, SOLUTION MANUAL FOR Survey of Accounting 11th Edition Warren
Important Notes
The file includes the complete test bank, organized chapter by chapter.
A sample of selected pages has been provided for preview.
All available appendices and Excel files (if included in the original resources) are
provided.
We continuously update our files to ensure you receive the latest and most accurate
editions.
New editions are added regularly – stay connected for updates!
✅ Why Buy From Us?
📚 Complete & organized chapter-by-chapter – no missing content, no guessing.
⚡ Instant digital delivery – get your file the moment you pay, no waiting.
📅 Always up to date – we track new editions so you always get the latest version.
💬 Friendly support – real humans ready to help, anytime you need us.
🔒 Safe & secure – thousands of satisfied students trust us every semester.
🛡️Our Guarantees
💰 Money-Back Guarantee: Not satisfied? We offer a full refund – no questions asked.
🔄 Wrong File? No Problem: Contact us and we will replace it immediately with the
correct version, free of charge.
⏰ 24/7 Support: We are always here – reach out anytime and expect a fast response.
Contact Email:
, 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
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, 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
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
BASIC EXERCISES
BE 1–1
a. A = L + SE
$710,000 = $195,000 + SE
SE = $515,000
b. A = L + SE
$710,000 + $125,000 = $195,000 + $25,000 + SE
$835,000 = $220,000 + SE
SE = $615,000
BE 1–2
Worldwide Travel
Income Statement
For the Year Ended July 31, 20Y6
Fees earned…............................................................................ $ 1,175,000
Expenses:
Salary and wages expense….............................................. $776,000
Office expense….................................................................. 175,000
Miscellaneous expense…................................................... 80,000
Total expenses…............................................................ (1,031,000)
Net income…............................................................................. $ 144,000
3
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
BE 1–3
Worldwide Travel
Statement of Stockholders’ Equity
For the Year Ended July 31, 20Y6
Common Retained
Stock Earnings Total
Balances, August 1, 20Y5…........................... $120,000 $550,000 $670,000
Issuance of common stock…......................... 60,000 60,000
Net income…................................................... 144,000 144,000
Dividends…...................................................... (35,000) (35,000)
Balances, July 31, 20Y6….............................. $180,000 $659,000 $839,000
BE 1–4
Worldwide Travel
Balance Sheet
July 31, 20Y6
Assets
Cash…....................................................................................... $143,450
Accounts receivable…............................................................. 42,750
Supplies…................................................................................. 3,800
Land…....................................................................................... 675,000
Total assets…........................................................................... $865,000
Liabilities
Accounts payable…................................................................. $ 26,000
Stockholders’ Equity
Common stock…...................................................................... $180,000
Retained earnings…................................................................. 659,000
Total stockholders’ equity…................................................... 839,000
Total liabilities and stockholders’ equity…........................... $865,000
4
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
BE 1–5
Worldwide Travel
Statement of Cash Flows
For the Year Ended July 31, 20Y6
Cash flows from (used for) operating activities:
Cash received from customers…............................ $ 1,225,000
Cash paid for operating expenses…....................... (1,116,050)
Net cash flows from operating activities…............. $108,950
Cash flows from (used for) investing activities:
Cash paid for purchase of land…............................ (50,000)
Cash flows from (used for) financing activities:
Cash received from issuance of common stock… $ 60,000
Cash paid as dividends…......................................... (35,000)
Net cash flows used for financing activities…....... 25,000
Net increase in cash ….................................................. $ 83,950
Cash balance, August 1, 20Y5…................................... 59,500
Cash balance, July 31, 20Y6…...................................... $143,450
BE 1–6
$190,000. Under the cost principle, the land should be recorded at the cost to Upstate
Metal Roofing.
BE 1–7
Net Income
Return on Assets =
Average Total Assets
$1,394,000 $1,394,000
Return on Assets = =
[($15,700,000 + $18,300,000) ÷ 2] $17,000,000
Return on Assets = 8.2%
5
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
EXERCISES
EX 1–1
1. service 6. merchandising 11. manufacturing
2. merchandising 7. manufacturing 12. manufacturing
3. manufacturing 8. manufacturing 13. service
4. manufacturing 9. merchandising 14. service
5. service 10. manufacturing 15. merchandising
EX 1–2
(in millions)
Best Buy: $14,967 – 11,914 = $3,053
Gamestop: $2,709 – 1,370 = $1,339
EX 1–3
(in millions)
Apple: $364,980 – $308,030 = $56,950
Microsoft: $512,163 – $243,686 = $268,477
EX 1–4
a. $295,500 + $475,000 = $770,500
b. $1,110,000 – $737,500 = $372,500
c. $3,350,000 – $1,050,000 = $2,300,000
EX 1–5
a. $69,831 – $46,209 = $23,622
b. $55,356 – $13,432 = $41,924
c. $162,050 + $90,349 = $252,399
EX 1–6
It would be incorrect to say the business had incurred a net loss of $10,000. The
excess of the dividends over the net income for the period is a decrease in the
amount of retained earnings in the business. Dividends are a distribution of
earnings to stockholders and are not included on the income statement.
