Fullffilefatfhttps://testbanku.eu/
fff
Solution Manual for Finan f f f
cial Accounting Informati
f f
on for Decisions 7th Editi
f f f f
on by Wil f f
Complete downloadable file at: f f f
https://testbanku.eu/Solution-Manual-
for-Financial-Accounting-Information-
for-Decisions-7th-Edition-by-Wil f
QUESTIONS
1.
Thefpurposefoffaccountingfisftofprovidefdecisionfmakersfwithfrelevantfandfreliablefinf
ormationftofhelpfthemfmakefbetterfdecisions.fExamplesfincludefinformationfforfpeoplef
makingfinvestments,floans,fandfbusinessfplans.f
2.
Technologyfreducesftheftime,feffort,fandfcostfoffrecordkeeping.fTherefisfstillfafdeman
dfforfpeoplefwhofcanfdesignfaccountingfsystems,fsuperviseftheirfoperation,fanalyzefco
mplexftransactions,fandfinterpretfreports.fDemandfalsofexistsfforfpeoplefwhofcanfeffect
ivelyfusefcomputersftofpreparefandfanalyzefaccountingfreports.fTechnologyfwillfneverfs
ubstitutefforfqualifiedfpeoplefwithfabilitiesftofprepare,fuse,fanalyze,fandfinterpretfaccou
ntingfinformation.
3.
Externalfusersfandftheirfusesfoffaccountingfinformationfinclude:f(a)flenders,ftofmeas
urefthefriskfandfreturnfoffloans;f(b)fshareholders,ftofassessfwhetherftofbuy,fsell,forfholdft
heirfshares;f(c)fdirectors,ftofoverseeftheirfinterestsfinftheforganization;f(d)femployeesfa
ndflaborfunions,ftofjudgeftheffairnessfoffwagesfandfassessffuturefemploymentfopportun
ities;fandf(e)fregulators,ftofdeterminefwhetherftheforganizationfisfcomplyingfwithfregula
tions.fOtherfusersfarefvoters,flegislators,fgovernmentfofficials,fcontributorsftofnonprofi
ts,fsuppliersfandfcustomers.
4.
Businessfownersfandfmanagersfusefaccountingfinformationftofhelpfanswerfquestion
sfsuchfas:fWhatfresourcesfdoesfanforganizationfown?fWhatfdebtsfarefowed?fHowfmuch
©f2015fbyfMcGraw-
HillfEducation.fAllfrightsfreserved.fNofreproductionforfdistributionfwithoutfthefpriorfwrittenfconsentfoffMcGraw-
HillfEducation. 1
SolutionsfManual,fChapterf1
,Chapterf01f-fIntroducingfFinancialfAccounting
incomefisfearned?fArefexpensesfreasonablefforftheflevelfoffsales?fArefcustomers’facco
f
untsfbeingfpromptlyfcollected?
5.
Servicefbusinessesfinclude:ffStandardfandfPoor’s,fDunf&fBradstreet,fMerrillfLynch,fS
outhwestfAirlines,fCitiCorp,fHumana,fCharlesfSchwab,fandfPrudential.ffBusinessesfoffe
ringfproductsfincludefNike,fReebok,fGap,fApplefComputer,fFordfMotorfCo.,fPhilipfMorri
s,fCoca-Cola,fBestfBuy,fandfCircuitfCity.f
6.
Thefinternalfrolefoffaccountingfisftofserveftheforganization’sfinternalfoperatingffuncti
ons.fItfdoesfthisfbyfprovidingfusefulfinformationfforfinternalfusersfinfcompletingftheirfta
sksfmorefeffectivelyfandfefficiently.fByfprovidingfthisfinformation,faccountingfhelpsfthef
organizationfreachfitsfoverallfgoals.
7.
Accountingfprofessionalsfofferfmanyfservicesfincludingfauditing,fmanagementfadvi
ce,ftaxfplanning,fbusinessfvaluation,fandfmoneyfmanagement.
8.
Marketingfmanagersfareflikelyfinterestedfinfinformationfsuchfasfsalesfvolume,fadvert
isingfcosts,fpromotionfcosts,fsalariesfoffsalesfpersonnel,fandfsalesfcommissions.f
©f2015fbyfMcGraw-
HillfEducation.fAllfrightsfreserved.fNofreproductionforfdistributionfwithoutfthefpriorfwrittenfconsentfoffMcGraw-
2 HillfEducation.
FinancialfAccounting,f7thfEdition
, Fullffilefatfhttps://testbanku.eu/
fff
9.
Accountingfisfdescribedfasfafservicefactivityfbecausefitfservesfdecisionfmakersfbyfpr
ovidingfinformationftofhelpfthemfmakefbetterfbusinessfdecisions.
