Solution Manual For Intermediate Accounting, 11th Edition b
cm cm cm cm cm cm cmcm
y David Spiceland, Mark Nelson, Wayne Thomas, Jennifer
cm cm cm cm cm cm cm
,Chapter 1 cm cm Environment and Theoretical Structure of cm cm cm cm
Financial Accounting cm
Question 1–1 cm
Financial accounting is concerned with providing relevant financial information
cm cm cm cm cm cm cm cm
about various kinds of organizations to different types of external users. The prima
cm cm cm cm cm cm cm cm cm cm cm cm cm
ry focus of financial accounting is on the financial information provided by profit-
cm cm cm cm cm cm cm cm cm cm cm cm
oriented companies to their present and potential investors and creditors.
cm cm cm cm cm cm cm cm cm cm
Question 1–2 cm
Resources are efficiently allocated if they are given to enterprises that will use
cm cm cm cm cm cm cm cm cm cm cm cm c
mthem to provide goods and services desired by society and not to enterprises that
cm cm cm cm cm cm cm cm cm cm cm cm cm cm
will waste them. The capital markets are the mechanism that fosters this efficient a
cm cm cm cm cm cm cm cm cm cm cm c m cm
llocation of resources. cm cm
Question 1–3 cm
Two extremely important variables that must be considered in any investment
cm cm cm cm cm cm cm cm cm cm cm
decision are the expected rate of return and the uncertainty or risk of that expected
cm cm cm cm cm cm cm cm cm cm cm cm cm cm c
return.
m
Question 1–4 cm
In the long run, a company will be able to provide investors and creditors with
cm cm cm cm cm cm cm cm cm cm cm cm cm cm
a rate of return only if it can generate a profit. That is, it must be able to use the r
cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm
esources provided to it to generate cash receipts from selling a product or service t
cm cm cm cm cm cm cm cm cm cm cm cm cm cm
hat exceed the cash disbursements necessary to provide that product or service.
cm cm cm cm cm cm cm cm cm cm cm
Question 1–5 cm
The primary objective of financial accounting is to provide investors and cred
cm cm cm cm cm cm cm cm cm c m cm
itors with information that will help them make investment and credit decisions.
cm cm cm cm cm cm cm cm cm cm cm
Question 1–6 cm
Net operating cash flows are the difference between cash receipts and cash dis
cm cm cm cm cm cm cm cm cm cm cm cm
bursements during a period of time from transactions related to providing goods an
cm cm cm cm cm cm cm c m cm cm cm cm
d services to customers. Net operating cash flows may not be a good indicator of f
cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm
uture cash flows because, by ignoring uncompleted transactions, they may not matc
cm cm cm cm cm cm cm cm cm cm cm
h the accomplishments and sacrifices of the period.
cm cm cm cm cm cm cm
,Question 1–7 cm
GAAP (generally accepted accounting principles) are a dynamic set of both br
cm cm cm cm cm cm cm cm c m cm cm
oad and specific guidelines that a company should follow in measuring and reporti
cm cm cm cm cm cm cm cm cm cm c m cm
ng the information in their financial statements and related notes. It is important t
cm cm cm cm cm cm cm cm cm c m c m cm cm
hat all companies follow GAAP so that investors can compare financial informatio
cm cm cm cm cm cm cm cm cm cm cm
n across companies to make their resource allocation decisions.
cm cm cm cm cm cm cm cm
Question 1–8 cm
In 1934, Congress created the SEC and gave it the job of setting accounting a
cm cm cm cm cm cm cm cm cm cm cm cm cm cm
nd reporting standards for companies whose securities are publicly traded. The SEC
cm cm cm cm cm cm cm cm cm cm cm
has retained the power, but has relied on private sector bodies to create the standar
cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm
ds. The current private sector body responsible for setting accounting standards is t
cm cm cm cm cm cm cm cm cm cm cm cm
he FASB. cm
Question 1–9 cm
Auditors are independent, professional accountants who examine financial state
cm cm cm cm cm cm cm cm
ments to express an opinion. The opinion reflects the auditors‗ assessment of the st
cm cm cm cm cm cm cm cm cm cm cm cm cm
atements' fairness, which is determined by the extent to which they are prepared in
cm cm cm cm cm cm cm cm cm cm cm cm cm cm
compliance with GAAP. The auditor adds credibility to the financial statements, w
cm cm c m cm cm cm cm cm cm cm cm
hich increases the confidence of capital market participants relying on that informat
cm cm cm cm cm cm cm cm cm cm cm
ion.