6
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
EX 1–7
Company Chang
Stockholders’ equity at end of year ($900,000 – $300,000)............................... $ 600,000
Deduct stockholders’ equity at beginning of year ($775,000 – $400,000)....... (375,000)
Net income (increase in stockholders’ equity)............................................. $ 225,000
Company Henry
Increase in stockholders’ equity (as determined for Chang)........................... $225,000
Add dividends....................................................................................................... 90,000
Net income....................................................................................................... $315,000
Company Nagel
Increase in stockholders’ equity (as determined for Chang)........................... $ 225,000
Deduct additional issuance of capital stock...................................................... (125,000)
Net income....................................................................................................... $ 100,000
Company Wilcox
Increase in stockholders’ equity (as determined for Chang)........................... $ 225,000
Deduct additional issuance of capital stock...................................................... (125,000)
$ 100,000
Add dividends....................................................................................................... 90,000
Net income....................................................................................................... $ 190,000
EX 1–8
a. (1) $3,886 – $1,101 = $2,785
(2) $4,149 – $1,287 = $2,862
b. $7,831 – $6,065 – $1,565 – $1 – $61 = $139 net income
EX 1–9
Balance sheet items: 1, 2, 3, 7, 8
EX 1–10
Income statement items: 4, 5, 6, 9, 10
EX 1–11
1. a—asset 6. a—asset
2. b—liability 7. b—liability
3. a—asset 8. d—expense
4. e—dividend 9. d—expense
5. c—revenue 10. d—expense
7
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
EX 1–12
ALL SEASONS COMPANY
Statement of Stockholders' Equity
For the Month Ended June 30, 20Y7
Common Retained
Stock Earnings Total
Balances, June 1, 20Y7.............................. $40,000 $145,000 $185,000
Issuance of common stock....................... 25,000 25,000
Net income.................................................. 78,500 78,500
Dividends.................................................... (12,000) (12,000)
Balances, June 30, 20Y7............................ $65,000 $211,500 $276,500
EX 1–13
JLM SERVICES
Income Statement
For the Month Ended August 31, 20Y5
Fees earned............................................................................ $ 2,350,000
Operating expenses:
Wages expense................................................................. $1,515,000
Rent expense..................................................................... 220,000
Supplies expense.............................................................. 26,500
Miscellaneous expense.................................................... 44,750
Total operating expenses............................................ (1,806,250)
Net income.............................................................................. $ 543,750
8
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Important Notes
The file includes the complete test bank, organized chapter by chapter.
A sample of selected pages has been provided for preview.
All available appendices and Excel files (if included in the original resources) are
provided.
We continuously update our files to ensure you receive the latest and most accurate
editions.
New editions are added regularly – stay connected for updates!
✅ Why Buy From Us?
📚 Complete & organized chapter-by-chapter – no missing content, no guessing.
⚡ Instant digital delivery – get your file the moment you pay, no waiting.
📅 Always up to date – we track new editions so you always get the latest version.
💬 Friendly support – real humans ready to help, anytime you need us.
🔒 Safe & secure – thousands of satisfied students trust us every semester.
🛡️Our Guarantees
💰 Money-Back Guarantee: Not satisfied? We offer a full refund – no questions asked.
🔄 Wrong File? No Problem: Contact us and we will replace it immediately with the
correct version, free of charge.
⏰ 24/7 Support: We are always here – reach out anytime and expect a fast response.
Contact Email:
, 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
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, 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
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
BASIC EXERCISES
BE 1–1
a. A = L + SE
$710,000 = $195,000 + SE
SE = $515,000
b. A = L + SE
$710,000 + $125,000 = $195,000 + $25,000 + SE
$835,000 = $220,000 + SE
SE = $615,000
BE 1–2
Worldwide Travel
Income Statement
For the Year Ended July 31, 20Y6
Fees earned…............................................................................ $ 1,175,000
Expenses:
Salary and wages expense….............................................. $776,000
Office expense….................................................................. 175,000
Miscellaneous expense…................................................... 80,000
Total expenses…............................................................ (1,031,000)
Net income…............................................................................. $ 144,000
3
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
BE 1–3
Worldwide Travel
Statement of Stockholders’ Equity
For the Year Ended July 31, 20Y6
Common Retained
Stock Earnings Total
Balances, August 1, 20Y5…........................... $120,000 $550,000 $670,000
Issuance of common stock…......................... 60,000 60,000
Net income…................................................... 144,000 144,000
Dividends…...................................................... (35,000) (35,000)
Balances, July 31, 20Y6….............................. $180,000 $659,000 $839,000
BE 1–4
Worldwide Travel
Balance Sheet
July 31, 20Y6
Assets
Cash…....................................................................................... $143,450
Accounts receivable…............................................................. 42,750
Supplies…................................................................................. 3,800
Land…....................................................................................... 675,000
Total assets…........................................................................... $865,000
Liabilities
Accounts payable…................................................................. $ 26,000
Stockholders’ Equity
Common stock…...................................................................... $180,000
Retained earnings…................................................................. 659,000
Total stockholders’ equity…................................................... 839,000
Total liabilities and stockholders’ equity…........................... $865,000
4
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
BE 1–5
Worldwide Travel
Statement of Cash Flows
For the Year Ended July 31, 20Y6
Cash flows from (used for) operating activities:
Cash received from customers…............................ $ 1,225,000
Cash paid for operating expenses…....................... (1,116,050)
Net cash flows from operating activities…............. $108,950
Cash flows from (used for) investing activities:
Cash paid for purchase of land…............................ (50,000)
Cash flows from (used for) financing activities:
Cash received from issuance of common stock… $ 60,000
Cash paid as dividends…......................................... (35,000)
Net cash flows used for financing activities…....... 25,000
Net increase in cash ….................................................. $ 83,950
Cash balance, August 1, 20Y5…................................... 59,500
Cash balance, July 31, 20Y6…...................................... $143,450
BE 1–6
$190,000. Under the cost principle, the land should be recorded at the cost to Upstate
Metal Roofing.
