Instructor’s.Manual./.Solutions.Manual
Full.Solution.Manual.for.Accounting.What.The.Numbers.Mean.13th.Edition.David.Marshall
CHAPTER
Accounting—Present and Past . .
1
CHAPTER.OUTLINE:
I. What.Is.Accounting?
A. Definition
B. Uses.of.Accounting.Information
C. Classifications
1. Financial.Accounting
2. Managerial.Accounting./.Cost.Accounting
3. Auditing.—.Public.Accounting
4. Internal.Auditing
5. Governmental.and.Not-for-Profit.Accounting
6. Income.Tax.Accounting
II. How.Has.Accounting.Developed?
A. Early.History
B. The.Accounting.Profession.in.the.United.States
C. Financial.Accounting.Standard.Setting.at.the.Present.Time
1. Financial.Accounting.Standards.Board
2. Standards.are.Evolving
D. Standards.for.Other.Types.of.Accounting
1. Managerial.Accounting./.Cost.Accounting
2. Auditing
3. Governmental.and.Not-for-Profit.Accounting
4. Income.Tax.Accounting
E. International.Accounting.Standards
F. Ethics.and.the.Accounting.Profession
III. The.Conceptual.Framework
A. Context
B. Summary.of.Concepts.Statement.No..8,.Chapter.1.—
.The.Objective.of.General.Purpose.Financial.Reporting
C. Objectives.of.Financial.Reporting.for.Nonbusiness.Organizations
IV. Plan.of.the.Book
, Instructor’s.Manual./.Solutions.Manual
TEACHING/LEARNING.OBJECTIVES:
Principal:
1. To.present.a.definition.of.accounting.
2. To.identify.and.describe.different. classifications.of.accounting.
3. To.emphasize.that.financial.accounting.standards.are.not.a.―fixed.code.of.rules,‖.but.are.estab
lished.in.response.to.user.needs.and.business.developments..Accountants.need.to.apply.profess
ional.judgment.in.the.application.of.accounting.principles.
4. To.emphasize.the.role.and.sources.of.ethics.for.the.accounting.profession.
Supporting:
5. To.summarize.how.accounting.has.evolved.over.time.
6. To.identify.sources.of.standards.for.other.types.of.accounting.and.to.contrast.these.with.fin
ancial.accounting.standards.
7. To.introduce.the.issues.associated.with.the.development.of.international.accounting.st
andards.
8. To.describe.the.context.of.the.FASB.Conceptual.Framework.project.
9. To.summarize.Concepts.Statement.No..8,.Chapter.1.—
.The.Objective.of.General.Purpose.Financial.Reporting.
10. To.relate.the.objectives.of.financial.reporting.for.nonbusiness.organizations.to.those.of.bu
siness.enterprises.
TEACHING.OBSERVATIONS/ASSIGNMENT.SUGGESTIONS:
1. Students.should.be.put.on.notice.about.the.jargon.of.accounting,.the.use.of.synonymous.terms
,.the.importance.of.the.context.within.which.a.term.is.used,.and.the.need.for.precision.in.the.us
e.of.terminology..The.first.example.of.jargon.is.the.term.entity.
2. When.discussing."Auditing.—
.Public.Accounting,".have.students.find.the.auditors'.opinion.in.the.Campbell.Soup.Company.
2020.Annual.Report.(see.pages.87-
88.of.the.Appendix)..Emphasize.that.a."clean.opinion".is.not.a."clean.bill.of.health."
3. Discuss.the.Summary.of.Concepts.Statement.No..8,.Chapter.1.—
.The.Objective.of.Financial.Reporting,.in.detail.
, Instructor’s.Manual./.Solutions.Manual
4. Assign.Exercise.1-
1..Encourage.students.to.experiment.with.websites.that.are.of.interest..In.addition,.or.as.an.alte
rnative.to.having.students.request.their.own.annual.reports,.distribute.reports.that.have.been.o
btained.by.the.instructor.
5. Use.Exercise.1-
5.to.generate.discussion.about.the.importance.of.ethical.standards.in.general.and.independence
.(in.both.appearance.and.fact).in.particular..Follow.up.with.a.brief.look.at.Exercise.1-
7.concerning.audit.independence.standards.
SOLUTIONS:
E1.3. This.exercise.provides.an.opportunity.to.gauge.where.the.students.are.in.terms.of.the
ir.prior.background.in.accounting,.be.it.practical.or.educational,.and.to.clear.up.som
e.of.the.common.misconceptions.(i.e.,.to.explain.that.accounting.goes
beyond.the.―how.to‖.aspects.of.bookkeeping.and.involves.the.use.of.judgment).
