,SOLUTION MANUAL FOR College Accounting,
Chapters 1-27 24th Edition by James A. Heintz
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
, CHAPTER 1 1
CHAPTER 1
INTRODUCTION TO ACCOUNTING
DISCUSSION QUESTIONS
1. The purpose of accounting is to provide financial information about a business to individuals,
agencies, and organizations.
2. Four user groups normally interested in financial information about a business are owners,
managers, creditors, and government agencies.
3. The six major steps of the accounting process are listed below.
a. Analyzing is looking at events that have taken place and thinking about how these affect the
business. This first step in the accounting process usually occurs when the business receives
some type of information, such as a bill, that needs to be properly entered into the business’s
records. This first step also involves deciding if the piece of information should result in an
accounting entry or not.
b. Recording is entering financial information into the accounting system.
c. Classifying is sorting and grouping like items together.
d. Summarizing is the aggregation of many similar events to provide information that is easy to
understand.
e. Reporting is telling the results.
f. Interpreting is deciding the importance of information in the various reports.
4. Generally accepted accounting principles (GAAP) are the rules that businesses must follow when
preparing financial statements.
5. FASB takes the following steps to develop an accounting standard:
1. The issue is placed on the Board’s agenda.
2. After researching the issue, a Preliminary Views document is issued.
3. Public hearings are held.
4. An Exposure Draft is issued.
5. An Accounting Standards Update is issued, which amends the FASB Accounting Standards
Codification.
6. The International Accounting Standards Board.
7. The three types of ownership structures are listed below.
a. A sole proprietorship is owned by one person. The owner assumes all risks for the business. The
advantage is that the owner can make all of the business decisions.
b. A partnership is owned by more than one person. Partners assume the risks for the business,
and their assets may be taken to pay creditors. An advantage of a partnership is that owners
share risks and decision making. A disadvantage is that partners may disagree about the best
way to run the business.
c. A corporation is owned by stockholders. The owners’ risk is usually limited to their initial
investment, but they typically have very little influence on business decisions.
8. Three types of businesses classified by activities are service businesses, merchandising businesses,
and manufacturing businesses.
9. An accounting clerk performs accounting tasks such as recording, sorting, and filing accounting
information.
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,2 CHAPTER 1
10. Four areas of specialization for a public accountant are auditing, taxation, management advisory
services, and forensic accounting.
Auditing—Auditing involves the application of standard review and testing procedures to be
certain that proper accounting policies and practices have been followed. The purpose of the
audit is to provide an independent opinion that the financial information about a business is fairly
presented.
Taxation—The work of tax specialists includes offering advice on tax planning, preparing tax
returns, and representing clients before governmental agencies, such as the Internal Revenue
Service.
Management Advisory Services—Given the financial training and business experience of public
accountants, many businesses seek their advice on a wide variety of managerial issues.
Forensic Accounting—Forensic accounting is a specialized field that combines fraud detection,
fraud prevention, litigation support, expert witnessing, business valuations, and other
investigative activities.
11. The Sarbanes-Oxley Act (SOX) was passed by Congress to help improve reporting practices of
public companies. One important provision prohibits accounting firms from providing audit and
management advisory services to the same company.
12. Six areas of specialization for a managerial accountant are accounting information systems, financial
accounting, cost accounting, budgeting, tax accounting, and internal auditing.
Accounting Information Systems—Accountants in this area design and implement manual and
computerized accounting systems.
Financial Accounting—Based on the accounting data prepared by the bookkeepers and
accounting clerks, the accountant prepares various reports and financial statements.
Cost Accounting—The cost of producing specific products or providing services must be
measured. Further analysis is also done to determine whether the products and services are
produced in the most cost-effective manner.
Budgeting—In the budgeting process, accountants help management develop a financial plan
for the future.
Tax Accounting—A firm may have its own accountants to focus on tax planning, preparation of
tax returns, and dealing with the Internal Revenue Service and other governmental agencies.
Internal Auditing—The main functions of an internal auditor are to review the operating and
accounting control procedures adopted by management and to see that accurate and timely
information is provided.
