Solution manual for financial statement analysis 13th edition by charles h gibson all chapters 1-13

Solution Manual For Financial Statement Analysis,
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13th Edition
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By Charles H. Gibson, Verified Chapter's 1 - 13 | Complete
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, Chaptern1n Introductio
nntonFinancialnReporting


QUESTIONS

1- 1. a.
nThenAICPAnisnannorganizationnofnCPAsnthatnpriornton1973nacceptednthenp

rimarynresponsibilitynfornthendevelopmentnofngenerallynacceptednaccountin
gnprinciples.nTheirnrolenwasnsubstantiallynreducedninn1973nwhennthenFinanc
ialnAccountingnStandardsnBoardnwasnestablished.n Theirnrolenwasnfurthernr
educednwithnthenestablishmentnofnthenPublicnCompanynAccountingnOversi
ghtnBoardnwasnestablishedninn2002.

b. ThenFinancialnAccountingnStandardsnBoardnreplacednthenAccountingn
PrinciplesnBoardnasnthenprimarynrule-
makingnbodynfornaccountingnstandards.nItnisnannindependentnorganiza
tionnandnincludesnmembersnothernthannpublicnaccountants.

c. ThenSECnhasnthenauthorityntondeterminengenerallynacceptednaccountingn
principlesnandntonregulatenthenaccountingnprofession.nThenSECnhasnelect
edntonleavenmuchnofnthendeterminationnofngenerallynacceptednaccountingn
principlesntonthenprivatensector.n ThenFinancialnAccountingnStandardsnBo
ardnhasnplayednthenmajornroleninnestablishingnaccountingnstandardsnsinc
en1973.n Regulationnofnthenaccountingnprofessionnwasnsubstantiallynturne
dnoverntonthenPublicnCompanynAccountingnOversightnBoardninn2002.

1-n2.
Consistencynisnobtainednthroughnthenapplicationnofnthensamenaccountingn
principlenfromnperiodntonperiod.n Anchangeninnprinciplenrequiresnstatementn
disclosure.

1-n3.
Thenconceptnofnhistoricalncostndeterminesnthenbalancensheetnvaluationnofnland.nT
henrealizationnconceptnrequiresnthatnantransactionnneedsntonoccurnfornthenprofitnton
benrecognized.

1-n4. a.n Entity e.n Historicalncost

b. Realization f.n Historicalncost

c. Materiality g.n Disclosure

d. Conservatism

1-n5. Entitynconcept

,1-n6.
Generallynacceptednaccountingnprinciplesndonnotnapplynwhennanfirmndoesnnotn
appearntonbenangoingnconcern.n Ifnthendecisionnisnmadenthatnthisnisnnotnangoingnc
oncern,nthennthenusenofnGAAPnwouldnnotnbenappropriate.

1-n7.
Withnthentimenperiodnassumption,ninaccuraciesnofnaccountingnfornthenentity,nshor
tnofnitsncompletenlifenspan,narenaccepted.nThenassumptionnisnmadenthatnthenentity
ncannbenaccountednfornreasonablynaccuratelynfornanparticularnperiodnofntime.n Inn

othernwords,nthendecisionnisnmadentonacceptnsomeninaccuracynbecausenofninco
mpleteninformationnaboutnthenfutureninnexchangenfornmorentimelynreporting.n Then
statementsnarenconsideredntonbenmeaningfulnbecausenmaterialninaccuraciesnare
nnotnacceptable.




1- 8.n n Itnisntruenthatnthenonlynaccuratenwayntonaccountnfornthensuccessnornfailurenofnannent
itynisntonaccumulatenallntransactionsnfromnthenopeningnofnbusinessnuntilnthenbusi
nessneventuallynliquidates.n Butnitnisnnotnnecessarynthatnthenstatementsnbencom
pletelynaccurateninnordernfornthemntonbenmeaningful.

1- 9. a. Anyearnthatnendsnwhennoperationsnarenatnanlownebbnfornthenyear.

b. ThenaccountingntimenperiodnisnendednonnDecembern31.

c. Antwelve-
monthnaccountingnperiodnthatnendsnatnthenendnofnanmonthnothernthannDece
mbern31.
1-10. Money.

1-
11.n n Whennmoneyndoesnnotnholdnanstablenvalue,nthenfinancialnstatementsncann
losenmuchnofntheirnsignificance.n Tonthenextentnthatnmoneyndoesnnotnremainnsta
ble,nitnlosesnusefulnessnasnthenstandardnfornmeasuringnfinancialntransactions.

1-12.
No.n Therenisnanproblemnwithndeterminingnthenindexninnorderntonadjustnthenstate
ments.n Thenitemsnthatnarenincludedninnthenindexnmustnbenrepresentative.nInnadd
ition,nthenpricesnofnitemsnchangenbecausenofnvariousnfactors,nsuchnasnquality,nte
chnology,nandninflation.

Yes.nAnreasonablenadjustmentntonthenstatementsncannbenmadenforninflation.

1-13. False.n Annarbitrarynwrite-
offnofninventoryncannotnbenjustifiednundernthenconservatismnconcept.n Thencons
ervatismnconceptncannonlynbenappliednwherentherenarenalternativenmeasureme
ntsnandneachnofnthesenalternativenmeasurementsnhasnreasonablensupport.

, 1-14.
Yes,ninventorynthatnhasnanmarketnvaluenbelownthenhistoricalncostnshouldnbenwri
ttenndownninnorderntonrecognizenanloss.n Thisnisndonenbasednuponnthenconceptn
ofnconservatism.n Lossesnthatncannbenreasonablynanticipatednshouldnbentakenn
innorderntonreflectnthenleastnfavorableneffectnonnnetnincomenofnthencurrentnperio
d.