Test Bank for Financial Accounting 11th Edition by Libby & Hodge, ISBN: 9781264229734, All 13 Chapters Covered, Verified Latest Edition

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CHAPTER 1: Financial Statements and Business Decisions
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Focus Company: Le-Nature’s Inc.
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CHAPTER 2: Investing and Financing Decisions and the Accounting System
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Focus Company: Chipotle Mexican Grill
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CHAPTER 3: Operating Decisions and the Accounting System
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Focus Company: Chipotle Mexican Grill
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CHAPTER 4: Adjustments, Financial Statements, and the Closing Process
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Focus Company: Chipotle Mexican Grill
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CHAPTER 5: Communicating and Analyzing Accounting Information
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Focus Company: Apple Inc.
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CHAPTER 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash
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Focus Company: Skechers U.S.A.
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CHAPTER 7: Reporting and Interpreting Cost of Goods Sold and Inventory
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Focus Company: Harley-Davidson, Inc.
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CHAPTER 8: Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Reso
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urces
Focus Company: FedEx Corporation
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CHAPTER 9: Reporting and Interpreting Liabilities
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Focus Company: Starbucks
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CHAPTER 10: Reporting and Interpreting Bond Securities
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Focus Company: Amazon
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CHAPTER 11: Reporting and Interpreting Stockholders’ Equity
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Focus Company: Microsoft
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CHAPTER 12: Statement of Cash Flows
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Focus Company: National Beverage Corporation
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CHAPTER 13: Analyzing Financial Statements
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Focus Company: The Home Depot
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,Chapter 1 GJ




Financial Statements and Business Decisions GJ GJ GJ GJ




ANSWERS TO QUESTIONS GJ GJ




1. Accounting is a system that collects and processes (analyzes, measures, and recor
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ds) financial information about an organization and reports that information todecisi
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on makers. GJ




2. Financial accounting involves preparation of the four basic financial statements andr
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elated disclosures for external decision makers. Managerial accounting involves the
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preparation of detailed plans, budgets, forecasts, and performance reports for intern
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al decision makers.
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3. Financial reports are used by both internal and external groups and individuals. Thei
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nternal groups are comprised of the various managers of the entity. The external gro
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ups include the owners, investors, creditors, governmental agencies, other intereste
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d parties, and the public at large.
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4. Investors purchase all or part of a business and hope to gain by receiving part of wh
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at the company earns and/or selling their ownership interest in the company in the f
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uture at a higher price than they paid. Creditors lend money to a company fora spec
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ific length of time and hope to gain by charging interest on the loan.
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, 5. In a society, each organization can be defined as a separate accounting entity. An ac
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counting entity is the organization for which financial data are to be collected. Typical
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accounting entities are a business, a church, a governmental unit, a university and o
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ther nonprofit organizations such as a hospital and a welfare organization. A busines
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s typically is defined and treated as a separate entity because the owners, creditors, i
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nvestors, and other interested parties need to evaluate its performance and its poten
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tial separately from other entities and from itsowners.
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6. Name of Statement GJ GJ Alternative Title GJ




(a) Income Statement GJ (a) Statement of Earnings; Statement of
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Income; Statement of Operations GJ GJ GJ




(b) Balance Sheet GJ (b) Statement of Financial Position
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(c) Cash Flow Statement GJ GJ (c) Statement of Cash Flows
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7. The heading of each of the four required financial statements should include thef
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ollowing:
(a) Name of the entity GJ GJ GJ




(b) Name of the statement GJ GJ GJ




(c) Date of the statement, or the period of time GJ GJ GJ GJ GJ GJ GJ GJ




(d) Unit of measure GJ GJ




8. (a)
The purpose of the income statement is to present information about the rev
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enues, expenses, and the net income of an entity for a specified period oftime
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.
(b) The purpose of the balance sheet is to report the financial position of an entityat
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a given date, that is, to report information about the assets, liabilities and stock
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holders’ equity of the entity as of a specific date. GJ GJ GJ GJ GJ GJ GJ GJ GJ




(c) The purpose of the statement of cash flows is to present information about thefl
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ow of cash into the entity (sources), the flow of cash out of the entity (uses), and
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the net increase or decrease in cash during the period.
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(d) The statement of stockholders’ equity reports the changes in each of the comp
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any’s stockholders’ equity accounts during the accounting period, including iss
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ue and repurchase of stock and the way that net income and distribution of divi
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dends affected the retained earnings of the company duringthat period.
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9. The income statement and the statement of cash flows are dated ―For the Year E
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nded December 31‖ because they report the inflows and outflows of resources du
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ring a period of time. In contrast, the balance sheet is dated ―At December 31‖bec
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ause it represents the resources, obligations, and stockholders’ equity at a specifi
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c date.
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