Solutions Manual Fundamental
Accounting Principles 18th
Canadian Edition (Volume 1) By
Kermit Larson, Heidi Dieckmann,
John Harris, Erin Creagh (All
Chapters 1-9, 100% Original
Verified, A+ Grade)
This is The Only Original and
Complete Solutions Manual for
18th Canadian Edition (Volume 1),
All Other Files in the Market are
Fake/Old/Wrong Edition.
All Supplement Files Download
Link is Added At the end of PDF.
,Solutions Manual, Chapter 1 2
Chapter 1 Accounting in Business
Concept Review Questions
1. Accounting will provide Molly Burke (MB) useful information to make good decisions. For
instance, it is important for Molly Burke to track MB revenues and expenses to determine
whether business is profitable (MB revenues are exceeding MB expenses). Based on the
accounting information, Molly Burke can make decisions on how to price creative
production activities where MB can decrease expenses to improve profits. Accounting will
provide Molly Burke important information on MB business’ performance to make informed
decisions on existing and planned activities strategy.
2. Businesses offering products include Spin Master Corp., Lululemon, NIKE, and Reebok
which produce apparel; Dell, Hewlett-Packard, and Apple which produce computer
equipment; and Abercrombie and Fitch, GAP, and Zara which produce clothing. Service
business examples include: WestJet Airlines which provides airline services; Bell Canada,
Rogers Communications, and Telus provide information communication services; and
Google, X, Zoom, Facebook and Instagram which provide internet services.
3. “Accounting is relevant to all students even if they do not plan on becoming an accountant.
If you are pursuing a career in marketing, you will need to understand information such as
sales volume, advertising costs, promotion costs, salaries of sales personnel, and sales
commissions. If you are studying human resources, you will need to understand the
financial position of your company to determine whether you have the resources to hire
new employees or provide existing employees a pay increase. Even if you do not pursue a
career in business, understanding the basics of accounting can help you better understand
your own personal finances and the world around us. I am convinced that this course will
be a good investment of our time.”
4. Answers will vary on what students would sell. Business organizations can be organized in
one of three forms: sole proprietorship, partnership, or corporation. These forms have
implications for legal liability, taxation, continuity, number of owners, and legal status as
follows:
Sole Proprietorship Partnership Corporation
Legal entity no no yes
Limited liability no no yes
Unlimited life no no yes
Business income taxed no no yes
One owner allowed yes no yes
Answers and reasons will vary for the best form of business. Possible answers include: A
sole proprietorship would be easiest to form for a student. A partnership would be helpful
in bringing people with multiple skills and/or resources together. A corporation would be
the easiest to obtain financing and to limit liability.
5. The equity section of the balance sheet reports a Hailey Walker, Capital account. The
presence of the owner’s capital account indicates that Organico has been organized as a
sole proprietorship.
,Solutions Manual, Chapter 1 3
6. The two organizations for which accounting information is available in Appendix III at the
end of the book are Gildan Activewear Inc and Spin Master Corp..
7. Hospitals, colleges, prisons, and bus lines are examples of organizations that can be
formed as profit-oriented businesses, government units, or not-for-profit establishments.
8. External users and their uses of accounting information include: (1) lenders for measuring
the return of loans; (2) shareholders for assessing the acquisition of shares; (3) members
of the board of directors for overseeing management; and (4) potential employees for
judging employment opportunities. Other users are external auditors, consultants,
regulators, unions, suppliers, and appraisers. Internal users and their uses of accounting
information include: (1) management for overseeing performance, financial position, and
cash flow; (2) current employees for generating special purpose reports to assist
management; (3) internal auditors for identifying high-risk areas to audit; and (4) Sales staff
to determine how to increase sales.
9. The internal role of accounting is to serve the organization’s internal operating functions by
providing useful information in completing their tasks more effectively and efficiently. By
providing this information, accounting helps the organization reach its overall goals.
10. “Tyler, there are a number of areas you could pursue within accounting. There are also a
number of opportunities within those accounting areas. I have put together some
information to help with your decision.”
Accounting professionals practice in four Accounting-related opportunities within each
broad fields including: field are numerous and include:
Financial accounting - Statement preparation
- Statement analysis
- Auditing
- Regulatory
- Consulting
- Planning
- Criminal investigation
Managerial accounting - General accounting
- Cost accounting
- Budgeting
- Internal auditing
- Management advisory services
Taxation - Preparation
- Planning
- Regulatory
- Investigations
- Consulting
Accounting-related - Lenders
- Consultants
- Analysts
- Traders
- Managers
- Directors
- Underwriters
, Solutions Manual, Chapter 1 4
- Planners
- Appraisers
11. The independent auditor for Recipe Unlimited International is KPMG LLP.
12. The purpose of accounting is to provide decision makers with information helping them
make better decisions. Examples include information for people making investments, loans
and similar decisions.
