Solutions for Horngren's Financial & Managerial Accounting, The Managerial Chapters, 8th edition by Miller-Nobles

HORNGREN'Sp ACCOUNTINGp -p Eleventhp Edition SolutionspManual

1. Whatpispaccounting?

Accountingpispthepinformationpsystempthatpmeasurespbusinesspactivities,pprocesses
thepinformationpintopreports,pandpcommunicatespthepresultsptopdecisionpmakers.
Accountingpisptheplanguagepofpbusiness.



2. Brieflypdescribeptheptwopmajorpfieldspofpaccounting.

Financialpaccountingpprovidespinformationpforpexternalpdecisionpmakers,psuchpas
outsidepinvestors,plenders,pcustomers,pandpthepfederalpgovernment.pManagerial
accountingpfocusesponpinformationpforpinternalpdecisionpmakers,psuchpaspthe
company’spmanagerspandpemployees.



3. Describepthepvariousptypespofpindividualspwhopusepaccountingpinformationpandphowpt
heypusepthatpinformationptopmakepimportantpdecisions.

Individualspusepaccountingpinformationptophelppthempmanageptheirpmoney,pevaluatepa
apnewpjob,pandpbetterpdecidepwhetherptheypcanpaffordptopmakepapnewppurchase.
Businesspownerspusepaccountingpinformationptopsetpgoals,pmeasurepprogressptoward
thosepgoals,pandpmakepadjustmentspwhenpneeded.pInvestorspusepaccounting
informationptophelppthempdecidepwhetherporpnotpapcompanypispapgoodpinvestmentpand
onceptheyphavepinvested,ptheypusepapcompany’spfinancialpstatementsptopanalyzephow
theirpinvestmentpispperforming.pCreditorspusepaccountingpinformationptopdecide
whetherptoplendpmoneyptopapbusinesspandptopevaluatepapcompany’spabilityptopmake
theploanppayments.pTaxingpauthoritiespusepaccountingpinformationptopcalculatepthe
amountpofpincomeptaxpthatpapcompanyphasptoppay.




4. Whatpareptwopcertificationspavailablepforpaccountants?pBrieflypexplainpeachp
certification.

CertifiedpPublicpAccountantsp(CPAs)pareplicensedpprofessionalpaccountantspwho
servepthepgeneralppublic.pTheypworkpforppublicpaccountingpfirms,pbusinesses,
government,porpeducationalpinstitutions.pTopbepcertifiedptheypmustpmeetpeducational
and/orpexperienceprequirementspandppasspanpexam.pCertifiedpManagement
Accountantsp(CMAs)pspecializepinpaccountingpandpfinancialpmanagement
knowledge.pTheypworkpforpapsinglepcompany.




Chapterp1:pAccoutingpandpthepBusinesspEnvironment Pagep1pofp
80
Fullpfilepatphttps://testbanku.eu/Solution-Manual-for-Horngrens-Accounting-11th-Edition-by-Miller-Nobles

, HORNGREN'Sp ACCOUNTINGp -p Eleventhp Edition SolutionspManual

5. WhatpisptheprolepofpthepFinancialpAccountingpStandardspBoardp(FASB)?

ThepFASBpoverseespthepcreationpandpgovernancepofpaccountingpstandards.pThey
workpwithpgovernmentalpregulatorypagencies,pcongressionallypcreatedpgroups,pand
privatepgroups.



6. ExplainptheppurposepofpGenerallypAcceptedpAccountingpPrinciplesp(GAAP),pincludi
ngptheporganizationpcurrentlypresponsiblepforpthepcreationpandpgovernancepofpthes
epstandards.

ThepguidelinespforpaccountingpinformationparepcalledpGAAP.pItpispthepmainpU.S.
accountingprulepbookpandpispcurrentlypcreatedpandpgovernedpbypthepFASB.pInvestors
andplenderspmustphavepinformationpthatpisprelevantpandphaspfaithfulprepresentationpin
orderptopmakepdecisionspandpthepGAAPpprovidespthepframeworkpforpthispfinancial
reporting.



7. Describepthepsimilaritiespandpdifferencespamongpthepfourpdifferentptypespofpbusinesspe
ntitiespdiscussedpinpthepchapter.

Apsolepproprietorshipphaspapsinglepowner,pterminatespuponpthepowner’spdeathpor
choice,pthepownerphasppersonalpliabilitypforpthepbusiness’spdebts,pandpitpispnotpa
separateptaxpentity.pAppartnershipphasptwoporpmorepowners,pterminatespatppartner’s
choiceporpdeath,ptheppartnersphaveppersonalpliability,pandpitpispnotpapseparateptax
entity.pApcorporationpispapseparateplegalpentity,phasponeporpmorepowners,phas
indefiniteplife,pthepstockholdersparepnotppersonallypliablepforpthepbusiness’spdebts,
andpitpispapseparateptaxpentity.pAplimited-liabilitypcompanyphasponeporpmorepmembers
andpeachpisponlypliablepforphisporpherpownpactions,phaspanpindefiniteplife,pandpispnotpa
separateptaxpentity.



8. Apbusinessppurchasespanpacrepofplandpforp$5,000.pThepcurrentpmarketpvaluepisp$5,550pa
ndptheplandpwaspassessedpforppropertyptaxppurposespatp$5,250.pWhatpvaluepshouldpthepl
andpbeprecordedpat,pandpwhichpaccountingpprinciplepsupportspyourpanswer?

