Accounting What the Numbers Mean 13th Edition Solution Manual | David Marshall

Instructor’sjManualj/jSolutionsjManual

FulljSolutionjManualjforjAccountingjWhatjThejNumbersjMeanj13thjEditionjDavidjMarshall



CHAPTER
Accounting—Present and Past j j


1

CHAPTERjOUTLINE:

I. WhatjIsjAccounting?
A. Definition
B. UsesjofjAccountingjInformation
C. Classifications
1. FinancialjAccounting
2. ManagerialjAccountingj/jCostjAccounting
3. Auditingj—jPublicjAccounting
4. InternaljAuditing
5. GovernmentaljandjNot-for-ProfitjAccounting
6. IncomejTaxjAccounting

II. HowjHasjAccountingjDeveloped?
A. EarlyjHistory
B. ThejAccountingjProfessionjinjthejUnitedjStates
C. FinancialjAccountingjStandardjSettingjatjthejPresentjTime
1. FinancialjAccountingjStandardsjBoard
2. StandardsjarejEvolving
D. StandardsjforjOtherjTypesjofjAccounting
1. ManagerialjAccountingj/jCostjAccounting
2. Auditing
3. GovernmentaljandjNot-for-ProfitjAccounting
4. IncomejTaxjAccounting
E. InternationaljAccountingjStandards
F. EthicsjandjthejAccountingjProfession

III. ThejConceptualjFramework
A. Context
B. SummaryjofjConceptsjStatementjNo.j8,jChapterj1j—
jThejObjectivejofjGeneraljPurposejFinancialjReporting
C. ObjectivesjofjFinancialjReportingjforjNonbusinessjOrganizations
IV. PlanjofjthejBook


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©jMcGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjdistributionjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC.

, Instructor’sjManualj/jSolutionsjManual



TEACHING/LEARNINGjOBJECTIVES:

Principal:

1. Tojpresentjajdefinitionjofjaccounting.

2. Tojidentifyjandjdescribejdifferentjclassificationsjofjaccounting.

3. Tojemphasizejthatjfinancialjaccountingjstandardsjarejnotjaj―fixedjcodejofjrules,‖jbutjarejestabl
ishedjinjresponsejtojuserjneedsjandjbusinessjdevelopments.jAccountantsjneedjtojapplyjprofessi
onaljjudgmentjinjthejapplicationjofjaccountingjprinciples.

4. Tojemphasizejthejrolejandjsourcesjofjethicsjforjthejaccountingjprofession.

Supporting:

5. Tojsummarizejhowjaccountingjhasjevolvedjoverjtime.

6. Tojidentifyjsourcesjofjstandardsjforjotherjtypesjofjaccountingjandjtojcontrastjthesejwithjfin
ancialjaccountingjstandards.

7. Tojintroducejthejissuesjassociatedjwithjthejdevelopmentjofjinternationaljaccountingjst
andards.

8. TojdescribejthejcontextjofjthejFASBjConceptualjFrameworkjproject.

9. TojsummarizejConceptsjStatementjNo.j8,jChapterj1j—
jThejObjectivejofjGeneraljPurposejFinancialjReporting.


10. Tojrelatejthejobjectivesjofjfinancialjreportingjforjnonbusinessjorganizationsjtojthosejofjbu
sinessjenterprises.

TEACHINGjOBSERVATIONS/ASSIGNMENTjSUGGESTIONS:

1. Studentsjshouldjbejputjonjnoticejaboutjthejjargonjofjaccounting,jthejusejofjsynonymousjterms
,jthejimportancejofjthejcontextjwithinjwhichjajtermjisjused,jandjthejneedjforjprecisionjinjthejuse
jofjterminology.jThejfirstjexamplejofjjargonjisjthejtermjentity.


2. Whenjdiscussingj"Auditingj—
jPublicjAccounting,"jhavejstudentsjfindjthejauditors'jopinionjinjthejCampbelljSoupjCompanyj
2020jAnnualjReportj(seejpagesj87-
88jofjthejAppendix).jEmphasizejthatjaj"cleanjopinion"jisjnotjaj"cleanjbilljofjhealth."

