TESTBANK .
Financial Accounting
.
by Robert Libby, Patricia Libby, Frank Hodge
. . . . . .
11th Edition.
.
FULL TEST BANK!!!
. .
, FULL SOLUTION MANUAL FOR
. . .
Financial Accounting11thEdition Robert Libby, Patrici
. . . . . .
a Libby, Frank Hodge
. . .
Chapter 1 .
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.m
akers.
2. Financial.accounting.involves.preparation.of.the.four.basic.financial.statements.and.rel
ated.disclosures.for.external.decision.makers..Managerial.accounting.involves.the.pre
paration.of.detailed.plans,.budgets,.forecasts,.and.performance.reports.for.internal.dec
ision.makers.
3. Financial.reports.are.used.by.both.internal.and.external.groups.and.individuals..The.inte
rnal.groups.are.comprised.of.the.various.managers.of.the.entity..The.external.groups.in
clude.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.t
he.company.earns.and/or.selling.their.ownership.interest.in.the.company.in.the.future.
at.a.higher.price.than.they.paid..Creditors.lend.money.to.a.company.for.a.specific.lengt
h.of.time.and.hope.to.gain.by.charging.interest.on.the.loan.
NURSEDOCS@2024
,5. In.a.society,.each.organization.can.be.defined.as.a.separate.accounting.entity..An.acco
unting.entity.is.the.organization.for.which.financial.data.are.to.be.collected..Typical.acco
unting.entities.are.a.business,.a.church,.a.governmental.unit,.a.university.and.other.non
profit.organizations.such.as.a.hospital.and.a.welfare.organization..A.business.typically.i
s.defined.and.treated.as.a.separate.entity.because.the.owners,.creditors,.investors,.and
.other.interested.parties.need.to.evaluate.its.performance.and.its.potential.separately.fro
m.other.entities.and.from.its.owners.
6. Name.of.Statement Alternative.Title
(a) Income.Statement (a).Statement.of.Earnings;.Statement.of
Income;.Statement.of.Operations
(b) Balance.Sheet (b).Statement.of.Financial.Position
(c) Cash.Flow.Statement (c). Statement.of.Cash.Flows
7. The.heading.of.each.of.the.four.required.financial.statements.should.include.the.follo
wing:
(a) Name.of.the.entity
(b) Name.of.the.statement
(c) Date.of.the.statement,.or.the.period.of.time
(d) Unit.of.measure
8. (a)
The.purpose.of.the.income.statement.is.to.present.information.about.the.revenu
es,.expenses,.and.the.net.income.of.an.entity.for.a.specified.period.of.time.
(b) The.purpose.of.the.balance.sheet.is.to.report.the.financial.position.of.an.entity.at.a.
given.date,.that.is,.to.report.information.about.the.assets,.liabilities.and.stockhold
ers’.equity.of.the.entity.as.of.a.specific.date.
(c) The.purpose.of.the.statement.of.cash.flows.is.to.present.information.about.the.flow.
of.cash.into.the.entity.(sources),.the.flow.of.cash.out.of.the.entity.(uses),.and.the.net
.increase.or.decrease.in.cash.during.the.period.
(d) The.statement.of.stockholders’.equity.reports.the.changes.in.each.of.the.compan
y’s.stockholders’.equity.accounts.during.the.accounting.period,.including.issue.a
nd.repurchase.of.stock.and.the.way.that.net.income.and.distribution.of.dividends.
affected.the.retained.earnings.of.the.company.during.that.period.
9. The.income.statement.and.the.statement.of.cash.flows.are.dated.―For.the.Year.Ende
d.December.31‖.because.they.report.the.inflows.and.outflows.of.resources.during.a.p
eriod.of.time..In.contrast,.the.balance.sheet.is.dated.―At.December.31‖.because.it.rep
resents.the.resources,.obligations,.and.stockholders’.equity.at.a.specific.date.
, 10. Assets.are.important.to.creditors.and.investors.because.assets.provide.a.basis.for.jud
ging.whether.sufficient.resources.are.available.to.operate.the.company..Assets.are.als
o.important.because.they.could.be.sold.for.cash.in.the.event.the.company.goes.out.of.b
usiness..Liabilities.are.important.to.creditors.and.investors.because.the.company.mus
t.be.able.to.generate.sufficient.cash.from.operations.or.further.borrowing.to.meet.the.p
ayments.required.by.debt.agreements..If.a.business.does.not.pay.its.creditors,.the.law.
may.give.the.creditors.the.right.to.force.the.sale.of.assets.sufficient.to.meet.their.claims
.
11. Net.income.is.the.excess.of.total.revenues.over.total.expenses..Net.loss.is.the.exce
ss.of.total.expenses.over.total.revenues.
12. The.equation.for.the.income.statement.is.Revenues.-
.Expenses.=.Net.Income.(or.Net.Loss.if.the.amount.is.negative)..Thus,.the.three.major.
items.reported.on.the.income.statement.are.(1).revenues,.(2).expenses,.and.(3).net.in
come.