BE 1–7
Net Income
Return on Assets =
Average Total Assets
$1,394,000 $1,394,000
Return on Assets = =
[($15,700,000 + $18,300,000) ÷ 2] $17,000,000
Return on Assets = 8.2%
5
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
EXERCISES
EX 1–1
1. service 6. merchandising 11. manufacturing
2. merchandising 7. manufacturing 12. manufacturing
3. manufacturing 8. manufacturing 13. service
4. manufacturing 9. merchandising 14. service
5. service 10. manufacturing 15. merchandising
EX 1–2
(in millions)
Best Buy: $14,967 – 11,914 = $3,053
Gamestop: $2,709 – 1,370 = $1,339
EX 1–3
(in millions)
Apple: $364,980 – $308,030 = $56,950
Microsoft: $512,163 – $243,686 = $268,477
EX 1–4
a. $295,500 + $475,000 = $770,500
b. $1,110,000 – $737,500 = $372,500
c. $3,350,000 – $1,050,000 = $2,300,000
EX 1–5
a. $69,831 – $46,209 = $23,622
b. $55,356 – $13,432 = $41,924
c. $162,050 + $90,349 = $252,399
EX 1–6
It would be incorrect to say the business had incurred a net loss of $10,000. The
excess of the dividends over the net income for the period is a decrease in the
amount of retained earnings in the business. Dividends are a distribution of
earnings to stockholders and are not included on the income statement.
6
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
EX 1–7
Company Chang
Stockholders’ equity at end of year ($900,000 – $300,000)............................... $ 600,000
Deduct stockholders’ equity at beginning of year ($775,000 – $400,000)....... (375,000)
Net income (increase in stockholders’ equity)............................................. $ 225,000
Company Henry
Increase in stockholders’ equity (as determined for Chang)........................... $225,000
Add dividends....................................................................................................... 90,000
Net income....................................................................................................... $315,000
Company Nagel
Increase in stockholders’ equity (as determined for Chang)........................... $ 225,000
Deduct additional issuance of capital stock...................................................... (125,000)
Net income....................................................................................................... $ 100,000
Company Wilcox
Increase in stockholders’ equity (as determined for Chang)........................... $ 225,000
Deduct additional issuance of capital stock...................................................... (125,000)
$ 100,000
Add dividends....................................................................................................... 90,000
Net income....................................................................................................... $ 190,000
EX 1–8
a. (1) $3,886 – $1,101 = $2,785
(2) $4,149 – $1,287 = $2,862
b. $7,831 – $6,065 – $1,565 – $1 – $61 = $139 net income
EX 1–9
Balance sheet items: 1, 2, 3, 7, 8
EX 1–10
Income statement items: 4, 5, 6, 9, 10
EX 1–11
1. a—asset 6. a—asset
2. b—liability 7. b—liability
3. a—asset 8. d—expense
4. e—dividend 9. d—expense
5. c—revenue 10. d—expense
7
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 The Role of Accounting in Business
EX 1–12
ALL SEASONS COMPANY
Statement of Stockholders' Equity
For the Month Ended June 30, 20Y7
Common Retained
Stock Earnings Total
Balances, June 1, 20Y7.............................. $40,000 $145,000 $185,000
Issuance of common stock....................... 25,000 25,000
Net income.................................................. 78,500 78,500
Dividends.................................................... (12,000) (12,000)
Balances, June 30, 20Y7............................ $65,000 $211,500 $276,500
EX 1–13
JLM SERVICES
Income Statement
For the Month Ended August 31, 20Y5
Fees earned............................................................................ $ 2,350,000
Operating expenses:
Wages expense................................................................. $1,515,000
Rent expense..................................................................... 220,000
Supplies expense.............................................................. 26,500
Miscellaneous expense.................................................... 44,750
Total operating expenses............................................ (1,806,250)
Net income.............................................................................. $ 543,750
8
© 2027 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