13. Accounting professionals deal with a variety of information about their employers and
clients that is not generally available to the public. Ethical issues arise concerning the
possibility that accounting professionals might personally benefit by using confidential
information. There is also the possibility that their employers and clients might be harmed if
certain information is not kept confidential.
14. An income statement user must know what time period is covered to judge whether the
company’s performance is satisfactory. For example, a statement user would not be able to
assess whether the amounts of revenue and profit are satisfactory without knowing
whether they were earned over a week, a month, or a year.
15. The revenue recognition principle provides guidance that managers and auditors need for
knowing when to recognize revenue. For example, if revenue is recognized too early, the
income statement reports income earlier than it should and the business looks more
profitable than it really is. On the other hand, if the revenue is not recognized on time, the
income statement shows lower amounts of revenue and profit than it should and the
business looks less profitable than it really is. Basically, this principle requires revenue to
be recognized when it is earned and can be measured reliably. The amount of revenue
should equal the value of the assets received from the customers.
16. The four financial statements are: the income statement, the balance sheet, the statement of
changes in equity, and the statement of cash flows.
17. An income statement reports on the business’s performance during the period. It shows
whether the business earned a profit (or loss). The statement does not simply report the
amount of profit or loss but lists the types and amounts of the revenues and expenses.
The balance sheet reports on the financial position of a business at a specific point in time.
It is often called the statement of financial position. It provides information that helps users
understand a company’s financial status. The balance sheet lists the types and dollar
amounts of assets, liabilities, and equity of the business.
18. Cash has purchasing power and can be used to acquire other assets. A business that sells
products to a customer and does not collect cash immediately has created an Accounts
Receivable. This account represents a future collection of cash. Supplies are resources
that will help a business carry on its operations.
19. I disagree with Rachel. While an accounts receivable and an accounts payable both show
up on the balance sheet and in the accounting equation, an accounts receivable is an
asset and an accounts payable is a liability. These two accounts also represent two
different perspectives. When a company sells products or services on credit, an accounts
receivable is created. When a company buys products on credit, an accounts payable is
created.
20. A revenue is an inflow of assets received in exchange for goods or services provided to
customers as part of the major or central operations of the business. A revenue also may
occur as a decrease in liabilities as when a service or product is delivered having been
paid for in advance. The accountant has recorded revenue incorrectly. The accountant
Accounting Principles 18th
Canadian Edition (Volume 1) By
Kermit Larson, Heidi Dieckmann,
John Harris, Erin Creagh (All
Chapters 1-9, 100% Original
Verified, A+ Grade)
This is The Only Original and
Complete Solutions Manual for
18th Canadian Edition (Volume 1),
All Other Files in the Market are
Fake/Old/Wrong Edition.
All Supplement Files Download
Link is Added At the end of PDF.
,Solutions Manual, Chapter 1 2
Chapter 1 Accounting in Business
Concept Review Questions
1. Accounting will provide Molly Burke (MB) useful information to make good decisions. For
instance, it is important for Molly Burke to track MB revenues and expenses to determine
whether business is profitable (MB revenues are exceeding MB expenses). Based on the
accounting information, Molly Burke can make decisions on how to price creative
production activities where MB can decrease expenses to improve profits. Accounting will
provide Molly Burke important information on MB business’ performance to make informed
decisions on existing and planned activities strategy.
2. Businesses offering products include Spin Master Corp., Lululemon, NIKE, and Reebok
which produce apparel; Dell, Hewlett-Packard, and Apple which produce computer
equipment; and Abercrombie and Fitch, GAP, and Zara which produce clothing. Service
business examples include: WestJet Airlines which provides airline services; Bell Canada,
Rogers Communications, and Telus provide information communication services; and
Google, X, Zoom, Facebook and Instagram which provide internet services.
3. “Accounting is relevant to all students even if they do not plan on becoming an accountant.
If you are pursuing a career in marketing, you will need to understand information such as
sales volume, advertising costs, promotion costs, salaries of sales personnel, and sales
commissions. If you are studying human resources, you will need to understand the
financial position of your company to determine whether you have the resources to hire
new employees or provide existing employees a pay increase. Even if you do not pursue a
career in business, understanding the basics of accounting can help you better understand
your own personal finances and the world around us. I am convinced that this course will
be a good investment of our time.”
4. Answers will vary on what students would sell. Business organizations can be organized in
one of three forms: sole proprietorship, partnership, or corporation. These forms have
implications for legal liability, taxation, continuity, number of owners, and legal status as
follows:
Sole Proprietorship Partnership Corporation
Legal entity no no yes
Limited liability no no yes
Unlimited life no no yes
Business income taxed no no yes
One owner allowed yes no yes
Answers and reasons will vary for the best form of business. Possible answers include: A
sole proprietorship would be easiest to form for a student. A partnership would be helpful
in bringing people with multiple skills and/or resources together. A corporation would be
the easiest to obtain financing and to limit liability.