13. The.equation.for.the.balance.sheet.(also.known.as.the.basic.accounting.equation).is:.A
ssets.=.Liabilities.+.Stockholders’.Equity..Assets.are.the.probable.(expected).future.ec
onomic.benefits.owned.by.the.entity.as.a.result.of.past.transactions.. They.are.the.resou
rces.owned.by.the.business.at.a.given.point.in.time.such.as.cash,.receivables,.inventor
y,.machinery,.buildings,.land,.and.patents..Liabilities.are.probable.(expected).debts.or.
obligations.of.the.entity.as.a.result.of.past.transactions.that.will.be.paid.with.assets.or.se
rvices.in.the.future..They.are.the.obligations.of.the.entity.such.as.accounts.payable,.not
es.payable,.and.bonds.payable..Stockholders’.equity.is.financing.provided.by.owners.o
f.the.business.and.operations..It.is.the.claim.of.the.owners.to.the.assets.of.the.business.
after.the.creditors’.claims.have.been.satisfied..It.may.be.thought.of.as.the.residual.inter
est.because.it.represents.assets.minus.liabilities.
14. The.equation.for.the.statement.of.cash.flows.is:.Cash.flows.from.operating.activities
+.Cash.flows.from.investing.activities.+.Cash.flows.from.financing.activities.=.Change.in.
cash.for.the.period..The.net.cash.flows.for.the.period.represent.the.increase.or.decrease.
in.cash.that.occurred.during.the.period..Cash.flows.from.operating.activities.are.cash.flo
ws.directly.related.to.earning.income.(normal.business.activity.including.interest.paid.an
d.income.taxes.paid)..Cash.flows.from.investing.activities.include.cash.flows.that.are.rela
ted.to.the.acquisition.or.sale.of.productive.assets.used.by.the.company..Cash.flows.from.
financing.activities.are.directly.related.to.the.financing.of.the.enterprise.itself.
15. The.retained.earnings.equation.is:.Beginning.Retained.Earnings.+.Net.Income.-
.Dividends.=.Ending.Retained.Earnings..It.begins.with.beginning-of-the-
year.Retained.Earnings.which.is.the.prior.year’s.ending.retained.earnings.reported.o
n.the.balance.sheet.. The.current.year's.Net.Income.reported.on.the.income.stateme
nt.is.added.and.the.current.year's.Dividends.are.subtracted.from.this.amount..The.en
ding.Retained.Earnings.amount.is.reported.on.the.end-of-period.balance.sheet.
NURSEDOCS@2024
Financial Accounting
.
by Robert Libby, Patricia Libby, Frank Hodge
. . . . . .
11th Edition.
.
FULL TEST BANK!!!
. .
, FULL SOLUTION MANUAL FOR
. . .
Financial Accounting11thEdition Robert Libby, Patrici
. . . . . .
a Libby, Frank Hodge
. . .
Chapter 1 .
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.m
akers.
2. Financial.accounting.involves.preparation.of.the.four.basic.financial.statements.and.rel
ated.disclosures.for.external.decision.makers..Managerial.accounting.involves.the.pre
paration.of.detailed.plans,.budgets,.forecasts,.and.performance.reports.for.internal.dec
ision.makers.
3. Financial.reports.are.used.by.both.internal.and.external.groups.and.individuals..The.inte
rnal.groups.are.comprised.of.the.various.managers.of.the.entity..The.external.groups.in
clude.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.t
he.company.earns.and/or.selling.their.ownership.interest.in.the.company.in.the.future.
at.a.higher.price.than.they.paid..Creditors.lend.money.to.a.company.for.a.specific.lengt
h.of.time.and.hope.to.gain.by.charging.interest.on.the.loan.
NURSEDOCS@2024
,5. In.a.society,.each.organization.can.be.defined.as.a.separate.accounting.entity..An.acco
unting.entity.is.the.organization.for.which.financial.data.are.to.be.collected..Typical.acco
unting.entities.are.a.business,.a.church,.a.governmental.unit,.a.university.and.other.non
profit.organizations.such.as.a.hospital.and.a.welfare.organization..A.business.typically.i
s.defined.and.treated.as.a.separate.entity.because.the.owners,.creditors,.investors,.and
.other.interested.parties.need.to.evaluate.its.performance.and.its.potential.separately.fro
m.other.entities.and.from.its.owners.
6. Name.of.Statement Alternative.Title
(a) Income.Statement (a).Statement.of.Earnings;.Statement.of
Income;.Statement.of.Operations
(b) Balance.Sheet (b).Statement.of.Financial.Position
(c) Cash.Flow.Statement (c). Statement.of.Cash.Flows
7. The.heading.of.each.of.the.four.required.financial.statements.should.include.the.follo
wing:
(a) Name.of.the.entity
(b) Name.of.the.statement
(c) Date.of.the.statement,.or.the.period.of.time
(d) Unit.of.measure
8. (a)
The.purpose.of.the.income.statement.is.to.present.information.about.the.revenu
es,.expenses,.and.the.net.income.of.an.entity.for.a.specified.period.of.time.
