FINANCIAL AND MANAGERIAL
. .
ACCOUNTING - Fifth Edition
. . .
Solutions Manual – All Chapters
. . . . .
,FINANCIAL .AND .MANAGERIAL .ACCOUNTING .- .Fifth .Edition
1. What .is .accounting?
Accounting .is .the .information .system .that .measures .business .activities, .processes
the .information .into .reports, .and .communicates .the .results .to .decision .makers.
Accounting .is .the .language .of .business.
2. Briefly .descri
Financial .accounting .provides .information .for .external .decision .makers, .such .as
outside .investors, .lenders, .customers, .and .the .federal .government. .Managerial
accounting .focuses .on .information .for .internal .decision .makers, .such .as .the
company’s .managers .and .employees.
3. Describe .the
. they .use
.that
Individuals .use .accounting .information .to .help .them .manage .their .money, .evaluate .a
a .new .job, .and .better .decide .whether .they .can .afford .to .make .a .new .purchase.
Business .owners .use .accounting .information .to .set .goals, .measure .progress .toward
those .goals, .and .make .adjustments .when .needed. .Investors .use .accounting
information .to .help .them .decide .whether .or .not .a .company .is .a .good .investment .and
once .they .have .invested, .they .use .a .company’s .financial .statements .to .analyze .how
their .investment .is .performing. .Creditors .use .accounting .information .to .decide
whether .to .lend .money .to .a .business .and .to .evaluate .a .company’s .ability .to .make
the .loan .payments. .Taxing .authorities .use .accounting .information .to .calculate .the
amount .of .income .tax .that .a .company .has .to .pay.
4. What .are
.two
. certification.
Certified .Public .Accountants .(CPAs) .are .licensed .professional .accountants .who
serve .the .general .public. .They .work .for .public .accounting .firms, .businesses,
government, .or .educational .institutions. .To .be .certified .they .must .meet .educational
and/or .experience .requirements .and .pass .an .exam. .Certified .Management
Accountants .(CMAs) .specialize .in .accounting .and .financial .management
knowledge. .They .work .for .a .single .company.
,Chapter .1: .Accouting .and .the .Business .Environment Page .1 .of .84
, FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Solutions Manual
5. What .is .the .role .of .the .Financial .Accounting .Standards .Board .(FASB)?
The .FASB .oversees .the .creation .and .governance .of .accounting .standards. .They
work .with .governmental .regulatory .agencies, .congressionally .created .groups, .and
private .groups.
6. Explain .the
.p . including
.the . of .these
.stan
The .guidelines .for .accounting .information .are .called .GAAP. .It .is .the .main .U.S.
accounting .rule .book .and .is .currently .created .and .governed .by .the .FASB. .Investors
and .lenders .must .have .information .that .is .relevant .and .has .faithful .representation .in
order .to .make .decisions .and .the .GAAP .provides .the .framework .for .this .financial
reporting.
7. Describe .the
. entities
.discu
A .sole .proprietorship .has .a .single .owner, .terminates .upon .the .owner’s .death .or
choice, .the .owner .has .personal .liability .for .the .business’s .debts, .and .it .is .not .a
separate .tax .entity. .A .partnership .has .two .or .more .owners, .terminates .at .partner’s
choice .or .death, .the .partners .have .personal .liability, .and .it .is .not .a .separate .tax
entity. .A .corporation .is .a .separate .legal .entity, .has .one .or .more .owners, .has
indefinite .life, .the .stockholders .are .not .personally .liable .for .the .business’s .debts,
and .it .is .a .separate .tax .entity. .A .limited-liability .company .has .one .or .more .members
and .each .is .only .liable .for .his .or .her .own .actions, .has .an .indefinite .life, .and .is .not .a
separate .tax .entity.
8. A .business .p
.and .the .land
. the .land .be
.re
The .land .should .be .recorded .at .$5,000. .The .cost .principle .states .that .assets .should
be .recorded .at .their .historical .cost.
. .
