SOLUTION MANUAL FOR
k k
Financial Accounting 11th Edition
k k k k
by Robert Libby, All Chapters 1 - 13
k k k k k k k
,TABLE OF CONTENTS
k k k
CHAPTERk1:kFinancialkStatementskandkBusinesskDecisions
FocuskCompany:kLe-Nature’skInc.
CHAPTERk2:kInvestingkandkFinancingkDecisionskandkthekAccountingkSystem
FocuskCompany:kChipotlekMexicankGrill
CHAPTERk3:kOperatingkDecisionskandkthekAccountingkSystem
FocuskCompany:kChipotlekMexicankGrill
CHAPTERk4:kAdjustments,kFinancialkStatements,kandkthekClosingkProcess
FocuskCompany:kChipotlekMexicankGrill
CHAPTERk5:kCommunicatingkandkAnalyzingkAccountingkInformation
FocuskCompany:kApplekInc.
CHAPTERk6:kReportingkandkInterpretingkSaleskRevenue,kReceivables,kandkCash
FocuskCompany:kSkecherskU.S.A.
CHAPTERk7:kReportingkandkInterpretingkCostkofkGoodskSoldkandkInventory
FocuskCompany:kHarley-Davidson,kInc.
CHAPTERk8:kReportingkandkInterpretingkProperty,kPlant,kandkEquipment;kIntangibles;kandkNatural
kResources
FocuskCompany:kFedExkCorporation
CHAPTERk9:kReportingkandkInterpretingkLiabilities
FocuskCompany:kStarbucks
CHAPTERk10:kReportingkandkInterpretingkBondkSecurities
FocuskCompany:kAmazon
CHAPTERk11:kReportingkandkInterpretingkStockholders’kEquity
FocuskCompany:kMicrosoft
CHAPTERk12:kStatementkofkCashkFlows
FocuskCompany:kNationalkBeveragekCorporation
CHAPTERk13:kAnalyzingkFinancialkStatements
FocuskCompany:kThekHomekDepot
,Chapter 1 k
Financial Statements and Business Decisions
k k k k
ANSWERSkTOkQUESTIONS
1. Accountingkiskaksystemkthatkcollectskandkprocessesk(analyzes,kmeasures,kandkre
cords)kfinancialkinformationkaboutkankorganizationkandkreportskthatkinformationktok
decisionkmakers.
2. Financialkaccountingkinvolveskpreparationkofkthekfourkbasickfinancialkstatementska
ndkrelatedkdisclosureskforkexternalkdecisionkmakers.kManagerialkaccountingkinvolv
eskthekpreparationkofkdetailedkplans,kbudgets,kforecasts,kandkperformancekreports
kforkinternalk decisionkmakers.
3. Financialkreportskarekusedkbykbothkinternalkandkexternalkgroupskandkindividuals.kT
hekinternalkgroupskarekcomprisedkofkthekvariouskmanagerskofkthekentity.kThekexter
nalkgroupskincludekthekowners,kinvestors,kcreditors,kgovernmentalkagencies,kotherk
interestedkparties,kandkthekpublickatklarge.
4. Investorskpurchasekallkorkpartkofkakbusinesskandkhopektokgainkbykreceivingkpartko
fkwhatkthekcompanykearnskand/orksellingk theirkownershipkinterestkinkthekcompany
kinkthekfuturekatkakhigherkpricekthanktheykpaid.kCreditorsklendkmoneyktokakcompa
nykforkakspecificklengthkofktimekandkhopektokgainkbykchargingkinterestkonkthekloan.
, 5. Inkaksociety,keachkorganizationkcankbekdefinedkaskakseparatekaccountingkentity.kA
nkaccountingkentitykiskthekorganizationkforkwhichkfinancialkdatakarektokbekcollected.
kTypicalk accountingkentitieskarekakbusiness,kakchurch,kakgovernmentalkunit,kakuniv
ersitykandkotherknonprofitkorganizationsksuchkaskakhospitalk andkakwelfarekorganiza
tion.kAkbusinessktypicallykiskdefinedkandktreatedkaskakseparatekentitykbecausekthek
owners,kcreditors,kinvestors,kandkotherkinterestedkpartieskneedktokevaluatekitskperf
ormancekandkitskpotentialkseparatelykfromkotherkentitieskandkfromkitskowners.