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 3
Exercise 1-1A
1. d Owners a. Whether the firm can pay its bills on time
2. b Managers b. Detailed, up-to-date information to measure business
performance (and plan for future operations)
3. a Creditors c. To determine taxes to be paid and whether other
regulations are met
4. c Government d. The firm’s current financial condition
agencies
Exercise 1-2A
Order Accounting Process Definition
2 Recording entering financial information into the accounting
system
4 Summarizing aggregating many similar events to provide
information that is easy to understand
5 Reporting telling the results
1 Analyzing looking to see what events have taken place and
thinking about how these affect the business
6 Interpreting deciding the importance of information on the
various reports
3 Classifying sorting and grouping like items together
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,4 CHAPTER 1
Exercise 1-3A
1. Airline Service
2. Hotel Service
3. Clothing Store Merchandising
4. Concert Service
5. Convenience Store Merchandising
6. Shoe Factory Manufacturing
7. Car Dealership Merchandising
8. Dry Cleaner Service
Exercise 1-1B
Users Information
Owners (present and future): firm’s profitability and current financial condition
Managers: detailed, up-to-date information about the business to
measure performance
Creditors (present and future): firm’s profitability, debt outstanding, and assets that could
be used to secure debt
Government agencies: firm’s profitability, cash flows, and overall financial
condition
Exercise 1-2B
Letter Accounting Process Definition
b Analyzing a. Telling the results
f Recording b. Looking at events that have taken place and thinking
about how they affect the business
e Classifying c. Deciding the importance of the various reports
d Summarizing d. Aggregating many similar events to provide information
that is easy to understand
a Reporting e. Sorting and grouping like items together
c Interpreting f. Entering financial information into the accounting system
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 5
Exercise 1-3B
1. Party Planner Service
2. Toy Factory Manufacturing
3. Sporting Goods Store Merchandising
4. Movie Theatre Service
5. Pharmacy Merchandising
6. Automobile Factory Manufacturing
7. Child Day Care Service
8. Grocery Store Merchandising
Ethics in Actions
Student answers may include:
The AICPA code of conduct for CPAs includes carrying out responsibilities as professionals using moral
judgment, acting in a way that best serves the public, and performing professional responsibilities with
the highest sense of integrity. The AICPA code of conduct requires that all CPAs act with integrity,
objectivity, due care, and competence; fully disclose of any conflicts of interest; maintain client
confidentiality; and serve the public interest when providing financial services.
The IMA statement of Ethical Professional Practice for CMAs states members have the responsibility to
comply with and uphold the standards of competence, confidentiality, integrity, and credibility.
Both certifications have very similar ethical standards with both mentioning confidentiality and integrity as
part of their ethics code.
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,6 CHAPTER 1
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 2 7
CHAPTER 2
ANALYZING TRANSACTIONS: THE ACCOUNTING EQUATION
DISCUSSION QUESTIONS
1. It is necessary to distinguish between business assets and liabilities and nonbusiness assets and
liabilities of a single proprietor because, according to the business entity concept, nonbusiness
assets and liabilities are not included in the business entity’s accounting records. These distinctions
allow the owner to make decisions based on the financial condition and results of the business
apart from nonbusiness activities.
2. The six major elements of the accounting equation are listed below.
a. Assets are items owned by a business that will provide future benefits.
b. Liabilities are items owed to another business.
c. Owner’s equity is the amount by which the business assets exceed the business liabilities.
Other terms used for owner’s equity include net worth and capital.
d. Revenues represent the amount a business charges customers for products sold or services
performed.
e. Expenses represent the decrease in assets (or increase in liabilities) as a result of efforts made
to produce revenues.
f. Withdrawals, or drawing, reduce owner’s equity as a result of the owner taking cash or other
assets out of the business for personal use.
3. The three basic questions that must be answered when analyzing the effects of a business
transaction on the accounting equation are as follows:
a. What happened?
b. Which accounts are affected?
c. How is the accounting equation affected?
4. The function of an income statement is to report the profitability of business operations for a specific
period of time.
5. The function of a statement of owner’s equity is to report the investments and withdrawals by the
owner and the profits and losses generated through operating activities for a specific period of time.
6. The function of a balance sheet is to report the assets, liabilities, and owner’s equity on a specific
date. It is called a balance sheet because it confirms that the accounting equation is in balance.
7. The three basic phases of the accounting process are listed below.
Input—Business transactions are used as input to the accounting process.
Processing—The transactions are processed by recognizing their effects on assets, liabilities,
owner’s equity, revenues, and expenses.
Output—Output from the accounting process is provided in the form of financial statements.
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, 8 CHAPTER 2
Exercise 2-1A
Item Account Classification
Money in bank Cash A
Office supplies Supplies A
Money owed Accounts Payable L
Office chairs Office Furniture A
Net worth of owner John Smith, Capital OE
Money withdrawn by owner John Smith, Drawing OE
Money owed by customers Accounts Receivable A
Exercise 2-2A
Assets = Liabilities + Owner’s Equity
$44,000 = $27,000 + $17,000
$32,000 = $18,000 + $14,000
$27,000 = $ 7,000 + $20,000
Exercise 2-3A
Assets = Liabilities + Owner’s Equity
(a) 27,000 27,000
Bal. 27,000 27,000
(b) 7,500 7,500
Bal. 34,500 7,500 27,000
(c) (1,600)
1,600
Bal. 34,500 7,500 27,000
(d) (2,300) (2,300)
Bal. 32,200 5,200 27,000
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapters 1-27 24th Edition by James A. Heintz
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
, CHAPTER 1 1
CHAPTER 1
INTRODUCTION TO ACCOUNTING
DISCUSSION QUESTIONS
1. The purpose of accounting is to provide financial information about a business to individuals,
agencies, and organizations.
