Demonstration Problem.
P2.25. 2, 3, 5 Med., 7-10fmin. Stress The Importance Of The Historical Cost Principle.
P2.26. 2, 3, 5, 6 Med., 10-12 Min. Group Learning Problem. See P2.25.
P2.27. 2, 4 Med., 10-12 Min. Group Learning Problem. Emphasizes The Structure Ofthe Income
State Ment.
P2.28. 2, 4 Med., 10-12 Min. Explainfwhy―Other Income, Net‖ Is Excludedfromfoperating
Income.
C2.29. 2, 4, 6, 7 Med., 15-20fmin. Excellentfconceptualfcase But Be Sure To Relate Student
Responses Back To The Terminology Introduced In The
, Instructor’s Manual / Solutions Manual
Chapter.
