SOLUTION MANUAL FOR
m m
Financial Accounting 11th Edition
m m m m
by Robert Libby, All Chapters 1 - 13
m m m m m m m
,TABLE OF CONTENTS
m m m
CHAPTERm1:mFinancialmStatementsmandmBusinessmDecisions
FocusmCompany:mLe-Nature’smInc.
CHAPTERm2:mInvestingmandmFinancingmDecisionsmandmthemAccountingmSystem
FocusmCompany:mChipotlemMexicanmGrill
CHAPTERm3:mOperatingmDecisionsmandmthemAccountingmSystem
FocusmCompany:mChipotlemMexicanmGrill
CHAPTERm4:mAdjustments,mFinancialmStatements,mandmthemClosingmProcess
FocusmCompany:mChipotlemMexicanmGrill
CHAPTERm5:mCommunicatingmandmAnalyzingmAccountingmInformation
FocusmCompany:mApplemInc.
CHAPTERm6:mReportingmandmInterpretingmSalesmRevenue,mReceivables,mandmCash
FocusmCompany:mSkechersmU.S.A.
CHAPTERm7:mReportingmandmInterpretingmCostmofmGoodsmSoldmandmInventory
FocusmCompany:mHarley-Davidson,mInc.
CHAPTERm8:mReportingmandmInterpretingmProperty,mPlant,mandmEquipment;mIntangibles;mandmNatural
m Resources
FocusmCompany:mFedExmCorporation
CHAPTERm9:mReportingmandmInterpretingmLiabilities
FocusmCompany:mStarbucks
CHAPTERm10:mReportingmandmInterpretingmBondmSecurities
FocusmCompany:mAmazon
CHAPTERm11:mReportingmandmInterpretingmStockholders’mEquity
FocusmCompany:mMicrosoft
CHAPTERm12:mStatementmofmCashmFlows
FocusmCompany:mNationalmBeveragemCorporation
CHAPTERm13:mAnalyzingmFinancialmStatements
FocusmCompany:mThemHomemDepot
,Chapter 1 m
Financial Statements and Business Decisions
m m m m
ANSWERS TO QUESTIONS
m m
1. Accountingmismamsystemmthatmcollectsmandmprocessesm(analyzes,mmeasures,mandmre
cords)mfinancialminformationmaboutmanmorganizationmandmreportsmthatminformationmtom
decisionmmakers.
2. Financialmaccountingminvolvesmpreparationmofmthemfourmbasicmfinancialmstatementsma
ndmrelatedmdisclosuresmformexternalmdecisionmmakers.mManagerialmaccountingminvolv
esmthempreparationmofmdetailedmplans,mbudgets,mforecasts,mandmperformancemreports
mforminternalm decisionmmakers.
3. Financialmreportsmaremusedmbymbothminternalmandmexternalmgroupsmandmindividuals.mT
heminternalmgroupsmaremcomprisedmofmthemvariousmmanagersmofmthementity.mThemexter
nalmgroupsmincludemthemowners,minvestors,mcreditors,mgovernmentalmagencies,mother
minterestedmparties,mandmthempublicmatmlarge.
4. Investorsmpurchasemallmormpartmofmambusinessmandmhopemtomgainmbymreceivingmpartm
ofmwhatmthemcompanymearnsmand/ormsellingm theirmownershipminterestminmthemcompa
nyminmthemfuturematmamhighermpricemthanmtheympaid.mCreditorsmlendmmoneymtomamcom
panymformamspecificmlengthmofmtimemandmhopemtomgainmbymchargingminterestmonmthemlo
an.
, 5. Inmamsociety,meachmorganizationmcanmbemdefinedmasmamseparatemaccountingmentity.mA
nmaccountingmentitymismthemorganizationmformwhichmfinancialmdatamaremtombemcollected.
mTypicalmaccountingmentitiesmaremambusiness,mamchurch,mamgovernmentalmunit,mamuniv
ersitymandmothermnonprofitmorganizationsmsuchmasmamhospitalmandmamwelfaremorganiza
tion.mAmbusinessmtypicallymismdefinedmandmtreatedmasmamseparatementitymbecausemthem
owners,mcreditors,minvestors,mandmotherminterestedmpartiesmneedmtomevaluatemitsmperf
ormancemandmitsmpotentialmseparatelymfrommothermentitiesmandmfrommitsmowners.
