Solution Manual For Financial Statement Analysis 13th Edition By Gibson, All 13 Chapters Covered, Verified Latest Edition

Solution Manual For Financial Statement Analysis,

13th Edition

By Charles H. Gibson, Verified Chapter's 1 - 13 | Complete

, Chapter 1 Introduction t tx t x tx




o Financial Reporting
tx tx




QUESTIONS


1- 1. a.
The AICPA is an organization of CPAs that prior to 1973 accepted the prim
tx tx tx tx tx tx tx tx tx tx tx tx tx




ary responsibility for the development of generally accepted accounting pri
tx tx tx tx tx tx tx tx tx




nciples. Their role was substantially reduced in 1973 when the Financial Acco
tx tx tx tx tx tx tx tx tx tx tx




unting Standards Board was established. Their role was further reduced wit
tx tx tx tx t x tx tx tx tx tx




h the establishment of the Public Company Accounting Oversight Board wa
tx tx tx tx tx tx tx tx tx tx




s established in 2002.
tx tx tx




b. The Financial Accounting Standards Board replaced the Accounting Pri
tx tx tx tx tx tx tx tx




nciples Board as the primary rule- tx tx tx tx tx




making body for accounting standards. It is an independent organizati
tx tx tx tx tx tx tx tx tx




on and includes members other than public accountants.
tx tx tx tx tx tx tx




c. The SEC has the authority to determine generally accepted accounting pri
tx tx tx tx tx tx tx tx tx tx




nciples and to regulate the accounting profession. The SEC has elected to
tx tx tx tx tx tx tx tx tx tx tx tx




leave much of the determination of generally accepted accounting princi
tx tx tx tx tx tx tx tx tx




ples to the private sector. The Financial Accounting Standards Board has
tx tx tx tx t x tx tx tx tx tx tx




played the major role in establishing accounting standards since 1973. Re
tx tx tx tx tx tx tx tx tx t x




gulation of the accounting profession was substantially turned over to the
tx tx tx tx tx tx tx tx tx tx t




x Public Company Accounting Oversight Board in 2002.
tx tx tx tx tx tx




1- 2.
tx




Consistency is obtained through the application of the same accounting pr
tx tx tx tx tx tx tx tx tx tx




inciple from period to period. A change in principle requires statement disc
tx tx tx tx t x tx tx tx tx tx tx

, losure.

1- 3.
tx




The concept of historical cost determines the balance sheet valuation of land. The
tx tx tx tx tx tx tx tx tx tx tx tx t




x realization concept requires that a transaction needs to occur for the profit to be r
tx tx tx tx tx tx tx tx tx tx tx tx tx tx




ecognized.


1- 4.
tx a. Entity
t x e. Historical cost
t x tx




b. Realization f. Historical cost
t x tx




c. Materiality g. Disclosure
t x




d. Conservatism


1- 5.
tx Entity concept tx

, 1- 6.
tx




Generally accepted accounting principles do not apply when a firm does not ap
tx tx tx tx tx tx tx tx tx tx tx tx




pear to be a going concern. If the decision is made that this is not a going conc
tx tx tx tx tx t x tx tx tx tx tx tx tx tx tx tx tx




ern, then the use of GAAP would not be appropriate.
tx tx tx tx tx tx tx tx tx




1- 7.
tx




With the time period assumption, inaccuracies of accounting for the entity, short
tx tx tx tx tx tx tx tx tx tx tx tx




of its complete life span, are accepted. The assumption is made that the entity ca
tx tx tx tx tx tx tx tx tx tx tx tx tx tx




n be accounted for reasonably accurately for a particular period of time. In othe
tx tx tx tx tx tx tx tx tx tx tx t x tx




r words, the decision is made to accept some inaccuracy because of incomplete i
tx tx tx tx tx tx tx tx tx tx tx tx tx




nformation about the future in exchange for more timely reporting. The stateme tx tx tx tx tx tx tx tx tx t x tx




nts are considered to be meaningful because material inaccuracies are not accep
tx tx tx tx tx tx tx tx tx tx tx




table.


1- 8. t x t x It is true that the only accurate way to account for the success or failure of an entit
tx tx tx tx tx tx tx tx tx tx tx tx tx tx tx tx tx




y is to accumulate all transactions from the opening of business until the busines
tx tx tx tx tx tx tx tx tx tx tx tx tx




s eventually liquidates. But it is not necessary that the statements be completely
tx tx t x tx tx tx tx tx tx tx tx tx tx




accurate in order for them to be meaningful. tx tx tx tx tx tx tx




1- 9. a. A year that ends when operations are at a low ebb for the year.
tx tx tx tx tx tx tx tx tx tx tx tx tx




b. The accounting time period is ended on December 31.
tx tx tx tx tx tx tx tx




c. A twelve-
tx




month accounting period that ends at the end of a month other than Dece
tx tx tx tx tx tx tx tx tx tx tx tx tx




mber 31. tx




1-10. Money.


1-
11. t x t x When money does not hold a stable value, the financial statements can lo
tx tx tx tx tx tx tx tx tx tx tx tx




se much of their significance. To the extent that money does not remain stable, i
tx tx tx tx t x tx tx tx tx tx tx tx tx tx