SOLUTION MANUAL Financial Accounting,13th Edition by William Thomas and Wendy M.Tietz Chapters 1 - 12, Complete A+ Guide

SOLUTION MANUAL Financial Accounting,13th Edition by William Thomas and Wendy M.Tietz Chapters 1 - 12, Complete A+ Guide Chapter 1 The Financial Statements Ethics Check (5-10 min.) EC 1-1 a. Objectivity and independence b. Due care c. Integrity d.Integrity Short Exercises (10 min.) S 1-1 a. Corporation, limited partners of a Limited-liability partnership (LLP) and Limited-liability company (LLC). If any of these businesses fails and cannot pay its liabilities, creditors cannot force the owners to pay the business’s debts from the owners’ personal assets. Creditors can go after the general partner of a limited liability partnership. b. Proprietorship. There is a single owner of the business,so the owner is answerable to no other owner. c. Partnership. If the partnership fails and cannot pay its liabilities, creditors can force the partners to pay the business’s debts from their personal assets. A partnership affords more protection for creditors than a proprietorship because there are two or more owners toshare this liability. (5 min.) S 1-2 1. The entity assumption applies. 2. Application of the entity assumption will separate Osmond’s personal assets from the assets of Simple Treats, Inc. This will help Osmond, investors, and $660,000 75,000 lenders know how much assets, liabilities and equity the business has, and this knowledge will help all parties evaluate the business realistically. (5-10 min.) S 1-3 a. Stable-monetary-unit assumption b. Historical cost principle; $300 is the accounting valueof the laptop c. Historical cost principle; the sale price is the amountactually received from the sale d. Entity assumption (10 min.) S 1-4 Computed amounts in boxes Total Assets = Total Liabilities + Stockholders’ Equity a. = $300,000 + $360,000 b. 85,000 = 50,000 + c. 350,000 = + 275,000 (5 min.) S 1-5 1. Liabilities = Assets −Owners’ Equity 35,000 2. Owners’ Equity = Assets − Liabilities This way of determining the amount of owners’ equityapplies to any company or your household. (5-10 min.) S 1-6 a. Land A g. Retained earnings S b. Accrued expenses payable L h. Prepaid expenses A c. Supplies A i. Accounts payable L d. Equipment A j. AccountsreceivableA e. Notes payable L k. Merchandise inventory A f. Long-term debt L l. Common stock S (5-10 min.) S 1-7 1. Assets are the economic resources of a business thatare expected to produce a benefit in the future. Owners’ (stockholders’) equity represents the insiderclaims of a business, the owners’ interest in its assets. Assets and owners’ equity differ in that assets are resources and owners’ equity is a claim to assets. Assets must be at least as large as owners’ equity, so equity can be smaller than assets.