6. NamekofkStatement AlternativekTitle
(a) IncomekStatement (a)k StatementkofkEarnings;kStatementkof
Income;kStatementkofkOperations
(b) BalancekSheet (b)kStatementkofkFinancialkPosition
(c) CashkFlowkStatement (c)k StatementkofkCashkFlows
7. Thekheadingkofkeachkofkthekfourkrequiredkfinancialkstatementskshouldkincludekt
hekfollowing:
(a) Namekofkthekentity
(b) Namekofkthekstatement
(c) Datekofkthekstatement,korkthekperiodkofktime
(d) Unitkofkmeasure
8. (a)
Thekpurposekofkthekincomekstatementkisktokpresentkinformationkaboutkthekr
evenues,kexpenses,kandktheknetkincomekofkankentitykforkakspecifiedkperiodk
ofktime.
(b) Thekpurposekofkthekbalanceksheetkisktokreportkthekfinancialkpositionkofkankent
itykatkakgivenkdate,kthatkis,ktokreportkinformationkaboutkthekassets,k liabilitieska
ndkstockholders’kequitykofkthekentitykaskofkakspecifickdate.
(c) Thekpurposekofkthekstatementkofkcashkflowskisktokpresentkinformationkaboutkt
hekflowkofkcashkintokthekentityk(sources),kthekflowkofkcashkoutkofkthekentityk(us
es),kandktheknetkincreasekorkdecreasekinkcashkduringkthekperiod.
(d) Thekstatementkofkstockholders’kequitykreportskthekchangeskinkeachkofkthekco
mpany’skstockholders’kequitykaccountskduringk thekaccountingkperiod,kincludi
ngkissuekandkrepurchasekofkstockkandkthekwaykthatknetkincomekandkdistribut
ionkofkdividendskaffectedkthekretainedkearningskofkthekcompanykduringkthatkp
eriod.
9. Thekincomekstatementkandkthekstatementkofkcashkflowskarekdatedk―ForkthekYea
rkEndedkDecemberk31‖kbecausektheykreportkthekinflowskandkoutflowskofkresourc
eskduringkakperiodkofktime.kInkcontrast,kthekbalanceksheetkiskdatedk―AtkDecemb
erk31‖kbecausekitkrepresentskthekresources,kobligations,kandkstockholders’kequit
ykatkakspecifickdate.
k k
Financial Accounting 11th Edition
k k k k
by Robert Libby, All Chapters 1 - 13
k k k k k k k
,TABLE OF CONTENTS
k k k
CHAPTERk1:kFinancialkStatementskandkBusinesskDecisions
FocuskCompany:kLe-Nature’skInc.
CHAPTERk2:kInvestingkandkFinancingkDecisionskandkthekAccountingkSystem
FocuskCompany:kChipotlekMexicankGrill
CHAPTERk3:kOperatingkDecisionskandkthekAccountingkSystem
FocuskCompany:kChipotlekMexicankGrill
CHAPTERk4:kAdjustments,kFinancialkStatements,kandkthekClosingkProcess
FocuskCompany:kChipotlekMexicankGrill
CHAPTERk5:kCommunicatingkandkAnalyzingkAccountingkInformation
FocuskCompany:kApplekInc.
CHAPTERk6:kReportingkandkInterpretingkSaleskRevenue,kReceivables,kandkCash
FocuskCompany:kSkecherskU.S.A.
CHAPTERk7:kReportingkandkInterpretingkCostkofkGoodskSoldkandkInventory
FocuskCompany:kHarley-Davidson,kInc.
CHAPTERk8:kReportingkandkInterpretingkProperty,kPlant,kandkEquipment;kIntangibles;kandkNatural
kResources
FocuskCompany:kFedExkCorporation
CHAPTERk9:kReportingkandkInterpretingkLiabilities
FocuskCompany:kStarbucks
CHAPTERk10:kReportingkandkInterpretingkBondkSecurities
FocuskCompany:kAmazon
CHAPTERk11:kReportingkandkInterpretingkStockholders’kEquity
FocuskCompany:kMicrosoft
CHAPTERk12:kStatementkofkCashkFlows
FocuskCompany:kNationalkBeveragekCorporation
CHAPTERk13:kAnalyzingkFinancialkStatements
FocuskCompany:kThekHomekDepot
,Chapter 1 k
Financial Statements and Business Decisions
k k k k
ANSWERSkTOkQUESTIONS
1. Accountingkiskaksystemkthatkcollectskandkprocessesk(analyzes,kmeasures,kandkre
cords)kfinancialkinformationkaboutkankorganizationkandkreportskthatkinformationktok
decisionkmakers.