E1.4. This.exercise.provides.an.opportunity.to.align.student.and.instructor.expectations..F
or.first-
time.instructors.in.this.course,.or.for.those.having.a.diverse.student.group,.you.will.g
et.a.glimpse.at.the.common.perceptions.students.have.concerning.the.course.content
,.level.of.difficulty,.and.methods.of.presentation,
testing/evaluation,.and.grading.
E1.5. The.principal.factors.Jim.Sandrolini.must.consider.are.his.competence.and.indepen
dence..Is.he.competent.to.prepare.financial.statements.for.a.company.that.operates.in
.a.different.industry.than.the.one.in.which.he.works?.Accepting.a.contingent.fee.arra
ngement.would.normally.cause.an.impairment.of.his
independence.because.he.would.directly.benefit. if.the.loan.were.to.be.approved.
, Instructor’s.Manual./.Solutions.Manual
E1.6. Suggested.discussion.strategy:
Q:. Why.does.a.business.have.value?
A:. It.provides.the.owners.an.opportunity.to.earn.a.profit,.an.opportunity.for.persona
l.fulfillment.from.being.in.charge,.and.an.opportunity.to.provide.a.product.or.servic
e.that.is.useful.to.others.
Q:. How.can.this.value.be.measured?
A:. Financial.information.will.have.the.most.to.do.with.evaluating.the.firm‘s.profita
bility,.and.the.financial.statements.include.this.information.
Q:. How.is.an.asking.price.for.the.sale.of.a.business.established?
A:. The.asking.price.should.be.a.function.of.the.profit,.resources,.and.obligations.rel
ated.to.the.business.as.shown.in.the.financial.statements.
Note:.This.exercise.also.provides.an.opportunity.to.point.out.some.of.the.basic.limit
ations.of.the.data.provided.by.the.accounting.process.(e.g.,.historical.cost.informati
on.—
.how.useful.are.past.earnings.results.in.predicting.future.earnings.and.cash.flows?)..
Be.careful.not.to.get.too.carried.away.with.details..Let.the
students.lead.this.discussion.
Full.Solution.Manual.for.Accounting.What.The.Numbers.Mean.13th.Edition.David.Marshall
CHAPTER
Accounting—Present and Past . .
1
CHAPTER.OUTLINE:
I. What.Is.Accounting?
A. Definition
B. Uses.of.Accounting.Information
C. Classifications
1. Financial.Accounting
2. Managerial.Accounting./.Cost.Accounting
3. Auditing.—.Public.Accounting
4. Internal.Auditing
5. Governmental.and.Not-for-Profit.Accounting
6. Income.Tax.Accounting
II. How.Has.Accounting.Developed?
A. Early.History
B. The.Accounting.Profession.in.the.United.States
C. Financial.Accounting.Standard.Setting.at.the.Present.Time
1. Financial.Accounting.Standards.Board
2. Standards.are.Evolving
D. Standards.for.Other.Types.of.Accounting
1. Managerial.Accounting./.Cost.Accounting
2. Auditing
3. Governmental.and.Not-for-Profit.Accounting
4. Income.Tax.Accounting
E. International.Accounting.Standards
F. Ethics.and.the.Accounting.Profession
III. The.Conceptual.Framework
A. Context
B. Summary.of.Concepts.Statement.No..8,.Chapter.1.—
.The.Objective.of.General.Purpose.Financial.Reporting
C. Objectives.of.Financial.Reporting.for.Nonbusiness.Organizations
IV. Plan.of.the.Book
, Instructor’s.Manual./.Solutions.Manual
TEACHING/LEARNING.OBJECTIVES:
Principal:
1. To.present.a.definition.of.accounting.
2. To.identify.and.describe.different. classifications.of.accounting.
3. To.emphasize.that.financial.accounting.standards.are.not.a.―fixed.code.of.rules,‖.but.are.estab
lished.in.response.to.user.needs.and.business.developments..Accountants.need.to.apply.profess
ional.judgment.in.the.application.of.accounting.principles.
4. To.emphasize.the.role.and.sources.of.ethics.for.the.accounting.profession.
Supporting:
5. To.summarize.how.accounting.has.evolved.over.time.
6. To.identify.sources.of.standards.for.other.types.of.accounting.and.to.contrast.these.with.fin
ancial.accounting.standards.