6. NamemofmStatement AlternativemTitle
(a) IncomemStatement (a)m StatementmofmEarnings;mStatementmof
Income;mStatementmofmOperations
(b) BalancemSheet (b)mStatementmofmFinancialmPosition
(c) CashmFlowmStatement (c)m StatementmofmCashmFlows
7. Themheadingmofmeachmofmthemfourmrequiredmfinancialmstatementsmshouldmincludemt
hemfollowing:
(a) Namemofmthementity
(b) Namemofmthemstatement
(c) Datemofmthemstatement,mormthemperiodmofmtime
(d) Unitmofmmeasure
8. (a)
Thempurposemofmthemincomemstatementmismtompresentminformationmaboutmthem
revenues,mexpenses,mandmthem netmincomemofmanmentitymformamspecifiedmperiod
m ofm
time.
(b) Thempurposemofmthembalancemsheetmismtomreportmthemfinancialmpositionmofmanmen
titymatmamgivenmdate,mthatmis,mtomreportminformationmaboutmthemassets,m liabilitiesm
andmstockholders’mequitymofmthementitymasmofmamspecificmdate.
(c) Thempurposemofmthemstatementmofmcashmflowsmismtompresentminformationmaboutmt
hemflowmofmcashmintomthementitym(sources),mthemflowmofmcashmoutmofmthementitym(u
ses),mandmthemnetmincreasemormdecreaseminmcashmduringmthemperiod.
(d) Themstatementmofmstockholders’mequitymreportsmthemchangesminmeachmofmthemc
ompany’smstockholders’mequitymaccountsmduringm themaccountingmperiod,minclu
dingmissuemandmrepurchasemofmstockmandmthemwaymthatmnetmincomemandmdistrib
utionmofmdividendsmaffectedmthemretainedmearningsmofmthemcompanymduringmthat
mperiod.
9. Themincomemstatementmandmthemstatementmofmcashmflowsmaremdatedm―FormthemYe
armEndedmDecemberm31‖mbecausemtheymreportmtheminflowsmandmoutflowsmofmresou
rcesmduringmamperiodmofmtime.mInmcontrast,mthembalancemsheetmismdatedm―AtmDece
mberm31‖mbecausemitmrepresentsmthemresources,mobligations,mandmstockholders’me
quitymatmamspecificmdate.
m m
Financial Accounting 11th Edition
m m m m
by Robert Libby, All Chapters 1 - 13
m m m m m m m
,TABLE OF CONTENTS
m m m
CHAPTERm1:mFinancialmStatementsmandmBusinessmDecisions
FocusmCompany:mLe-Nature’smInc.
CHAPTERm2:mInvestingmandmFinancingmDecisionsmandmthemAccountingmSystem
FocusmCompany:mChipotlemMexicanmGrill
CHAPTERm3:mOperatingmDecisionsmandmthemAccountingmSystem
FocusmCompany:mChipotlemMexicanmGrill
CHAPTERm4:mAdjustments,mFinancialmStatements,mandmthemClosingmProcess
FocusmCompany:mChipotlemMexicanmGrill
CHAPTERm5:mCommunicatingmandmAnalyzingmAccountingmInformation
FocusmCompany:mApplemInc.
CHAPTERm6:mReportingmandmInterpretingmSalesmRevenue,mReceivables,mandmCash
FocusmCompany:mSkechersmU.S.A.
CHAPTERm7:mReportingmandmInterpretingmCostmofmGoodsmSoldmandmInventory
FocusmCompany:mHarley-Davidson,mInc.
CHAPTERm8:mReportingmandmInterpretingmProperty,mPlant,mandmEquipment;mIntangibles;mandmNatural
m Resources
FocusmCompany:mFedExmCorporation
CHAPTERm9:mReportingmandmInterpretingmLiabilities
FocusmCompany:mStarbucks
CHAPTERm10:mReportingmandmInterpretingmBondmSecurities
FocusmCompany:mAmazon
CHAPTERm11:mReportingmandmInterpretingmStockholders’mEquity
FocusmCompany:mMicrosoft
CHAPTERm12:mStatementmofmCashmFlows
FocusmCompany:mNationalmBeveragemCorporation
CHAPTERm13:mAnalyzingmFinancialmStatements
FocusmCompany:mThemHomemDepot
,Chapter 1 m
Financial Statements and Business Decisions
m m m m
ANSWERS TO QUESTIONS
m m
1. Accountingmismamsystemmthatmcollectsmandmprocessesm(analyzes,mmeasures,mandmre
cords)mfinancialminformationmaboutmanmorganizationmandmreportsmthatminformationmtom
decisionmmakers.