(b) The.purpose.of.the.balance.sheet.is.to.report.the.financial.position.of.an.entity.at.a.
given.date,.that.is,.to.report.information.about.the.assets,.liabilities.and.stockhold
ers’.equity.of.the.entity.as.of.a.specific.date.
(c) The.purpose.of.the.statement.of.cash.flows.is.to.present.information.about.the.flow.
of.cash.into.the.entity.(sources),.the.flow.of.cash.out.of.the.entity.(uses),.and.the.net
.increase.or.decrease.in.cash.during.the.period.
(d) The.statement.of.stockholders’.equity.reports.the.changes.in.each.of.the.compan
y’s.stockholders’.equity.accounts.during.the.accounting.period,.including.issue.a
nd.repurchase.of.stock.and.the.way.that.net.income.and.distribution.of.dividends.
affected.the.retained.earnings.of.the.company.during.that.period.
9. The.income.statement.and.the.statement.of.cash.flows.are.dated.―For.the.Year.Ende
d.December.31‖.because.they.report.the.inflows.and.outflows.of.resources.during.a.p
eriod.of.time..In.contrast,.the.balance.sheet.is.dated.―At.December.31‖.because.it.rep
resents.the.resources,.obligations,.and.stockholders’.equity.at.a.specific.date.
, 10. Assets.are.important.to.creditors.and.investors.because.assets.provide.a.basis.for.jud
ging.whether.sufficient.resources.are.available.to.operate.the.company..Assets.are.als
o.important.because.they.could.be.sold.for.cash.in.the.event.the.company.goes.out.of.b
usiness..Liabilities.are.important.to.creditors.and.investors.because.the.company.mus
t.be.able.to.generate.sufficient.cash.from.operations.or.further.borrowing.to.meet.the.p
ayments.required.by.debt.agreements..If.a.business.does.not.pay.its.creditors,.the.law.
may.give.the.creditors.the.right.to.force.the.sale.of.assets.sufficient.to.meet.their.claims
.
11. Net.income.is.the.excess.of.total.revenues.over.total.expenses..Net.loss.is.the.exce
ss.of.total.expenses.over.total.revenues.
12. The.equation.for.the.income.statement.is.Revenues.-
.Expenses.=.Net.Income.(or.Net.Loss.if.the.amount.is.negative)..Thus,.the.three.major.
items.reported.on.the.income.statement.are.(1).revenues,.(2).expenses,.and.(3).net.in
come.
13. The.equation.for.the.balance.sheet.(also.known.as.the.basic.accounting.equation).is:.A
ssets.=.Liabilities.+.Stockholders’.Equity..Assets.are.the.probable.(expected).future.ec
onomic.benefits.owned.by.the.entity.as.a.result.of.past.transactions.. They.are.the.resou
rces.owned.by.the.business.at.a.given.point.in.time.such.as.cash,.receivables,.inventor
y,.machinery,.buildings,.land,.and.patents..Liabilities.are.probable.(expected).debts.or.
obligations.of.the.entity.as.a.result.of.past.transactions.that.will.be.paid.with.assets.or.se
rvices.in.the.future..They.are.the.obligations.of.the.entity.such.as.accounts.payable,.not
es.payable,.and.bonds.payable..Stockholders’.equity.is.financing.provided.by.owners.o
f.the.business.and.operations..It.is.the.claim.of.the.owners.to.the.assets.of.the.business.
after.the.creditors’.claims.have.been.satisfied..It.may.be.thought.of.as.the.residual.inter
est.because.it.represents.assets.minus.liabilities.
14. The.equation.for.the.statement.of.cash.flows.is:.Cash.flows.from.operating.activities
+.Cash.flows.from.investing.activities.+.Cash.flows.from.financing.activities.=.Change.in.
cash.for.the.period..The.net.cash.flows.for.the.period.represent.the.increase.or.decrease.
in.cash.that.occurred.during.the.period..Cash.flows.from.operating.activities.are.cash.flo
ws.directly.related.to.earning.income.(normal.business.activity.including.interest.paid.an
d.income.taxes.paid)..Cash.flows.from.investing.activities.include.cash.flows.that.are.rela
ted.to.the.acquisition.or.sale.of.productive.assets.used.by.the.company..Cash.flows.from.
financing.activities.are.directly.related.to.the.financing.of.the.enterprise.itself.
15. The.retained.earnings.equation.is:.Beginning.Retained.Earnings.+.Net.Income.-
.Dividends.=.Ending.Retained.Earnings..It.begins.with.beginning-of-the-
year.Retained.Earnings.which.is.the.prior.year’s.ending.retained.earnings.reported.o
n.the.balance.sheet.. The.current.year's.Net.Income.reported.on.the.income.stateme
nt.is.added.and.the.current.year's.Dividends.are.subtracted.from.this.amount..The.en
ding.Retained.Earnings.amount.is.reported.on.the.end-of-period.balance.sheet.
NURSEDOCS@2024