, Question 1–10 cm
Key provisions included in the text are:
cm cm cm cm cm cm
Creation of the Public Company Accounting Oversight Board
cm cm cm cm cm cm cm
Regulate types of non-audit audit services
cm cm cm cm cm
Require lead audit partner rotation every 5 year
cm cm cm cm cm cm cm
Corporate executive accountability cm cm
Addresses conflicts of interest for security analysts
cm cm cm cm cm cm
Internal control reporting and auditor opinion about controls
cm cm cm cm cm cm cm
Question 1–11 cm
New accounting standards, or changes in standards, can have significant differ
cm cm cm cm cm cm cm cm cm cm
ential effects on companies, investors and creditors, and other interest groups by ca
cm cm cm cm cm cm cm cm cm cm cm cm
using redistribution of wealth. There also is the possibility that standards could har
cm cm cm c m cm cm cm cm cm cm cm cm
m the economy as a whole by causing companies to change their behavior.
cm cm cm cm cm cm cm cm cm cm cm cm
Question 1–12 cm
The FASB undertakes a series of elaborate information gathering steps before
cm cm cm cm cm cm cm cm cm cm cm
issuing an accounting standard to determine consensus as to the preferred method o
cm cm cm cm cm cm cm cm cm cm cm cm
f accounting, as well as to anticipate adverse economic consequences.
cm cm cm cm cm cm cm cm cm
Question 1–13 cm
The purpose of the conceptual framework is to guide the Board in developing
cm cm cm cm cm cm cm cm cm cm cm cm cm
accounting standards by providing an underlying foundation and basic reasoning on
cm cm cm cm cm cm cm cm cm cm c
mwhich to consider merits of alternatives. The framework does not prescribe GAAP
cm cm cm cm cm c m cm cm cm cm cm
.
cm cm cm cm cm cm cmcm
y David Spiceland, Mark Nelson, Wayne Thomas, Jennifer
cm cm cm cm cm cm cm
,Chapter 1 cm cm Environment and Theoretical Structure of cm cm cm cm
Financial Accounting cm
Question 1–1 cm
Financial accounting is concerned with providing relevant financial information
cm cm cm cm cm cm cm cm
about various kinds of organizations to different types of external users. The prima
cm cm cm cm cm cm cm cm cm cm cm cm cm
ry focus of financial accounting is on the financial information provided by profit-
cm cm cm cm cm cm cm cm cm cm cm cm
oriented companies to their present and potential investors and creditors.
cm cm cm cm cm cm cm cm cm cm
Question 1–2 cm
Resources are efficiently allocated if they are given to enterprises that will use
cm cm cm cm cm cm cm cm cm cm cm cm c
mthem to provide goods and services desired by society and not to enterprises that
cm cm cm cm cm cm cm cm cm cm cm cm cm cm
will waste them. The capital markets are the mechanism that fosters this efficient a
cm cm cm cm cm cm cm cm cm cm cm c m cm
llocation of resources. cm cm
Question 1–3 cm
Two extremely important variables that must be considered in any investment
cm cm cm cm cm cm cm cm cm cm cm
decision are the expected rate of return and the uncertainty or risk of that expected
cm cm cm cm cm cm cm cm cm cm cm cm cm cm c
return.
m
Question 1–4 cm
In the long run, a company will be able to provide investors and creditors with
cm cm cm cm cm cm cm cm cm cm cm cm cm cm
a rate of return only if it can generate a profit. That is, it must be able to use the r
cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm
esources provided to it to generate cash receipts from selling a product or service t
cm cm cm cm cm cm cm cm cm cm cm cm cm cm
hat exceed the cash disbursements necessary to provide that product or service.
cm cm cm cm cm cm cm cm cm cm cm
Question 1–5 cm
The primary objective of financial accounting is to provide investors and cred
cm cm cm cm cm cm cm cm cm c m cm
itors with information that will help them make investment and credit decisions.
