Instructor Manual: Warren, Corporate Financial Accounting, 16e, 2022, 9780357510384; Chapter 1: Introduction to Accounting
and Business
Instructor Manual
Warren, Corporate Financial Accounting, 16e, 2022, 9780357510384,
Chapter 1: Introduction to Accounting and Business
Table of Contents
Purpose and Perspective of the Chapter........................................................................................2
Purpose and Perspective of the Chapter........................................................................................2
Cengage Supplements.......................................................................................................................2
Cengage Supplements.......................................................................................................................2
Chapter Objectives.............................................................................................................................2
Chapter Objectives.............................................................................................................................2
Complete List of Chapter Activities and Assessments...................................................................3
Complete List of Chapter Activities and Assessments...................................................................3
Key Terms............................................................................................................................................3
Key Terms............................................................................................................................................3
What's New in This Chapter..............................................................................................................8
What's New in This Chapter..............................................................................................................8
Chapter Outline...................................................................................................................................8
Chapter Outline...................................................................................................................................8
Discussion Questions.......................................................................................................................12
Discussion Questions.......................................................................................................................12
Additional Activities and Assignments...........................................................................................14
Additional Activities and Assignments...........................................................................................14
Additional Resources.......................................................................................................................16
Additional Resources.......................................................................................................................16
Cengage Video Resources..................................................................................... 16
© 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 1
website, in whole or in part.
,Instructor Manual: Warren, Corporate Financial Accounting, 16e, 2022, 9780357510384; Chapter 1: Introduction to Accounting
and Business
Purpose and Perspective of the Chapter
The purpose of this chapter is to introduce students to business and accounting. For many
students, Chapter 1 of Corporate Financial Accounting is their first taste of the business or
accounting disciplines. The teaching challenge is to get students to understand and accept
the importance of learning business and accounting concepts. This will make the course
more than just another requirement that students must complete to graduate. Because
this chapter will set the tone for the entire course and the students’ business careers, avoid
the temptation to rush through the material.
Chapter 1 begins with a discussion of the nature of business and accounting and the
different types of businesses (service, retail, and manufacturing). Next, the chapter
describes the role of accounting in business. The chapter then moves on to business ethics
and discusses how individual character, firm culture, and laws and enforcement affect
ethics as well as examples of accounting/business fraud. Opportunities in accounting
professions/careers are discussed. Following this introductory information, the text
explains generally accepted accounting principles (GAAP), the characteristics of financial
information, and the assumptions that form the basis of GAAP. The forms of business
entities (proprietorships, partnerships, corporations, and limited liability companies) are
described. The four principles of financial accounting (measurement, historical cost,
revenue recognition, and expense recognition) are defined. The accounting equation is
introduced, and then the discussion of how business transactions affect accounts in the
accounting equation begins. When transactions are analyzed, changes in assets, liabilities,
and stockholders’ equity are stated as “increases” or “decreases”; the terms debit and credit
are not introduced until Chapter 2. The components of the accounting equation are
discussed using several transactions for a business called NetSolutions. Next are examples
of how to prepare the four primary financial statements using the accounting equation
information and explanations of how the four financial statements are interrelated. The
chapter ends with an explanation of the ratio of liabilities to stockholders’ equity and how it
is particularly important to creditors.
Cengage Supplements
The following product-level supplements provide additional information that may help you
in preparing your course. They are available in the Instructor Resource Center.
Educator’s Guide
PowerPoint® slides
Test bank powered by Cognero®
Chapter Objectives
The following objectives are addressed in this chapter:
Obj. 1 Describe the nature of business and the role of accounting and ethics in business.
Obj. 2 Describe generally accepted accounting principles, including the underlying
assumptions and principles.
© 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 2
website, in whole or in part.
, Instructor Manual: Warren, Corporate Financial Accounting, 16e, 2022, 9780357510384; Chapter 1: Introduction to Accounting
and Business
Obj. 3 State the accounting equation and define each element of the equation.
Obj. 4 Describe and illustrate how business transactions can be recorded in terms of the
resulting change in the elements of the accounting equation.
Obj. 5 Describe the financial statements of a corporation and explain how they
interrelate.
Obj. 6 Describe and illustrate the use of the ratio of liabilities to stockholders’ equity in
evaluating a company’s financial condition.
Complete List of Chapter Activities and Assessments
For additional guidance, refer to the Teaching Online Guide.
Chapter
Objective PPT Slide Activity/Assessment
Obj. 1 2 Icebreaker
Obj. 1 6–7 Knowledge Check Activity 1
Obj. 2 25–26 Discussion Activity 1
Obj. 3 28–29 Discussion Activity 2
Obj. 4 44–45 Knowledge Check Activity 2
Obj. 5 57–58 Knowledge Check Activity 3
[return to top]
Key Terms
Account payable: The liability created by a purchase on account.
Account receivable: An asset, which is a claim against the customer created by selling
merchandise or services on credit.
Accounting: An information system that provides reports to stakeholders about the
economic activities and condition of a business.
Accounting assumptions: Assumptions that provide the framework upon which
accounting standards are constructed.
Accounting equation: The equation that shows the relationship among assets, liabilities,
and equity; expressed as Assets = Liabilities + Equity.
Accounting principles: Principles that provide the framework upon which accounting
standards are constructed.
Accounting standards: The rules that determine the accounting for individual business
transactions.
Accounting Standards Codification: An electronic database maintained by the Financial
Accounting Standards Board (FASB) that contains all of the accounting standards that make
up the generally accepted accounting principles (GAAP).