7. To.introduce.the.issues.associated.with.the.development.of.international.accounting.st
andards.
8. To.describe.the.context.of.the.FASB.Conceptual.Framework.project.
9. To.summarize.Concepts.Statement.No..8,.Chapter.1.—
.The.Objective.of.General.Purpose.Financial.Reporting.
10. To.relate.the.objectives.of.financial.reporting.for.nonbusiness.organizations.to.those.of.bu
siness.enterprises.
TEACHING.OBSERVATIONS/ASSIGNMENT.SUGGESTIONS:
1. Students.should.be.put.on.notice.about.the.jargon.of.accounting,.the.use.of.synonymous.terms
,.the.importance.of.the.context.within.which.a.term.is.used,.and.the.need.for.precision.in.the.us
e.of.terminology..The.first.example.of.jargon.is.the.term.entity.
2. When.discussing."Auditing.—
.Public.Accounting,".have.students.find.the.auditors'.opinion.in.the.Campbell.Soup.Company.
2020.Annual.Report.(see.pages.87-
88.of.the.Appendix)..Emphasize.that.a."clean.opinion".is.not.a."clean.bill.of.health."
3. Discuss.the.Summary.of.Concepts.Statement.No..8,.Chapter.1.—
.The.Objective.of.Financial.Reporting,.in.detail.
, Instructor’s.Manual./.Solutions.Manual
4. Assign.Exercise.1-
1..Encourage.students.to.experiment.with.websites.that.are.of.interest..In.addition,.or.as.an.alte
rnative.to.having.students.request.their.own.annual.reports,.distribute.reports.that.have.been.o
btained.by.the.instructor.
5. Use.Exercise.1-
5.to.generate.discussion.about.the.importance.of.ethical.standards.in.general.and.independence
.(in.both.appearance.and.fact).in.particular..Follow.up.with.a.brief.look.at.Exercise.1-
7.concerning.audit.independence.standards.
SOLUTIONS:
E1.3. This.exercise.provides.an.opportunity.to.gauge.where.the.students.are.in.terms.of.the
ir.prior.background.in.accounting,.be.it.practical.or.educational,.and.to.clear.up.som
e.of.the.common.misconceptions.(i.e.,.to.explain.that.accounting.goes
beyond.the.―how.to‖.aspects.of.bookkeeping.and.involves.the.use.of.judgment).
E1.4. This.exercise.provides.an.opportunity.to.align.student.and.instructor.expectations..F
or.first-
time.instructors.in.this.course,.or.for.those.having.a.diverse.student.group,.you.will.g
et.a.glimpse.at.the.common.perceptions.students.have.concerning.the.course.content
,.level.of.difficulty,.and.methods.of.presentation,
testing/evaluation,.and.grading.
E1.5. The.principal.factors.Jim.Sandrolini.must.consider.are.his.competence.and.indepen
dence..Is.he.competent.to.prepare.financial.statements.for.a.company.that.operates.in
.a.different.industry.than.the.one.in.which.he.works?.Accepting.a.contingent.fee.arra
ngement.would.normally.cause.an.impairment.of.his
independence.because.he.would.directly.benefit. if.the.loan.were.to.be.approved.
, Instructor’s.Manual./.Solutions.Manual
E1.6. Suggested.discussion.strategy:
Q:. Why.does.a.business.have.value?
A:. It.provides.the.owners.an.opportunity.to.earn.a.profit,.an.opportunity.for.persona
l.fulfillment.from.being.in.charge,.and.an.opportunity.to.provide.a.product.or.servic
e.that.is.useful.to.others.
Q:. How.can.this.value.be.measured?
A:. Financial.information.will.have.the.most.to.do.with.evaluating.the.firm‘s.profita
bility,.and.the.financial.statements.include.this.information.
Q:. How.is.an.asking.price.for.the.sale.of.a.business.established?
A:. The.asking.price.should.be.a.function.of.the.profit,.resources,.and.obligations.rel
ated.to.the.business.as.shown.in.the.financial.statements.
Note:.This.exercise.also.provides.an.opportunity.to.point.out.some.of.the.basic.limit
ations.of.the.data.provided.by.the.accounting.process.(e.g.,.historical.cost.informati
on.—
.how.useful.are.past.earnings.results.in.predicting.future.earnings.and.cash.flows?)..
Be.careful.not.to.get.too.carried.away.with.details..Let.the
students.lead.this.discussion.