ACCOUNTING - Fifth Edition
. . .
Solutions Manual – All Chapters
. . . . .
,FINANCIAL .AND .MANAGERIAL .ACCOUNTING .- .Fifth .Edition
1. What .is .accounting?
Accounting .is .the .information .system .that .measures .business .activities, .processes
the .information .into .reports, .and .communicates .the .results .to .decision .makers.
Accounting .is .the .language .of .business.
2. Briefly .descri
Financial .accounting .provides .information .for .external .decision .makers, .such .as
outside .investors, .lenders, .customers, .and .the .federal .government. .Managerial
accounting .focuses .on .information .for .internal .decision .makers, .such .as .the
company’s .managers .and .employees.
3. Describe .the
. they .use
.that
Individuals .use .accounting .information .to .help .them .manage .their .money, .evaluate .a
a .new .job, .and .better .decide .whether .they .can .afford .to .make .a .new .purchase.
Business .owners .use .accounting .information .to .set .goals, .measure .progress .toward
those .goals, .and .make .adjustments .when .needed. .Investors .use .accounting
information .to .help .them .decide .whether .or .not .a .company .is .a .good .investment .and
once .they .have .invested, .they .use .a .company’s .financial .statements .to .analyze .how
their .investment .is .performing. .Creditors .use .accounting .information .to .decide
whether .to .lend .money .to .a .business .and .to .evaluate .a .company’s .ability .to .make
the .loan .payments. .Taxing .authorities .use .accounting .information .to .calculate .the
amount .of .income .tax .that .a .company .has .to .pay.
4. What .are
.two
. certification.
Certified .Public .Accountants .(CPAs) .are .licensed .professional .accountants .who
serve .the .general .public. .They .work .for .public .accounting .firms, .businesses,
government, .or .educational .institutions. .To .be .certified .they .must .meet .educational
and/or .experience .requirements .and .pass .an .exam. .Certified .Management
Accountants .(CMAs) .specialize .in .accounting .and .financial .management
knowledge. .They .work .for .a .single .company.
,Chapter .1: .Accouting .and .the .Business .Environment Page .1 .of .84
, FINANCIAL AND MANAGERIAL ACCOUNTING - Fifth Edition Solutions Manual
5. What .is .the .role .of .the .Financial .Accounting .Standards .Board .(FASB)?
The .FASB .oversees .the .creation .and .governance .of .accounting .standards. .They
work .with .governmental .regulatory .agencies, .congressionally .created .groups, .and
private .groups.
6. Explain .the
.p . including
.the . of .these
.stan
The .guidelines .for .accounting .information .are .called .GAAP. .It .is .the .main .U.S.
accounting .rule .book .and .is .currently .created .and .governed .by .the .FASB. .Investors
and .lenders .must .have .information .that .is .relevant .and .has .faithful .representation .in
order .to .make .decisions .and .the .GAAP .provides .the .framework .for .this .financial
reporting.
7. Describe .the
. entities
.discu
A .sole .proprietorship .has .a .single .owner, .terminates .upon .the .owner’s .death .or
choice, .the .owner .has .personal .liability .for .the .business’s .debts, .and .it .is .not .a
separate .tax .entity. .A .partnership .has .two .or .more .owners, .terminates .at .partner’s
choice .or .death, .the .partners .have .personal .liability, .and .it .is .not .a .separate .tax
entity. .A .corporation .is .a .separate .legal .entity, .has .one .or .more .owners, .has
indefinite .life, .the .stockholders .are .not .personally .liable .for .the .business’s .debts,
and .it .is .a .separate .tax .entity. .A .limited-liability .company .has .one .or .more .members
and .each .is .only .liable .for .his .or .her .own .actions, .has .an .indefinite .life, .and .is .not .a
separate .tax .entity.
8. A .business .p
.and .the .land
. the .land .be
.re
The .land .should .be .recorded .at .$5,000. .The .cost .principle .states .that .assets .should
be .recorded .at .their .historical .cost.