© 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 3
website, in whole or in part.
and Business
Instructor Manual
Warren, Corporate Financial Accounting, 16e, 2022, 9780357510384,
Chapter 1: Introduction to Accounting and Business
Table of Contents
Purpose and Perspective of the Chapter........................................................................................2
Purpose and Perspective of the Chapter........................................................................................2
Cengage Supplements.......................................................................................................................2
Cengage Supplements.......................................................................................................................2
Chapter Objectives.............................................................................................................................2
Chapter Objectives.............................................................................................................................2
Complete List of Chapter Activities and Assessments...................................................................3
Complete List of Chapter Activities and Assessments...................................................................3
Key Terms............................................................................................................................................3
Key Terms............................................................................................................................................3
What's New in This Chapter..............................................................................................................8
What's New in This Chapter..............................................................................................................8
Chapter Outline...................................................................................................................................8
Chapter Outline...................................................................................................................................8
Discussion Questions.......................................................................................................................12
Discussion Questions.......................................................................................................................12
Additional Activities and Assignments...........................................................................................14
Additional Activities and Assignments...........................................................................................14
Additional Resources.......................................................................................................................16
Additional Resources.......................................................................................................................16
Cengage Video Resources..................................................................................... 16
© 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 1
website, in whole or in part.
,Instructor Manual: Warren, Corporate Financial Accounting, 16e, 2022, 9780357510384; Chapter 1: Introduction to Accounting
and Business
Purpose and Perspective of the Chapter
The purpose of this chapter is to introduce students to business and accounting. For many
students, Chapter 1 of Corporate Financial Accounting is their first taste of the business or
accounting disciplines. The teaching challenge is to get students to understand and accept
the importance of learning business and accounting concepts. This will make the course
more than just another requirement that students must complete to graduate. Because
this chapter will set the tone for the entire course and the students’ business careers, avoid
the temptation to rush through the material.
Chapter 1 begins with a discussion of the nature of business and accounting and the
different types of businesses (service, retail, and manufacturing). Next, the chapter
describes the role of accounting in business. The chapter then moves on to business ethics
and discusses how individual character, firm culture, and laws and enforcement affect
ethics as well as examples of accounting/business fraud. Opportunities in accounting
professions/careers are discussed. Following this introductory information, the text
explains generally accepted accounting principles (GAAP), the characteristics of financial
information, and the assumptions that form the basis of GAAP. The forms of business
entities (proprietorships, partnerships, corporations, and limited liability companies) are
described. The four principles of financial accounting (measurement, historical cost,
revenue recognition, and expense recognition) are defined. The accounting equation is
introduced, and then the discussion of how business transactions affect accounts in the
accounting equation begins. When transactions are analyzed, changes in assets, liabilities,
and stockholders’ equity are stated as “increases” or “decreases”; the terms debit and credit
are not introduced until Chapter 2. The components of the accounting equation are
discussed using several transactions for a business called NetSolutions. Next are examples
of how to prepare the four primary financial statements using the accounting equation
information and explanations of how the four financial statements are interrelated. The
chapter ends with an explanation of the ratio of liabilities to stockholders’ equity and how it
is particularly important to creditors.
Cengage Supplements
The following product-level supplements provide additional information that may help you
in preparing your course. They are available in the Instructor Resource Center.
Educator’s Guide
PowerPoint® slides
Test bank powered by Cognero®
Chapter Objectives
The following objectives are addressed in this chapter:
Obj. 1 Describe the nature of business and the role of accounting and ethics in business.
Obj. 2 Describe generally accepted accounting principles, including the underlying
assumptions and principles.
© 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 2
website, in whole or in part.
, Instructor Manual: Warren, Corporate Financial Accounting, 16e, 2022, 9780357510384; Chapter 1: Introduction to Accounting
and Business
Obj. 3 State the accounting equation and define each element of the equation.
Obj. 4 Describe and illustrate how business transactions can be recorded in terms of the
resulting change in the elements of the accounting equation.
Obj. 5 Describe the financial statements of a corporation and explain how they
interrelate.
Obj. 6 Describe and illustrate the use of the ratio of liabilities to stockholders’ equity in
evaluating a company’s financial condition.
Complete List of Chapter Activities and Assessments
For additional guidance, refer to the Teaching Online Guide.
Chapter
Objective PPT Slide Activity/Assessment
Obj. 1 2 Icebreaker
Obj. 1 6–7 Knowledge Check Activity 1
Obj. 2 25–26 Discussion Activity 1
Obj. 3 28–29 Discussion Activity 2
Obj. 4 44–45 Knowledge Check Activity 2
Obj. 5 57–58 Knowledge Check Activity 3
[return to top]
Key Terms
Account payable: The liability created by a purchase on account.
Account receivable: An asset, which is a claim against the customer created by selling
merchandise or services on credit.
Accounting: An information system that provides reports to stakeholders about the
economic activities and condition of a business.
Accounting assumptions: Assumptions that provide the framework upon which
accounting standards are constructed.
Accounting equation: The equation that shows the relationship among assets, liabilities,
and equity; expressed as Assets = Liabilities + Equity.
Accounting principles: Principles that provide the framework upon which accounting
standards are constructed.
Accounting standards: The rules that determine the accounting for individual business
transactions.
Accounting Standards Codification: An electronic database maintained by the Financial
Accounting Standards Board (FASB) that contains all of the accounting standards that make
up the generally accepted accounting principles (GAAP).
© 2022 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 3
website, in whole or in part.