2. Four user groups normally interested in financial information about a business are owners,
managers, creditors, and government agencies.
3. The six major steps of the accounting process are listed below.
a. Analyzing is looking at events that have taken place and thinking about how these affect the
business. This first step in the accounting process usually occurs when the business receives
some type of information, such as a bill, that needs to be properly entered into the business’s
records. This first step also involves deciding if the piece of information should result in an
accounting entry or not.
b. Recording is entering financial information into the accounting system.
c. Classifying is sorting and grouping like items together.
d. Summarizing is the aggregation of many similar events to provide information that is easy to
understand.
e. Reporting is telling the results.
f. Interpreting is deciding the importance of information in the various reports.
4. Generally accepted accounting principles (GAAP) are the rules that businesses must follow when
preparing financial statements.
5. FASB takes the following steps to develop an accounting standard:
1. The issue is placed on the Board’s agenda.
2. After researching the issue, a Preliminary Views document is issued.
3. Public hearings are held.
4. An Exposure Draft is issued.
5. An Accounting Standards Update is issued, which amends the FASB Accounting Standards
Codification.
6. The International Accounting Standards Board.
7. The three types of ownership structures are listed below.
a. A sole proprietorship is owned by one person. The owner assumes all risks for the business. The
advantage is that the owner can make all of the business decisions.
b. A partnership is owned by more than one person. Partners assume the risks for the business,
and their assets may be taken to pay creditors. An advantage of a partnership is that owners
share risks and decision making. A disadvantage is that partners may disagree about the best
way to run the business.
c. A corporation is owned by stockholders. The owners’ risk is usually limited to their initial
investment, but they typically have very little influence on business decisions.
8. Three types of businesses classified by activities are service businesses, merchandising businesses,
and manufacturing businesses.
9. An accounting clerk performs accounting tasks such as recording, sorting, and filing accounting
information.
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,2 CHAPTER 1
10. Four areas of specialization for a public accountant are auditing, taxation, management advisory
services, and forensic accounting.
Auditing—Auditing involves the application of standard review and testing procedures to be
certain that proper accounting policies and practices have been followed. The purpose of the
audit is to provide an independent opinion that the financial information about a business is fairly
presented.
Taxation—The work of tax specialists includes offering advice on tax planning, preparing tax
returns, and representing clients before governmental agencies, such as the Internal Revenue
Service.
Management Advisory Services—Given the financial training and business experience of public
accountants, many businesses seek their advice on a wide variety of managerial issues.
Forensic Accounting—Forensic accounting is a specialized field that combines fraud detection,
fraud prevention, litigation support, expert witnessing, business valuations, and other
investigative activities.
11. The Sarbanes-Oxley Act (SOX) was passed by Congress to help improve reporting practices of
public companies. One important provision prohibits accounting firms from providing audit and
management advisory services to the same company.
12. Six areas of specialization for a managerial accountant are accounting information systems, financial
accounting, cost accounting, budgeting, tax accounting, and internal auditing.
Accounting Information Systems—Accountants in this area design and implement manual and
computerized accounting systems.
Financial Accounting—Based on the accounting data prepared by the bookkeepers and
accounting clerks, the accountant prepares various reports and financial statements.
Cost Accounting—The cost of producing specific products or providing services must be
measured. Further analysis is also done to determine whether the products and services are
produced in the most cost-effective manner.
Budgeting—In the budgeting process, accountants help management develop a financial plan
for the future.
Tax Accounting—A firm may have its own accountants to focus on tax planning, preparation of
tax returns, and dealing with the Internal Revenue Service and other governmental agencies.
Internal Auditing—The main functions of an internal auditor are to review the operating and
accounting control procedures adopted by management and to see that accurate and timely
information is provided.