2. Financialkaccountingkinvolveskpreparationkofkthekfourkbasickfinancialkstatementska
ndkrelatedkdisclosureskforkexternalkdecisionkmakers.kManagerialkaccountingkinvolv
eskthekpreparationkofkdetailedkplans,kbudgets,kforecasts,kandkperformancekreports
kforkinternalk decisionkmakers.
3. Financialkreportskarekusedkbykbothkinternalkandkexternalkgroupskandkindividuals.kT
hekinternalkgroupskarekcomprisedkofkthekvariouskmanagerskofkthekentity.kThekexter
nalkgroupskincludekthekowners,kinvestors,kcreditors,kgovernmentalkagencies,kotherk
interestedkparties,kandkthekpublickatklarge.
4. Investorskpurchasekallkorkpartkofkakbusinesskandkhopektokgainkbykreceivingkpartko
fkwhatkthekcompanykearnskand/orksellingk theirkownershipkinterestkinkthekcompany
kinkthekfuturekatkakhigherkpricekthanktheykpaid.kCreditorsklendkmoneyktokakcompa
nykforkakspecificklengthkofktimekandkhopektokgainkbykchargingkinterestkonkthekloan.
, 5. Inkaksociety,keachkorganizationkcankbekdefinedkaskakseparatekaccountingkentity.kA
nkaccountingkentitykiskthekorganizationkforkwhichkfinancialkdatakarektokbekcollected.
kTypicalk accountingkentitieskarekakbusiness,kakchurch,kakgovernmentalkunit,kakuniv
ersitykandkotherknonprofitkorganizationsksuchkaskakhospitalk andkakwelfarekorganiza
tion.kAkbusinessktypicallykiskdefinedkandktreatedkaskakseparatekentitykbecausekthek
owners,kcreditors,kinvestors,kandkotherkinterestedkpartieskneedktokevaluatekitskperf
ormancekandkitskpotentialkseparatelykfromkotherkentitieskandkfromkitskowners.
6. NamekofkStatement AlternativekTitle
(a) IncomekStatement (a)k StatementkofkEarnings;kStatementkof
Income;kStatementkofkOperations
(b) BalancekSheet (b)kStatementkofkFinancialkPosition
(c) CashkFlowkStatement (c)k StatementkofkCashkFlows
7. Thekheadingkofkeachkofkthekfourkrequiredkfinancialkstatementskshouldkincludekt
hekfollowing:
(a) Namekofkthekentity
(b) Namekofkthekstatement
(c) Datekofkthekstatement,korkthekperiodkofktime
(d) Unitkofkmeasure
8. (a)
Thekpurposekofkthekincomekstatementkisktokpresentkinformationkaboutkthekr
evenues,kexpenses,kandktheknetkincomekofkankentitykforkakspecifiedkperiodk
ofktime.
(b) Thekpurposekofkthekbalanceksheetkisktokreportkthekfinancialkpositionkofkankent
itykatkakgivenkdate,kthatkis,ktokreportkinformationkaboutkthekassets,k liabilitieska
ndkstockholders’kequitykofkthekentitykaskofkakspecifickdate.
(c) Thekpurposekofkthekstatementkofkcashkflowskisktokpresentkinformationkaboutkt
hekflowkofkcashkintokthekentityk(sources),kthekflowkofkcashkoutkofkthekentityk(us
es),kandktheknetkincreasekorkdecreasekinkcashkduringkthekperiod.
(d) Thekstatementkofkstockholders’kequitykreportskthekchangeskinkeachkofkthekco
mpany’skstockholders’kequitykaccountskduringk thekaccountingkperiod,kincludi
ngkissuekandkrepurchasekofkstockkandkthekwaykthatknetkincomekandkdistribut
ionkofkdividendskaffectedkthekretainedkearningskofkthekcompanykduringkthatkp
eriod.
9. Thekincomekstatementkandkthekstatementkofkcashkflowskarekdatedk―ForkthekYea
rkEndedkDecemberk31‖kbecausektheykreportkthekinflowskandkoutflowskofkresourc
eskduringkakperiodkofktime.kInkcontrast,kthekbalanceksheetkiskdatedk―AtkDecemb
erk31‖kbecausekitkrepresentskthekresources,kobligations,kandkstockholders’kequit
ykatkakspecifickdate.