10. Somefaccounting-
relatedfprofessionsfincludefconsultant,ffinancialfanalyst,funderwriter,ffinancialfplanner
,fappraiser,fFBIfinvestigator,fmarketfresearcher,fandfsystemfdesigner.
11.
Ethicsfrulesfrequirefthatfauditorsfavoidfauditingfclientsfinfwhichftheyfhavefafdirectfinv
estment,forfiffthefauditor’sffeefisfdependentfonftheffiguresfinfthefclient’sfreports.ffThisfwil
lfhelpfpreventfothersffromfdoubtingfthefqualityfoffthefauditor’sfreport.
12.
Infadditionftofpreparingftaxfreturns,ftaxfaccountantsfhelpfcompaniesfandfindividualsf
planffutureftransactionsftofminimizefthefamountfofftaxftofbefpaid.ffTheyfarefalsofactivelyfi
nvolvedfinfestatefplanningfandfinfhelpingfsetfupforganizations.fSomeftaxfaccountantsfw
orkfforfregulatoryfagenciesfsuchfasfthefIRSforfthefvariousfstatefdepartmentsfoffrevenue.
ffTheseftaxfaccountantsfhelpftofenforceftaxflaws.
13.
Thefobjectivityfconceptfmeansfthatffinancialfstatementfinformationfisfsupportedfbyfi
ndependent,funbiasedfevidencefotherfthanfsomeone’sfopinionforfimagination.ffThisfco
nceptfincreasesfthefreliabilityfandfverifiabilityfofffinancialfstatementfinformation.
14. Thisftreatmentfisfjustifiedfbyfbothfthefcostfprinciplefandfthefgoing-concernfassumption.
15.
Thefrevenuefrecognitionfprinciplefprovidesfguidancefforfmanagersfandfauditorsfsofthe
yfknowfwhenftofrecognizefrevenue.ffIffrevenuefisfrecognizedftoofearly,fthefbusinessflook
sfmorefprofitablefthanfitfis.ffOnfthefotherfhand,fiffrevenuefisfrecognizedftooflatefthefbusin
essflooksflessfprofitablefthanfitfis.ffThisfprinciplefdemandsfthatfrevenuefbefrecognizedfw
henfitfisfbothfearnedf(whenfserviceforfproductfprovided)fandfcanfbefmeasuredfreliably.ffT
hefamountfoffrevenuefshouldfequalfthefvaluefoffthefassetsfreceivedforfexpectedftofbefrec
eivedffromfthefbusiness’sfoperatingfactivitiesfcoveringfafspecificftimefperiod.
16.
Businessforganizationsfcanfbeforganizedfinfonefoffthreefbasicfforms:fsolefproprietor
ship,fpartnership,forfcorporation.fThesefformsfhavefimplicationsfforflegalfliability,ftaxati
on,fcontinuity,fnumberfoffowners,fandflegalfstatusfasffollows:
Proprietorship ffffPartnership ffffCorporation
Businessfentity yes yes yes
Legalfentity no no yes
Limitedfliability no* no* yes
Unlimitedflife ffffff no no yes
Businessftaxed no no yes
Onefownerfallowed yes no yes
*ProprietorshipsfandfpartnershipsfthatfarefsetfupfasfLLCsfprovideflimitedfliability.
17.
(a)fAssetsfarefresourcesfownedforfcontrolledfbyfafcompanyfthatfarefexpectedftofyieldf
futurefbenefits.f(b)fLiabilitiesfarefcreditors’fclaimsfonfassetsfthatfreflectfobligationsftofp
rovidefassets,fproductsforfservicesftofothers.f(c)fEquityfisfthefowner’sfclaimfonfassetsfa
ndfisfequalftofassetsfminusfliabilities.f(d)fNetfassetsfreferftofequity.
©f2015fbyfMcGraw-
HillfEducation.fAllfrightsfreserved.fNofreproductionforfdistributionfwithoutfthefpriorfwrittenfconsentfoffMcGraw-
HillfEducation. 3
SolutionsfManual,fChapterf1
, Chapterf01f-fIntroducingfFinancialfAccounting
18.
Equityfisfincreasedfbyfinvestmentsffromfthefstockholder(s)fandfbyfnetfincomef(whichf
isfthefexcessfoffrevenuesfoverfexpenses).ffItfisfdecreasedfbyfdividendsfandfbyfafnetflossf
(whichfisfthefexcessfoffexpensesfoverfrevenues).