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 3
Exercise 1-1A
1. d Owners a. Whether the firm can pay its bills on time
2. b Managers b. Detailed, up-to-date information to measure business
performance (and plan for future operations)
3. a Creditors c. To determine taxes to be paid and whether other
regulations are met
4. c Government d. The firm’s current financial condition
agencies
Exercise 1-2A
Order Accounting Process Definition
2 Recording entering financial information into the accounting
system
4 Summarizing aggregating many similar events to provide
information that is easy to understand
5 Reporting telling the results
1 Analyzing looking to see what events have taken place and
thinking about how these affect the business
6 Interpreting deciding the importance of information on the
various reports
3 Classifying sorting and grouping like items together
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,4 CHAPTER 1
Exercise 1-3A
1. Airline Service
2. Hotel Service
3. Clothing Store Merchandising
4. Concert Service
5. Convenience Store Merchandising
6. Shoe Factory Manufacturing
7. Car Dealership Merchandising
8. Dry Cleaner Service
Exercise 1-1B
Users Information
Owners (present and future): firm’s profitability and current financial condition
Managers: detailed, up-to-date information about the business to
measure performance
Creditors (present and future): firm’s profitability, debt outstanding, and assets that could
be used to secure debt
Government agencies: firm’s profitability, cash flows, and overall financial
condition
Exercise 1-2B
Letter Accounting Process Definition
b Analyzing a. Telling the results
f Recording b. Looking at events that have taken place and thinking
about how they affect the business
e Classifying c. Deciding the importance of the various reports
d Summarizing d. Aggregating many similar events to provide information
that is easy to understand
a Reporting e. Sorting and grouping like items together
c Interpreting f. Entering financial information into the accounting system
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 1 5
Exercise 1-3B
1. Party Planner Service
2. Toy Factory Manufacturing
3. Sporting Goods Store Merchandising
4. Movie Theatre Service
5. Pharmacy Merchandising
6. Automobile Factory Manufacturing
7. Child Day Care Service
8. Grocery Store Merchandising
Ethics in Actions
Student answers may include:
The AICPA code of conduct for CPAs includes carrying out responsibilities as professionals using moral
judgment, acting in a way that best serves the public, and performing professional responsibilities with
the highest sense of integrity. The AICPA code of conduct requires that all CPAs act with integrity,
objectivity, due care, and competence; fully disclose of any conflicts of interest; maintain client
confidentiality; and serve the public interest when providing financial services.
The IMA statement of Ethical Professional Practice for CMAs states members have the responsibility to
comply with and uphold the standards of competence, confidentiality, integrity, and credibility.
Both certifications have very similar ethical standards with both mentioning confidentiality and integrity as
part of their ethics code.
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,6 CHAPTER 1
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, CHAPTER 2 7
CHAPTER 2
ANALYZING TRANSACTIONS: THE ACCOUNTING EQUATION
DISCUSSION QUESTIONS
1. It is necessary to distinguish between business assets and liabilities and nonbusiness assets and
liabilities of a single proprietor because, according to the business entity concept, nonbusiness
assets and liabilities are not included in the business entity’s accounting records. These distinctions
allow the owner to make decisions based on the financial condition and results of the business
apart from nonbusiness activities.
2. The six major elements of the accounting equation are listed below.
a. Assets are items owned by a business that will provide future benefits.
b. Liabilities are items owed to another business.
c. Owner’s equity is the amount by which the business assets exceed the business liabilities.
Other terms used for owner’s equity include net worth and capital.
d. Revenues represent the amount a business charges customers for products sold or services
performed.
e. Expenses represent the decrease in assets (or increase in liabilities) as a result of efforts made
to produce revenues.
f. Withdrawals, or drawing, reduce owner’s equity as a result of the owner taking cash or other
assets out of the business for personal use.
3. The three basic questions that must be answered when analyzing the effects of a business
transaction on the accounting equation are as follows:
a. What happened?
b. Which accounts are affected?
c. How is the accounting equation affected?
4. The function of an income statement is to report the profitability of business operations for a specific
period of time.
5. The function of a statement of owner’s equity is to report the investments and withdrawals by the
owner and the profits and losses generated through operating activities for a specific period of time.
6. The function of a balance sheet is to report the assets, liabilities, and owner’s equity on a specific
date. It is called a balance sheet because it confirms that the accounting equation is in balance.
7. The three basic phases of the accounting process are listed below.
Input—Business transactions are used as input to the accounting process.
Processing—The transactions are processed by recognizing their effects on assets, liabilities,
owner’s equity, revenues, and expenses.
Output—Output from the accounting process is provided in the form of financial statements.
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, 8 CHAPTER 2
Exercise 2-1A
Item Account Classification
Money in bank Cash A
Office supplies Supplies A
Money owed Accounts Payable L
Office chairs Office Furniture A
Net worth of owner John Smith, Capital OE
Money withdrawn by owner John Smith, Drawing OE
Money owed by customers Accounts Receivable A
Exercise 2-2A
Assets = Liabilities + Owner’s Equity
$44,000 = $27,000 + $17,000
$32,000 = $18,000 + $14,000
$27,000 = $ 7,000 + $20,000
Exercise 2-3A
Assets = Liabilities + Owner’s Equity
(a) 27,000 27,000
Bal. 27,000 27,000
(b) 7,500 7,500
Bal. 34,500 7,500 27,000
(c) (1,600)
1,600
Bal. 34,500 7,500 27,000
(d) (2,300) (2,300)
Bal. 32,200 5,200 27,000
© 2025 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