2. Financialmaccountingminvolvesmpreparationmofmthemfourmbasicmfinancialmstatementsma
ndmrelatedmdisclosuresmformexternalmdecisionmmakers.mManagerialmaccountingminvolv
esmthempreparationmofmdetailedmplans,mbudgets,mforecasts,mandmperformancemreports
mforminternalm decisionmmakers.
3. Financialmreportsmaremusedmbymbothminternalmandmexternalmgroupsmandmindividuals.mT
heminternalmgroupsmaremcomprisedmofmthemvariousmmanagersmofmthementity.mThemexter
nalmgroupsmincludemthemowners,minvestors,mcreditors,mgovernmentalmagencies,mother
minterestedmparties,mandmthempublicmatmlarge.
4. Investorsmpurchasemallmormpartmofmambusinessmandmhopemtomgainmbymreceivingmpartm
ofmwhatmthemcompanymearnsmand/ormsellingm theirmownershipminterestminmthemcompa
nyminmthemfuturematmamhighermpricemthanmtheympaid.mCreditorsmlendmmoneymtomamcom
panymformamspecificmlengthmofmtimemandmhopemtomgainmbymchargingminterestmonmthemlo
an.
, 5. Inmamsociety,meachmorganizationmcanmbemdefinedmasmamseparatemaccountingmentity.mA
nmaccountingmentitymismthemorganizationmformwhichmfinancialmdatamaremtombemcollected.
mTypicalmaccountingmentitiesmaremambusiness,mamchurch,mamgovernmentalmunit,mamuniv
ersitymandmothermnonprofitmorganizationsmsuchmasmamhospitalmandmamwelfaremorganiza
tion.mAmbusinessmtypicallymismdefinedmandmtreatedmasmamseparatementitymbecausemthem
owners,mcreditors,minvestors,mandmotherminterestedmpartiesmneedmtomevaluatemitsmperf
ormancemandmitsmpotentialmseparatelymfrommothermentitiesmandmfrommitsmowners.
6. NamemofmStatement AlternativemTitle
(a) IncomemStatement (a)m StatementmofmEarnings;mStatementmof
Income;mStatementmofmOperations
(b) BalancemSheet (b)mStatementmofmFinancialmPosition
(c) CashmFlowmStatement (c)m StatementmofmCashmFlows
7. Themheadingmofmeachmofmthemfourmrequiredmfinancialmstatementsmshouldmincludemt
hemfollowing:
(a) Namemofmthementity
(b) Namemofmthemstatement
(c) Datemofmthemstatement,mormthemperiodmofmtime
(d) Unitmofmmeasure
8. (a)
Thempurposemofmthemincomemstatementmismtompresentminformationmaboutmthem
revenues,mexpenses,mandmthem netmincomemofmanmentitymformamspecifiedmperiod
m ofm
time.
(b) Thempurposemofmthembalancemsheetmismtomreportmthemfinancialmpositionmofmanmen
titymatmamgivenmdate,mthatmis,mtomreportminformationmaboutmthemassets,m liabilitiesm
andmstockholders’mequitymofmthementitymasmofmamspecificmdate.
(c) Thempurposemofmthemstatementmofmcashmflowsmismtompresentminformationmaboutmt
hemflowmofmcashmintomthementitym(sources),mthemflowmofmcashmoutmofmthementitym(u
ses),mandmthemnetmincreasemormdecreaseminmcashmduringmthemperiod.
(d) Themstatementmofmstockholders’mequitymreportsmthemchangesminmeachmofmthemc
ompany’smstockholders’mequitymaccountsmduringm themaccountingmperiod,minclu
dingmissuemandmrepurchasemofmstockmandmthemwaymthatmnetmincomemandmdistrib
utionmofmdividendsmaffectedmthemretainedmearningsmofmthemcompanymduringmthat
mperiod.
9. Themincomemstatementmandmthemstatementmofmcashmflowsmaremdatedm―FormthemYe
armEndedmDecemberm31‖mbecausemtheymreportmtheminflowsmandmoutflowsmofmresou
rcesmduringmamperiodmofmtime.mInmcontrast,mthembalancemsheetmismdatedm―AtmDece
mberm31‖mbecausemitmrepresentsmthemresources,mobligations,mandmstockholders’me
quitymatmamspecificmdate.