cm cm cm cm cm cm cm cm cm cm cm
Question 1–6 cm
Net operating cash flows are the difference between cash receipts and cash dis
cm cm cm cm cm cm cm cm cm cm cm cm
bursements during a period of time from transactions related to providing goods an
cm cm cm cm cm cm cm c m cm cm cm cm
d services to customers. Net operating cash flows may not be a good indicator of f
cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm
uture cash flows because, by ignoring uncompleted transactions, they may not matc
cm cm cm cm cm cm cm cm cm cm cm
h the accomplishments and sacrifices of the period.
cm cm cm cm cm cm cm
,Question 1–7 cm
GAAP (generally accepted accounting principles) are a dynamic set of both br
cm cm cm cm cm cm cm cm c m cm cm
oad and specific guidelines that a company should follow in measuring and reporti
cm cm cm cm cm cm cm cm cm cm c m cm
ng the information in their financial statements and related notes. It is important t
cm cm cm cm cm cm cm cm cm c m c m cm cm
hat all companies follow GAAP so that investors can compare financial informatio
cm cm cm cm cm cm cm cm cm cm cm
n across companies to make their resource allocation decisions.
cm cm cm cm cm cm cm cm
Question 1–8 cm
In 1934, Congress created the SEC and gave it the job of setting accounting a
cm cm cm cm cm cm cm cm cm cm cm cm cm cm
nd reporting standards for companies whose securities are publicly traded. The SEC
cm cm cm cm cm cm cm cm cm cm cm
has retained the power, but has relied on private sector bodies to create the standar
cm cm cm cm cm cm cm cm cm cm cm cm cm cm cm
ds. The current private sector body responsible for setting accounting standards is t
cm cm cm cm cm cm cm cm cm cm cm cm
he FASB. cm
Question 1–9 cm
Auditors are independent, professional accountants who examine financial state
cm cm cm cm cm cm cm cm
ments to express an opinion. The opinion reflects the auditors‗ assessment of the st
cm cm cm cm cm cm cm cm cm cm cm cm cm
atements' fairness, which is determined by the extent to which they are prepared in
cm cm cm cm cm cm cm cm cm cm cm cm cm cm
compliance with GAAP. The auditor adds credibility to the financial statements, w
cm cm c m cm cm cm cm cm cm cm cm
hich increases the confidence of capital market participants relying on that informat
cm cm cm cm cm cm cm cm cm cm cm
ion.
, Question 1–10 cm
Key provisions included in the text are:
cm cm cm cm cm cm
Creation of the Public Company Accounting Oversight Board
cm cm cm cm cm cm cm
Regulate types of non-audit audit services
cm cm cm cm cm
Require lead audit partner rotation every 5 year
cm cm cm cm cm cm cm
Corporate executive accountability cm cm
Addresses conflicts of interest for security analysts
cm cm cm cm cm cm
Internal control reporting and auditor opinion about controls
cm cm cm cm cm cm cm
Question 1–11 cm
New accounting standards, or changes in standards, can have significant differ
cm cm cm cm cm cm cm cm cm cm
ential effects on companies, investors and creditors, and other interest groups by ca
cm cm cm cm cm cm cm cm cm cm cm cm
using redistribution of wealth. There also is the possibility that standards could har
cm cm cm c m cm cm cm cm cm cm cm cm
m the economy as a whole by causing companies to change their behavior.
cm cm cm cm cm cm cm cm cm cm cm cm
Question 1–12 cm
The FASB undertakes a series of elaborate information gathering steps before
cm cm cm cm cm cm cm cm cm cm cm
issuing an accounting standard to determine consensus as to the preferred method o
cm cm cm cm cm cm cm cm cm cm cm cm
f accounting, as well as to anticipate adverse economic consequences.
cm cm cm cm cm cm cm cm cm
Question 1–13 cm
The purpose of the conceptual framework is to guide the Board in developing
cm cm cm cm cm cm cm cm cm cm cm cm cm
accounting standards by providing an underlying foundation and basic reasoning on
cm cm cm cm cm cm cm cm cm cm c
mwhich to consider merits of alternatives. The framework does not prescribe GAAP
cm cm cm cm cm c m cm cm cm cm cm
.
