SOLUTIONS MANUAL
** All Chapters included
** Excel Solutions included
** Exercises & Problems
** Cases & Metric Based Analysis
,Table of Contents are given below
Chapter 1. The Role of Accounting in Business
Chapter 2. Service Operations: Cash Basis
Chapter 3. Service Operations: Accrual Basis
Chapter 4. Merchandising Operations
Chapter 5. Internal Control and Cash
Chapter 6. Receivables and Inventories
Chapter 7. Long-Term Operating Assets
Chapter 8. Liabilities and Stockholders’ Equity
Chapter 9. Manufacturing Operations
Chapter 10. Cost-Volume-Profit Analysis
Chapter 11. Planning Operations
Chapter 12. Operating Decisions
Chapter 13. Evaluating Segments and Capital Investments
Chapter 14. The Balanced Scorecard
, CHAPTER 1
THE ROLE OF ACCOUNTING IN BUSINESS
CLASS DISCUSSION QUESTIONS
1. The objective of most businesses is to maximize profits. Profit is the difference
between the amounts received from customers for goods or services provided and
the amounts paid for the inputs used to provide those goods or services.
2. A manufacturing business changes basic inputs into products that are sold to
customers. In contrast, a merchandising business purchases products in a form
that can be sold to customers without any additional changes. Examples of
manufacturing businesses include Alcoa, Boeing, Caterpillar, and Dow Chemical.
Examples of merchandising businesses include Best Buy, Macy’s, Target, and
Walmart.
3. A manufacturing business changes basic inputs into products that are sold to
customers. A service business provides services rather than products to
customers. A restaurant, such as McDonald’s, has characteristics of both a
manufacturing and a service business in that McDonald’s takes raw inputs, such as
cheese, fish, and beef, and processes them into products for consumption by its
customers. At the same time, McDonald’s provides services of waiting on its
customers.
4. The corporate form allows the company to obtain large amounts of resources by
issuing stock. In addition, in a corporation, the stockholders’ liability to creditors for
the debts of the company is limited to their investment in the corporation. For these
reasons, most large companies that require large investments in property, plant,
and equipment are organized as corporations.
5. eBay services its customers by maintaining a web-based community in which
buyers and sellers are brought together in an efficient format to browse, buy, and
sell items such as collectibles, automobiles, high-end or premium art pieces,
jewelry, consumer electronics, and a host of practical and miscellaneous items.
6. No. The stakeholders within a group do not always share the same interests. For
example, bankers are primarily concerned about the ability of the business to repay
its debt, including interest. In contrast, stockholders are more concerned about the
long-term profitability of the business, the business’s ability to pay dividends, and
the future appreciation of their stock.
7. Examples of financing activities for Southwest Airlines could include issuing stock,
borrowing from banks, and paying dividends. Examples of investing activities could
include purchasing new aircraft, acquiring new terminal facilities, and upgrading its
computerized reservation systems. Examples of operating activities could include
transporting passengers and freight.
8. The role of accounting is to provide information for managers to use in operating
the business. In addition, accounting provides information to other stakeholders to
use in assessing the economic performance and condition of the business.
1
, CHAPTER 1 The Role of Accounting in Business
CLASS DISCUSSION QUESTIONS (Continued)
9. The income statement presents a summary of the revenues and expenses of a
business for a specific period of time. The statement of stockholders’ equity
indicates the changes in retained earnings that have occurred over a specific period
of time. The balance sheet presents a listing of the assets, liabilities, and
stockholders’ equity of a business as of a specific date. The statement of cash flows
presents a summary of the cash receipts and cash payments of a business entity for
a specific period of time.
10. Target reported net income of $4,138 million ($107,412 million – $103,274 million).
11. Net income or net loss will appear on the income statement and the statement of
stockholders’ equity. The Retained Earnings and Common Stock balances at the end
of the period will appear on the statement of stockholders’ equity and the balance
sheet. Finally, the Cash balance at the end of the period will appear on the balance
sheet and the statement of cash flows.
12. No. The business entity concept limits the recording of economic data to
transactions directly affecting the activities of the business. The payment of the
interest of $6,000 is a personal transaction of Billy Jessop and should not be
recorded by Valley Delivery Service.
13. The land should be recorded at its cost of $110,000 to Wok Repair Service. This is
consistent with the cost concept.
14. No. The offer of $975,000 and the increase in the assessed value should not be
recognized in the accounting records. This is consistent with the cost concept.
