Financial Reporting and Analysis, 13th Edition Charles H. Gibson - Solution Manual

SolutionpoManualpoForpoFinancialpoStatementpoAnalysis,
13th Edition
po



BypoCharlespoH.poGibson,poVerifiedpoChapter'spo1po-po13po|poCompletepo

, Chapterpo1p o Introduct
ionpotopoFinancialpoReporting


QUESTIONS

1- 1. a.
ThepoAICPApoispoanpoorganizationpoofpoCPAspothatpopriorpotopo1973poac
ceptedpothepoprimaryporesponsibilitypoforpothepodevelopmentpoofpogenerall
ypoacceptedpoaccountingpoprinciples.poTheirporolepowasposubstantiallypore
ducedpoinpo1973powhenpothepoFinancialpoAccountingpoStandardspoBoardp
owaspoestablished.p o Theirporolepowaspofurtherporeducedpowithpothepoesta
blishmentpoofpothepoPublicpoCompanypoAccountingpoOversightpoBoardpow
aspoestablishedpoinpo2002.

b. ThepoFinancialpoAccountingpoStandardspoBoardporeplacedpothepoAcc
ountingpoPrinciplespoBoardpoaspothepoprimaryporule-
makingpobodypoforpoaccountingpostandards.poItpoispoanpoindependent
poorganizationpoandpoincludespomemberspootherpothanpopublicpoacco
untants.

c. ThepoSECpohaspothepoauthoritypotopodeterminepogenerallypoacceptedpoa
ccountingpoprinciplespoandpotoporegulatepothepoaccountingpoprofession.p
oThepoSECpohaspoelectedpotopoleavepomuchpoofpothepodeterminationpoof
pogenerallypoacceptedpoaccountingpoprinciplespotopothepoprivateposector.
p o ThepoFinancialpoAccountingpoStandardspoBoardpohaspoplayedpothepo
majorporolepoinpoestablishingpoaccountingpostandardsposincepo1973.p o R
egulationpoofpothepoaccountingpoprofessionpowasposubstantiallypoturnedp
ooverpotopothepoPublicpoCompanypoAccountingpoOversightpoBoardpoinpo2
002.

1-po2.
Consistencypoispoobtainedpothroughpothepoapplicationpoofpotheposamepoa
ccountingpoprinciplepofrompoperiodpotopoperiod.p o Apochangepoinpoprincipl
eporequirespostatementpodisclosure.

1-po3.
Thepoconceptpoofpohistoricalpocostpodeterminespothepobalanceposheetpovaluatio
npoofpoland.poTheporealizationpoconceptporequirespothatpoapotransactionponeedsp
otopooccurpoforpothepoprofitpotopobeporecognized.


1-po4. a.p o Entity e.p o Historicalpocost

b. Realization f.p o Historicalpocost

c. Materiality g.p o Disclosure

, d. Conservatism

1-po5. Entitypoconcept

, 1-po6.
Generallypoacceptedpoaccountingpoprinciplespodoponotpoapplypowhenpoapofirm
podoesponotpoappearpotopobepoapogoingpoconcern.p o Ifpothepodecisionpoispomad
epothatpothispoisponotpoapogoingpoconcern,pothenpothepousepoofpoGAAPpowould
ponotpobepoappropriate.


1-po7.
Withpothepotimepoperiodpoassumption,poinaccuraciespoofpoaccountingpoforpothep
oentity,poshortpoofpoitspocompletepolifepospan,poarepoaccepted.poThepoassumptio
npoispomadepothatpothepoentitypocanpobepoaccountedpoforporeasonablypoaccurat
elypoforpoapoparticularpoperiodpoofpotime.p o Inpootherpowords,pothepodecisionpois
pomadepotopoacceptposomepoinaccuracypobecausepoofpoincompletepoinformatio
npoaboutpothepofuturepoinpoexchangepoforpomorepotimelyporeporting.p o Thepostat
ementspoarepoconsideredpotopobepomeaningfulpobecausepomaterialpoinaccuraci
espoareponotpoacceptable.

1- 8.p o p o Itpoispotruepothatpothepoonlypoaccuratepowaypotopoaccountpoforpotheposucces
spoorpofailurepoofpoanpoentitypoispotopoaccumulatepoallpotransactionspofrompothe
poopeningpoofpobusinesspountilpothepobusinesspoeventuallypoliquidates.p o Butpoi
tpoisponotponecessarypothatpothepostatementspobepocompletelypoaccuratepoinpoo
rderpoforpothempotopobepomeaningful.

1- 9. a. Apoyearpothatpoendspowhenpooperationspoarepoatpoapolowpoebbpoforpothepoyear.

b. ThepoaccountingpotimepoperiodpoispoendedpoonpoDecemberpo31.

c. Apotwelve-
monthpoaccountingpoperiodpothatpoendspoatpothepoendpoofpoapomonthpooth
erpothanpoDecemberpo31.
1-10. Money.

1-
11.p o p o Whenpomoneypodoesponotpoholdpoapostablepovalue,pothepofinancialpo
statementspocanpolosepomuchpoofpotheirposignificance.p o Topothepoextentpothat
pomoneypodoesponotporemainpostable,poitpolosespousefulnesspoaspothepostanda
rdpoforpomeasuringpofinancialpotransactions.

1-12.
No.p o Therepoispoapoproblempowithpodeterminingpothepoindexpoinpoorderpotopoa
djustpothepostatements.p o Thepoitemspothatpoarepoincludedpoinpothepoindexpomu
stpobeporepresentative.poInpoaddition,pothepopricespoofpoitemspochangepobecau
sepoofpovariouspofactors,posuchpoaspoquality,potechnology,poandpoinflation.

Yes.poAporeasonablepoadjustmentpotopothepostatementspocanpobepomadepoforpoinflation.

1-13. False.p o Anpoarbitrarypowrite-