©f2015fbyfMcGraw-
HillfEducation.fAllfrightsfreserved.fNofreproductionforfdistributionfwithoutfthefpriorfwrittenfconsentfoffMcGraw-
4 HillfEducation.
FinancialfAccounting,f7thfEdition
fff
Solution Manual for Finan f f f
cial Accounting Informati
f f
on for Decisions 7th Editi
f f f f
on by Wil f f
Complete downloadable file at: f f f
https://testbanku.eu/Solution-Manual-
for-Financial-Accounting-Information-
for-Decisions-7th-Edition-by-Wil f
QUESTIONS
1.
Thefpurposefoffaccountingfisftofprovidefdecisionfmakersfwithfrelevantfandfreliablefinf
ormationftofhelpfthemfmakefbetterfdecisions.fExamplesfincludefinformationfforfpeoplef
makingfinvestments,floans,fandfbusinessfplans.f
2.
Technologyfreducesftheftime,feffort,fandfcostfoffrecordkeeping.fTherefisfstillfafdeman
dfforfpeoplefwhofcanfdesignfaccountingfsystems,fsuperviseftheirfoperation,fanalyzefco
mplexftransactions,fandfinterpretfreports.fDemandfalsofexistsfforfpeoplefwhofcanfeffect
ivelyfusefcomputersftofpreparefandfanalyzefaccountingfreports.fTechnologyfwillfneverfs
ubstitutefforfqualifiedfpeoplefwithfabilitiesftofprepare,fuse,fanalyze,fandfinterpretfaccou
ntingfinformation.
3.
Externalfusersfandftheirfusesfoffaccountingfinformationfinclude:f(a)flenders,ftofmeas
urefthefriskfandfreturnfoffloans;f(b)fshareholders,ftofassessfwhetherftofbuy,fsell,forfholdft
heirfshares;f(c)fdirectors,ftofoverseeftheirfinterestsfinftheforganization;f(d)femployeesfa
ndflaborfunions,ftofjudgeftheffairnessfoffwagesfandfassessffuturefemploymentfopportun
ities;fandf(e)fregulators,ftofdeterminefwhetherftheforganizationfisfcomplyingfwithfregula
tions.fOtherfusersfarefvoters,flegislators,fgovernmentfofficials,fcontributorsftofnonprofi
ts,fsuppliersfandfcustomers.
4.
Businessfownersfandfmanagersfusefaccountingfinformationftofhelpfanswerfquestion
sfsuchfas:fWhatfresourcesfdoesfanforganizationfown?fWhatfdebtsfarefowed?fHowfmuch
©f2015fbyfMcGraw-
HillfEducation.fAllfrightsfreserved.fNofreproductionforfdistributionfwithoutfthefpriorfwrittenfconsentfoffMcGraw-
HillfEducation. 1
SolutionsfManual,fChapterf1
,Chapterf01f-fIntroducingfFinancialfAccounting
incomefisfearned?fArefexpensesfreasonablefforftheflevelfoffsales?fArefcustomers’facco
f
untsfbeingfpromptlyfcollected?
5.
Servicefbusinessesfinclude:ffStandardfandfPoor’s,fDunf&fBradstreet,fMerrillfLynch,fS
outhwestfAirlines,fCitiCorp,fHumana,fCharlesfSchwab,fandfPrudential.ffBusinessesfoffe
ringfproductsfincludefNike,fReebok,fGap,fApplefComputer,fFordfMotorfCo.,fPhilipfMorri
s,fCoca-Cola,fBestfBuy,fandfCircuitfCity.f
6.
Thefinternalfrolefoffaccountingfisftofserveftheforganization’sfinternalfoperatingffuncti
ons.fItfdoesfthisfbyfprovidingfusefulfinformationfforfinternalfusersfinfcompletingftheirfta
sksfmorefeffectivelyfandfefficiently.fByfprovidingfthisfinformation,faccountingfhelpsfthef
organizationfreachfitsfoverallfgoals.
7.
Accountingfprofessionalsfofferfmanyfservicesfincludingfauditing,fmanagementfadvi
ce,ftaxfplanning,fbusinessfvaluation,fandfmoneyfmanagement.
8.
Marketingfmanagersfareflikelyfinterestedfinfinformationfsuchfasfsalesfvolume,fadvert
isingfcosts,fpromotionfcosts,fsalariesfoffsalesfpersonnel,fandfsalesfcommissions.f
©f2015fbyfMcGraw-
HillfEducation.fAllfrightsfreserved.fNofreproductionforfdistributionfwithoutfthefpriorfwrittenfconsentfoffMcGraw-
2 HillfEducation.
FinancialfAccounting,f7thfEdition
, Fullffilefatfhttps://testbanku.eu/
fff
9.
Accountingfisfdescribedfasfafservicefactivityfbecausefitfservesfdecisionfmakersfbyfpr
ovidingfinformationftofhelpfthemfmakefbetterfbusinessfdecisions.