2
** All Chapters included
** Excel Solutions included
** Exercises & Problems
** Cases & Metric Based Analysis
,Table of Contents are given below
Chapter 1. The Role of Accounting in Business
Chapter 2. Service Operations: Cash Basis
Chapter 3. Service Operations: Accrual Basis
Chapter 4. Merchandising Operations
Chapter 5. Internal Control and Cash
Chapter 6. Receivables and Inventories
Chapter 7. Long-Term Operating Assets
Chapter 8. Liabilities and Stockholders’ Equity
Chapter 9. Manufacturing Operations
Chapter 10. Cost-Volume-Profit Analysis
Chapter 11. Planning Operations
Chapter 12. Operating Decisions
Chapter 13. Evaluating Segments and Capital Investments
Chapter 14. The Balanced Scorecard
, CHAPTER 1
THE ROLE OF ACCOUNTING IN BUSINESS
CLASS DISCUSSION QUESTIONS
1. The objective of most businesses is to maximize profits. Profit is the difference
between the amounts received from customers for goods or services provided and
the amounts paid for the inputs used to provide those goods or services.
2. A manufacturing business changes basic inputs into products that are sold to
customers. In contrast, a merchandising business purchases products in a form
that can be sold to customers without any additional changes. Examples of
manufacturing businesses include Alcoa, Boeing, Caterpillar, and Dow Chemical.
Examples of merchandising businesses include Best Buy, Macy’s, Target, and
Walmart.
3. A manufacturing business changes basic inputs into products that are sold to
customers. A service business provides services rather than products to
customers. A restaurant, such as McDonald’s, has characteristics of both a
manufacturing and a service business in that McDonald’s takes raw inputs, such as
cheese, fish, and beef, and processes them into products for consumption by its
customers. At the same time, McDonald’s provides services of waiting on its
customers.
4. The corporate form allows the company to obtain large amounts of resources by
issuing stock. In addition, in a corporation, the stockholders’ liability to creditors for
the debts of the company is limited to their investment in the corporation. For these
reasons, most large companies that require large investments in property, plant,
and equipment are organized as corporations.
5. eBay services its customers by maintaining a web-based community in which
buyers and sellers are brought together in an efficient format to browse, buy, and
sell items such as collectibles, automobiles, high-end or premium art pieces,
jewelry, consumer electronics, and a host of practical and miscellaneous items.
6. No. The stakeholders within a group do not always share the same interests. For
example, bankers are primarily concerned about the ability of the business to repay
its debt, including interest. In contrast, stockholders are more concerned about the
long-term profitability of the business, the business’s ability to pay dividends, and
the future appreciation of their stock.
7. Examples of financing activities for Southwest Airlines could include issuing stock,
borrowing from banks, and paying dividends. Examples of investing activities could
include purchasing new aircraft, acquiring new terminal facilities, and upgrading its
computerized reservation systems. Examples of operating activities could include
transporting passengers and freight.
8. The role of accounting is to provide information for managers to use in operating
the business. In addition, accounting provides information to other stakeholders to
use in assessing the economic performance and condition of the business.
1
, CHAPTER 1 The Role of Accounting in Business
CLASS DISCUSSION QUESTIONS (Continued)
9. The income statement presents a summary of the revenues and expenses of a
business for a specific period of time. The statement of stockholders’ equity
indicates the changes in retained earnings that have occurred over a specific period
of time. The balance sheet presents a listing of the assets, liabilities, and
stockholders’ equity of a business as of a specific date. The statement of cash flows
presents a summary of the cash receipts and cash payments of a business entity for
a specific period of time.
10. Target reported net income of $4,138 million ($107,412 million – $103,274 million).
11. Net income or net loss will appear on the income statement and the statement of
stockholders’ equity. The Retained Earnings and Common Stock balances at the end
of the period will appear on the statement of stockholders’ equity and the balance
sheet. Finally, the Cash balance at the end of the period will appear on the balance
sheet and the statement of cash flows.
12. No. The business entity concept limits the recording of economic data to
transactions directly affecting the activities of the business. The payment of the
interest of $6,000 is a personal transaction of Billy Jessop and should not be
recorded by Valley Delivery Service.
13. The land should be recorded at its cost of $110,000 to Wok Repair Service. This is
consistent with the cost concept.
14. No. The offer of $975,000 and the increase in the assessed value should not be
recognized in the accounting records. This is consistent with the cost concept.
2
