SOLUTIONS MANUAL : College Accounting A Practical Approach 14th Canadian Editio n © 20 21 Pearson Canada All Rights Reserved 4-1 INSTRUCTOR’S SOLUTIONS MANUAL Brenda Ridgeley -Ketchell Okanagan College College Accounting: A Practical Approach Four teenth Canadian Edition Jeffrey Slater North Shore Community College Debra Good Conestoga College ISBN: 978-0-13-543694 -3 Copyright © 2021 Pearson Canada Inc., Toronto, Ontario. All rights reserved. This work is protected by Canadian copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Disseminat ion or sale of any part of this work (including on the Internet) will destroy the integrity of the work and is not permitted. The copyright holder grants permission to instructors who have adopted College Accounting by Slater and Good , to post this materia l online only if the use of the website is restricted by access codes to students in the instructor’s class that is using the textbook and provided the reproduced material bears this copyright notice. © 20 21 Pearson Canada All Rights Reserved 4-1 1 Accounting Concepts and Procedures: An Introduction ANSWERS TO DISCUSSION QUESTIONS AND CRITICAL THINKING/ETHICAL CASE 1. The functions of accounting are to analyze, record, classify, summarize, report and interpret information. 2. Sole proprietorship —one owner, unlimited liability; easy to form Partnership —two or more owners; unlimited liability, easy to form Corporation —one or more shareholders; limited liability; more difficult to f orm. 3. Service, merchandising, or manufacturing . 4. The objective of accounting is to provide relevant, timely information for user decision making. Accountants must behave in an ethical manner so that the information they provide will be trustworthy and, therefore, useful for all decisions. Ethics are moral principles that guide the conduct of individuals. Sometimes business managers and accountants behave in an unethical manner. 5. The three elements of the basic accounting equation are assets, liabiliti es, owner’s equity. 6. Capital is the owner’s current investment or equity in the assets of a business. It is one subdivision of owner’s equity. 7. True. The sum of the left side of the equation must equal the sum of the right side of the equation. 8. False. It is the income statement that tells how well the company has performed. 9. False. Revenue is a subdivision of owner’s equity. 10. Owner’s equity is subdivided into Capital, Withdrawals, Revenue, and Expenses. 11. False. It is a subdivision of owner’s equity. 12. Reject. As expenses increase and revenue remains the same , owner’s equity decreases. 13. Revenue less Expenses; an income statement shows performance —profit or loss for the period. 14. False. It calculates ending capital. 15. The question in th is case is whether Paul should be allowed to ―pad‖ his expense account with an additional $100 of expenses. Paul should be allowed to charge only those items that are business related. Paul’s argument that he is entitled to an additional $100 is not a vali d assumption. However, he should be allocated money for any business expenses during the weekend. Paul should also ask his employer for additional compensation for working during his non scheduled time. The important point is that accountants need to be se en as being ethical and should not do unethical activities. © 20 21 Pearson Canada All Rights Reserved 4-1 SOLUTIONS TO CLASSROOM DEMONSTRATION EXERCISES CDE1. a. A CDE4. $24,000 ($12,000 + $12,000) CDE8. a. IS b. A b. BS c. L CDE5. c. J. Penny, Capital c. BS d. A d. Advertising Expense d. BS e. OE f. Taxi Fees Earned e. IS f. A g. J. Penny, Withdrawls f. IS g. OE h. BS CDE2. a. Liabilities and or Equities CDE6. c. Accounts Payable b. Assets d. Grooming Fees Earned CDE9 a. OE c. Accounts Payable b. BS c. BS d. IS CDE3. a. I CDE7. a. b. S b. d. CDE10 . 1. Balance Sheet 2. Assets 3. Liabilities 4. Accounting Equation 5. Accounts Payable 6. Service 7. Owner’s Equity 8. Accounts Receivable 9. Transaction 10. Creditor SOLUTIONS TO EXERCISES —SET A E1-1A. a. $15,000 ($19,000 − $4,000) b. $15,000 ($ 6,000 + $9,000) c. $ 6,000 ($10,000 − $4,000) E1-2A. 1. Service 6. Service 2. Merchandise 7. Service 3. Service 8. Manufacturer 4. Merchandise 9. Manufacturer 5. Merchandise 10. Merchandise E1-3A. 1-3A Solutions 1. B 2. B 3. B 4. A 5. D 6. D