10. Somefaccounting-
relatedfprofessionsfincludefconsultant,ffinancialfanalyst,funderwriter,ffinancialfplanner
,fappraiser,fFBIfinvestigator,fmarketfresearcher,fandfsystemfdesigner.
11.
Ethicsfrulesfrequirefthatfauditorsfavoidfauditingfclientsfinfwhichftheyfhavefafdirectfinv
estment,forfiffthefauditor’sffeefisfdependentfonftheffiguresfinfthefclient’sfreports.ffThisfwil
lfhelpfpreventfothersffromfdoubtingfthefqualityfoffthefauditor’sfreport.
12.
Infadditionftofpreparingftaxfreturns,ftaxfaccountantsfhelpfcompaniesfandfindividualsf
planffutureftransactionsftofminimizefthefamountfofftaxftofbefpaid.ffTheyfarefalsofactivelyfi
nvolvedfinfestatefplanningfandfinfhelpingfsetfupforganizations.fSomeftaxfaccountantsfw
orkfforfregulatoryfagenciesfsuchfasfthefIRSforfthefvariousfstatefdepartmentsfoffrevenue.
ffTheseftaxfaccountantsfhelpftofenforceftaxflaws.
13.
Thefobjectivityfconceptfmeansfthatffinancialfstatementfinformationfisfsupportedfbyfi
ndependent,funbiasedfevidencefotherfthanfsomeone’sfopinionforfimagination.ffThisfco
nceptfincreasesfthefreliabilityfandfverifiabilityfofffinancialfstatementfinformation.
14. Thisftreatmentfisfjustifiedfbyfbothfthefcostfprinciplefandfthefgoing-concernfassumption.
15.
Thefrevenuefrecognitionfprinciplefprovidesfguidancefforfmanagersfandfauditorsfsofthe
yfknowfwhenftofrecognizefrevenue.ffIffrevenuefisfrecognizedftoofearly,fthefbusinessflook
sfmorefprofitablefthanfitfis.ffOnfthefotherfhand,fiffrevenuefisfrecognizedftooflatefthefbusin
essflooksflessfprofitablefthanfitfis.ffThisfprinciplefdemandsfthatfrevenuefbefrecognizedfw
henfitfisfbothfearnedf(whenfserviceforfproductfprovided)fandfcanfbefmeasuredfreliably.ffT
hefamountfoffrevenuefshouldfequalfthefvaluefoffthefassetsfreceivedforfexpectedftofbefrec
eivedffromfthefbusiness’sfoperatingfactivitiesfcoveringfafspecificftimefperiod.
16.
Businessforganizationsfcanfbeforganizedfinfonefoffthreefbasicfforms:fsolefproprietor
ship,fpartnership,forfcorporation.fThesefformsfhavefimplicationsfforflegalfliability,ftaxati
on,fcontinuity,fnumberfoffowners,fandflegalfstatusfasffollows:
Proprietorship ffffPartnership ffffCorporation
Businessfentity yes yes yes
Legalfentity no no yes
Limitedfliability no* no* yes
Unlimitedflife ffffff no no yes
Businessftaxed no no yes
Onefownerfallowed yes no yes
*ProprietorshipsfandfpartnershipsfthatfarefsetfupfasfLLCsfprovideflimitedfliability.
17.
(a)fAssetsfarefresourcesfownedforfcontrolledfbyfafcompanyfthatfarefexpectedftofyieldf
futurefbenefits.f(b)fLiabilitiesfarefcreditors’fclaimsfonfassetsfthatfreflectfobligationsftofp
rovidefassets,fproductsforfservicesftofothers.f(c)fEquityfisfthefowner’sfclaimfonfassetsfa
ndfisfequalftofassetsfminusfliabilities.f(d)fNetfassetsfreferftofequity.
©f2015fbyfMcGraw-
HillfEducation.fAllfrightsfreserved.fNofreproductionforfdistributionfwithoutfthefpriorfwrittenfconsentfoffMcGraw-
HillfEducation. 3
SolutionsfManual,fChapterf1
, Chapterf01f-fIntroducingfFinancialfAccounting
18.
Equityfisfincreasedfbyfinvestmentsffromfthefstockholder(s)fandfbyfnetfincomef(whichf
isfthefexcessfoffrevenuesfoverfexpenses).ffItfisfdecreasedfbyfdividendsfandfbyfafnetflossf
(whichfisfthefexcessfoffexpensesfoverfrevenues).
©f2015fbyfMcGraw-
HillfEducation.fAllfrightsfreserved.fNofreproductionforfdistributionfwithoutfthefpriorfwrittenfconsentfoffMcGraw-
4 HillfEducation.
FinancialfAccounting,f7thfEdition