Theplandpshouldpbeprecordedpatp$5,000.pThepcostpprinciplepstatespthatpassetspshould
beprecordedpatptheirphistoricalpcost.



9. Whatpdoespthepgoingpconcernpassumptionpmeanpforpapbusiness?

Thepgoingpconcernpassumptionpassumespthatpthepentitypwillpremainpinpbusinesspfor
thepforeseeablepfuturepandplongpenoughptopusepexistingpresourcespforptheirpintended
purpose.




Chapterp1:pAccoutingpandpthepBusinesspEnvironment Pagep2pofp
80
Fullpfilepatphttps://testbanku.eu/Solution-Manual-for-Horngrens-Accounting-11th-Edition-by-Miller-Nobles

, HORNGREN'Sp ACCOUNTINGp -p Eleventhp Edition SolutionspManual

10. Whichpconceptpstatespthatpaccountingpinformationpshouldpbepcomplete,pneutral,pandpf
reepfrompmaterialperror?

Thepfaithfulprepresentationpconceptpstatespthatpaccountingpinformationpshouldpbe
complete,pneutral,pandpfreepfrompmaterialperror.



11. FinancialpstatementspinpthepUnitedpStatesparepreportedpinpU.S.pdollars.pWhatp
assumptionpsupportspthispstatement?

Thepmonetarypunitpassumptionpstatespthatpitemsponpthepfinancialpstatementspshould
bepmeasuredpinptermspofpapmonetarypunit.



12. ExplainptheprolepofpthepInternationalpAccountingpStandardspBoardp(IASB)pinprelationpt
opInternationalpFinancialpReportingpStandardsp(IFRS).

ThepIASBpisptheporganizationpthatpdevelopspandpcreatespIFRSpwhichparepapsetpof
globalpaccountingpstandardspthatpwouldpbepusedparoundpthepworld.



13. Whatpispthepaccountingpequation?pBrieflypexplainpeachpofpthepthreepparts.

Assetsp=pLiabilitiesp+pEquity.pAssetsparepeconomicpresourcespthatparepexpectedpto
benefitpthepbusinesspinpthepfuture.pTheyparepthingspofpvaluepthatpapbusinesspownspor
haspcontrolpof.pLiabilitiesparepdebtspthatparepowedptopcreditors.p Theypareponepsource
ofpclaimspagainstpassets.pEquitypispthepotherpsourcepofpclaimspagainstpassets.
Equitypispthepowners’pclaimspagainstpassetspandpispthepamountpofpassetspthatpis
leftpoverpafterpthepcompanyphasppaidpitspliabilities.pItprepresentspthepnetpworthpofpthe
business.




14. Whatpareptheptwopwayspthatpequitypincreases?p
Whatpareptheptwopwayspthatpequitypdecreases?

Equitypincreasespwithpowner’spcontributionspandprevenue.
Equitypdecreasespwithpexpensespandpowner’spwithdrawals.




Chapterp1:pAccoutingpandpthepBusinesspEnvironment Pagep3pofp
80
Fullpfilepatphttps://testbanku.eu/Solution-Manual-for-Horngrens-Accounting-11th-Edition-by-Miller-Nobles

, HORNGREN'Sp ACCOUNTINGp -p Eleventhp Edition SolutionspManual

15. Howpispnetpincomepcalculated?pDefineprevenuespandpexpenses.

Revenuesp–pExpensesp=pNetpIncome.pRevenuesparepearningspresultingpfrom
deliveringpgoodsporpservicesptopcustomers.pExpensesparepthepcostpofpsellingpgoods
orpservice.


16. Whatparepthepstepspusedpwhenpanalyzingpapbusinessptransaction?

Stepp1:pIdentifypthepaccountspandpthepaccountptype.pStepp2:pDecidepifpeachpaccount
increasesporpdecreases.pStepp3:pDeterminepifpthepaccountingpequationpispinpbalance.



17. Listpthepfourpfinancialpstatements.pBrieflypdescribepeachpstatement.

IncomepStatementp–pShowspthepdifferencepbetweenpanpentity’sprevenuespand
expensespandpreportspthepnetpincomeporpnetplosspforpapspecificpperiod.
StatementpofpOwner'spEquityp–pShowspthepchangespinpowner'spcapitalpforpa
specificpperiodpincludingpnetpincomep(loss)pandpwithdrawals.
BalancepSheetp–pShowspthepassets,pliabilities,pandpowners’pequitypofpthe
businesspaspofpapspecificpdate.
StatementpofpCashpFlowsp–pShowspapbusiness’spcashpreceiptspandpcashppayments
forpapspecificpperiod.




18. Whatpispthepcalculationpforpreturnponpassetsp(ROA)?pExplainpwhatpROApmeasures.

ReturnponpAssetsp=pNetpincomep/pAverageptotalpassets.pROApmeasuresphow
profitablypapcompanypusespitspassets.




Chapterp1:pAccoutingpandpthepBusinesspEnvironment Pagep4pofp
80
Fullpfilepatphttps://testbanku.eu/Solution-Manual-for-Horngrens-Accounting-11th-Edition-by-Miller-Nobles