5. The equity section of the balance sheet reports a Hailey Walker, Capital account. The
presence of the owner’s capital account indicates that Organico has been organized as a
sole proprietorship.
,Solutions Manual, Chapter 1 3
6. The two organizations for which accounting information is available in Appendix III at the
end of the book are Gildan Activewear Inc and Spin Master Corp..
7. Hospitals, colleges, prisons, and bus lines are examples of organizations that can be
formed as profit-oriented businesses, government units, or not-for-profit establishments.
8. External users and their uses of accounting information include: (1) lenders for measuring
the return of loans; (2) shareholders for assessing the acquisition of shares; (3) members
of the board of directors for overseeing management; and (4) potential employees for
judging employment opportunities. Other users are external auditors, consultants,
regulators, unions, suppliers, and appraisers. Internal users and their uses of accounting
information include: (1) management for overseeing performance, financial position, and
cash flow; (2) current employees for generating special purpose reports to assist
management; (3) internal auditors for identifying high-risk areas to audit; and (4) Sales staff
to determine how to increase sales.
9. The internal role of accounting is to serve the organization’s internal operating functions by
providing useful information in completing their tasks more effectively and efficiently. By
providing this information, accounting helps the organization reach its overall goals.
10. “Tyler, there are a number of areas you could pursue within accounting. There are also a
number of opportunities within those accounting areas. I have put together some
information to help with your decision.”
Accounting professionals practice in four Accounting-related opportunities within each
broad fields including: field are numerous and include:
Financial accounting - Statement preparation
- Statement analysis
- Auditing
- Regulatory
- Consulting
- Planning
- Criminal investigation
Managerial accounting - General accounting
- Cost accounting
- Budgeting
- Internal auditing
- Management advisory services
Taxation - Preparation
- Planning
- Regulatory
- Investigations
- Consulting
Accounting-related - Lenders
- Consultants
- Analysts
- Traders
- Managers
- Directors
- Underwriters
, Solutions Manual, Chapter 1 4
- Planners
- Appraisers
11. The independent auditor for Recipe Unlimited International is KPMG LLP.
12. The purpose of accounting is to provide decision makers with information helping them
make better decisions. Examples include information for people making investments, loans
and similar decisions.
13. Accounting professionals deal with a variety of information about their employers and
clients that is not generally available to the public. Ethical issues arise concerning the
possibility that accounting professionals might personally benefit by using confidential
information. There is also the possibility that their employers and clients might be harmed if
certain information is not kept confidential.
14. An income statement user must know what time period is covered to judge whether the
company’s performance is satisfactory. For example, a statement user would not be able to
assess whether the amounts of revenue and profit are satisfactory without knowing
whether they were earned over a week, a month, or a year.
15. The revenue recognition principle provides guidance that managers and auditors need for
knowing when to recognize revenue. For example, if revenue is recognized too early, the
income statement reports income earlier than it should and the business looks more
profitable than it really is. On the other hand, if the revenue is not recognized on time, the
income statement shows lower amounts of revenue and profit than it should and the
business looks less profitable than it really is. Basically, this principle requires revenue to
be recognized when it is earned and can be measured reliably. The amount of revenue
should equal the value of the assets received from the customers.
16. The four financial statements are: the income statement, the balance sheet, the statement of
changes in equity, and the statement of cash flows.
17. An income statement reports on the business’s performance during the period. It shows
whether the business earned a profit (or loss). The statement does not simply report the
amount of profit or loss but lists the types and amounts of the revenues and expenses.
The balance sheet reports on the financial position of a business at a specific point in time.
It is often called the statement of financial position. It provides information that helps users
understand a company’s financial status. The balance sheet lists the types and dollar
amounts of assets, liabilities, and equity of the business.
18. Cash has purchasing power and can be used to acquire other assets. A business that sells
products to a customer and does not collect cash immediately has created an Accounts
Receivable. This account represents a future collection of cash. Supplies are resources
that will help a business carry on its operations.
19. I disagree with Rachel. While an accounts receivable and an accounts payable both show
up on the balance sheet and in the accounting equation, an accounts receivable is an
asset and an accounts payable is a liability. These two accounts also represent two
different perspectives. When a company sells products or services on credit, an accounts
receivable is created. When a company buys products on credit, an accounts payable is
created.
20. A revenue is an inflow of assets received in exchange for goods or services provided to
customers as part of the major or central operations of the business. A revenue also may
occur as a decrease in liabilities as when a service or product is delivered having been
paid for in advance. The accountant has recorded revenue incorrectly. The accountant
