Solution Manual For Financial Accounting,
7th Canadian Edition by Libby, Hodge,
Kanaan, Sterling Chapters 1 - 13, Complete
1-1
,TABLE OF CONTENTS
CHAPTER ONE
Financial Statements and Business Decisions
CHAPTER TWO
Investing and Financing Decisions and the Accounting System
CHAPTER THREE
Operating Decisions and the Accounting System
CHAPTER FOUR
Adjustments, Financial Statements, and the Closing Process
CHAPTER FIVE
Reporting and Interpreting Sales Revenue, Receivables, and Cash
CHAPTER SIX
Reporting and Interpreting Cost of Sales and Inventory
CHAPTER SEVEN
Reporting and Interpreting Long-Lived Assets
CHAPTER EIGHT
Reporting and Interpreting Current Liabilities
CHAPTER NINE
Reporting and Interpreting Non-current Liabilities
CHAPTER TEN
Reporting and Interpreting Shareholders' Equity
CHAPTER ELEVEN
Statement of Cash Flows
CHAPTER TWELVE
Communicating Accounting Information and Analyzing Financial Statements
CHAPTER THIRTEEN
Reporting and Interpreting Investments in Other Corporations
1-2
,CHAPTER ONE
Financial Statements and Business Decisions
ANSWERS TO QUESTIONS
1. Accounting is a system that collects and processes (analyzes, measures, and
records) financial information about an organization and reports that information to
decision makers.
2. Financial accounting involves preparation of the four basic financial statements and
related disclosures for external decision makers. Managerial accounting involves
the preparation of detailed plans, budgets, forecasts, and performance reports for
internal decision makers.
3. Financial reports are used by both internal and external groups and individuals. The
internal groups are comprised of the various managers of the entity. The external
groups include the owners, investors, creditors, governmental agencies, other
interested parties, and the public at large.
4. Investors purchase all or part of a business and hope to gain by receiving part of
what the company earns and/or selling the company in the future at a higher price
than they paid. Creditors lend money to a company for a specific length of time and
hope to gain by charging interest on the loan.
5. In aa asociety aeach aorganization acan abe adefined aas aa aseparate aaccounting
aentity. aAn aaccounting aentity ais athe aorganization afor awhich afinancial adata aare
ato abe acollected. aTypical aaccounting aentities aare aa abusiness, aa achurch, aa
agovernmental aunit, aa auniversity aand aother anonprofit aorganizations asuch aas aa
ahospital aand aa awelfare aorganization. aA abusiness atypically ais adefined aand
atreated aas aa aseparate a entity abecause athe aowners, acreditors, ainvestors, aand
aother ainterested aparties aneed ato aevaluate aits aperformance aand aits apotential
aseparately afrom aother aentities aand afrom aitsaowners.
1-3
, 6. Name aof aStatement Alternative aTitle
(a) Income aStatement (a) a Statement aof aEarnings; aStatement aof
Income; aStatement aof aOperations
(b) Balance aSheet (b) aStatement aof aFinancial aPosition
(c) Audit aReport (c) a Report aof aIndependent aAccountants
1-4
7th Canadian Edition by Libby, Hodge,
Kanaan, Sterling Chapters 1 - 13, Complete
1-1
,TABLE OF CONTENTS
CHAPTER ONE
Financial Statements and Business Decisions
CHAPTER TWO
Investing and Financing Decisions and the Accounting System
CHAPTER THREE
Operating Decisions and the Accounting System
CHAPTER FOUR
Adjustments, Financial Statements, and the Closing Process
CHAPTER FIVE
Reporting and Interpreting Sales Revenue, Receivables, and Cash
CHAPTER SIX
Reporting and Interpreting Cost of Sales and Inventory
CHAPTER SEVEN
Reporting and Interpreting Long-Lived Assets
CHAPTER EIGHT
Reporting and Interpreting Current Liabilities
CHAPTER NINE
Reporting and Interpreting Non-current Liabilities
CHAPTER TEN
Reporting and Interpreting Shareholders' Equity
CHAPTER ELEVEN
Statement of Cash Flows
CHAPTER TWELVE
Communicating Accounting Information and Analyzing Financial Statements
CHAPTER THIRTEEN
Reporting and Interpreting Investments in Other Corporations
1-2
,CHAPTER ONE
Financial Statements and Business Decisions
ANSWERS TO QUESTIONS
1. Accounting is a system that collects and processes (analyzes, measures, and
records) financial information about an organization and reports that information to
decision makers.
2. Financial accounting involves preparation of the four basic financial statements and
related disclosures for external decision makers. Managerial accounting involves
the preparation of detailed plans, budgets, forecasts, and performance reports for
internal decision makers.
3. Financial reports are used by both internal and external groups and individuals. The
internal groups are comprised of the various managers of the entity. The external
groups include the owners, investors, creditors, governmental agencies, other
interested parties, and the public at large.
4. Investors purchase all or part of a business and hope to gain by receiving part of
what the company earns and/or selling the company in the future at a higher price
than they paid. Creditors lend money to a company for a specific length of time and
hope to gain by charging interest on the loan.
5. In aa asociety aeach aorganization acan abe adefined aas aa aseparate aaccounting
aentity. aAn aaccounting aentity ais athe aorganization afor awhich afinancial adata aare
ato abe acollected. aTypical aaccounting aentities aare aa abusiness, aa achurch, aa
agovernmental aunit, aa auniversity aand aother anonprofit aorganizations asuch aas aa
ahospital aand aa awelfare aorganization. aA abusiness atypically ais adefined aand
atreated aas aa aseparate a entity abecause athe aowners, acreditors, ainvestors, aand
aother ainterested aparties aneed ato aevaluate aits aperformance aand aits apotential
aseparately afrom aother aentities aand afrom aitsaowners.
1-3
, 6. Name aof aStatement Alternative aTitle
(a) Income aStatement (a) a Statement aof aEarnings; aStatement aof
Income; aStatement aof aOperations
(b) Balance aSheet (b) aStatement aof aFinancial aPosition
(c) Audit aReport (c) a Report aof aIndependent aAccountants
1-4