3. DiscussjthejSummaryjofjConceptsjStatementjNo.j8,jChapterj1j—
jThejObjectivejofjFinancialjReporting,jinjdetail.



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©jMcGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjdistributionjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC.

, Instructor’sjManualj/jSolutionsjManual

4. AssignjExercisej1-
1.jEncouragejstudentsjtojexperimentjwithjwebsitesjthatjarejofjinterest.jInjaddition,jorjasjanjalte
rnativejtojhavingjstudentsjrequestjtheirjownjannualjreports,jdistributejreportsjthatjhavejbeenjo
btainedjbyjthejinstructor.

5. UsejExercisej1-
5jtojgeneratejdiscussionjaboutjthejimportancejofjethicaljstandardsjinjgeneraljandjindependencej
(injbothjappearancejandjfact)jinjparticular.jFollowjupjwithjajbriefjlookjatjExercisej1-
7jconcerningjauditjindependencejstandards.


SOLUTIONS:

E1.3. Thisjexercisejprovidesjanjopportunityjtojgaugejwherejthejstudentsjarejinjtermsjofjthe
irjpriorjbackgroundjinjaccounting,jbejitjpracticaljorjeducational,jandjtojclearjupjsom
ejofjthejcommonjmisconceptionsj(i.e.,jtojexplainjthatjaccountingjgoes
beyondjthej―howjto‖jaspectsjofjbookkeepingjandjinvolvesjthejusejofjjudgment).

E1.4. Thisjexercisejprovidesjanjopportunityjtojalignjstudentjandjinstructorjexpectations.jF
orjfirst-
timejinstructorsjinjthisjcourse,jorjforjthosejhavingjajdiversejstudentjgroup,jyoujwilljg
etjajglimpsejatjthejcommonjperceptionsjstudentsjhavejconcerningjthejcoursejcontent
,jleveljofjdifficulty,jandjmethodsjofjpresentation,
testing/evaluation,jandjgrading.

E1.5. ThejprincipaljfactorsjJimjSandrolinijmustjconsiderjarejhisjcompetencejandjindepen
dence.jIsjhejcompetentjtojpreparejfinancialjstatementsjforjajcompanyjthatjoperatesjin
jajdifferentjindustryjthanjthejonejinjwhichjhejworks?jAcceptingjajcontingentjfeejarra
ngementjwouldjnormallyjcausejanjimpairmentjofjhis
independencejbecausejhejwouldjdirectlyjbenefitjifjthejloanjwerejtojbejapproved.




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©jMcGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjdistributionjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC.

, Instructor’sjManualj/jSolutionsjManual
E1.6. Suggestedjdiscussionjstrategy:
Q:j Whyjdoesjajbusinessjhavejvalue?
A:j Itjprovidesjthejownersjanjopportunityjtojearnjajprofit,janjopportunityjforjpersonal
jfulfillmentjfromjbeingjinjcharge,jandjanjopportunityjtojprovidejajproductjorjservice
jthatjisjusefuljtojothers.


Q:j Howjcanjthisjvaluejbejmeasured?
A:j Financialjinformationjwilljhavejthejmostjtojdojwithjevaluatingjthejfirm‘sjprofitab
ility,jandjthejfinancialjstatementsjincludejthisjinformation.

Q:j Howjisjanjaskingjpricejforjthejsalejofjajbusinessjestablished?
A:j Thejaskingjpricejshouldjbejajfunctionjofjthejprofit,jresources,jandjobligationsjrel
atedjtojthejbusinessjasjshownjinjthejfinancialjstatements.

Note:jThisjexercisejalsojprovidesjanjopportunityjtojpointjoutjsomejofjthejbasicjlimit
ationsjofjthejdatajprovidedjbyjthejaccountingjprocessj(e.g.,jhistoricaljcostjinformati
onj—
jhowjusefuljarejpastjearningsjresultsjinjpredictingjfuturejearningsjandjcashjflows?).j
Bejcarefuljnotjtojgetjtoojcarriedjawayjwithjdetails.jLetjthe
studentsjleadjthisjdiscussion.




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©jMcGrawjHilljLLC.jAlljrightsjreserved.jNojreproductionjorjdistributionjwithoutjthejpriorjwrittenjconsentjofjMcGrawjHilljLLC.