SOLUTION MANUAL FOR
Financial Accounting 11th Edition
by Robert Libby, All Chapters 1–13 covered
,TABLE OF CONTENTS
e e e
CHAPTERe1:eFinancialeStatementseandeBusinesseDecisions
FocuseCompany:eLe-Nature’seInc.
CHAPTERe2:eInvestingeandeFinancingeDecisionseandetheeAccountingeSystem
FocuseCompany:eChipotleeMexicaneGrill
CHAPTERe3:eOperatingeDecisionseandetheeAccountingeSystem
FocuseCompany:eChipotleeMexicaneGrill
CHAPTERe4:eAdjustments,eFinancialeStatements,eandetheeClosingeProcess
FocuseCompany:eChipotleeMexicaneGrill
CHAPTERe5:eCommunicatingeandeAnalyzingeAccountingeInformation
FocuseCompany:eAppleeInc.
CHAPTERe6:eReportingeandeInterpretingeSaleseRevenue,eReceivables,eandeCash
FocuseCompany:eSkecherseU.S.A.
CHAPTERe7:eReportingeandeInterpretingeCosteofeGoodseSoldeandeInventory
FocuseCompany:eHarley-Davidson,eInc.
CHAPTERe8:eReportingeandeInterpretingeProperty,ePlant,eandeEquipment;eIntangibles;eandeNaturaleRes
ources
FocuseCompany:eFedExeCorporation
CHAPTERe9:eReportingeandeInterpretingeLiabilities
FocuseCompany:eStarbucks
CHAPTERe10:eReportingeandeInterpretingeBondeSecurities
FocuseCompany:eAmazon
CHAPTERe11:eReportingeandeInterpretingeStockholders’eEquity
FocuseCompany:eMicrosoft
CHAPTERe12:eStatementeofeCasheFlows
FocuseCompany:eNationaleBeverageeCorporation
CHAPTERe13:eAnalyzingeFinancialeStatements
FocuseCompany:eTheeHomeeDepot
,Chapter 1 e
Financial Statements and Business Decisions
e e e e
ANSWERS TO QUESTIONS
e e
1. Accountingeiseaesystemethatecollectseandeprocessese(analyzes,emeasures,eanderecor
ds)efinancialeinformationeabouteaneorganizationeandereportsethateinformationetoedecisi
onemakers.
2. Financialeaccountingeinvolvesepreparationeofetheefourebasicefinancialestatementseander
elatededisclosureseforeexternaledecisionemakers.eManagerialeaccountingeinvolvesethe
epreparationeofedetailedeplans,ebudgets,eforecasts,eandeperformanceereportseforeinter
naledecisionemakers.
3. Financialereportseareeusedebyebotheinternaleandeexternalegroupseandeindividuals.eTheei
nternalegroupseareecomprisedeofetheevariousemanagerseofetheeentity.eTheeexternalegro
upseincludeetheeowners,einvestors,ecreditors,egovernmentaleagencies,eothereintereste
departies,eandetheepubliceatelarge.
4. Investorsepurchaseealleoreparteofeaebusinesseandehopeetoegainebyereceivingeparteofew
hatetheecompanyeearnseand/oresellingetheireownershipeinteresteinetheecompanyeineth
eefutureeateaehigherepriceethanetheyepaid.eCreditorselendemoneyetoeaecompanyeforeaes
pecificelengtheofetimeeandehopeetoegainebyechargingeinteresteonetheeloan.
, 5. Ineaesociety,eeacheorganizationecanebeedefinedeaseaeseparateeaccountingeentity.eAnea
ccountingeentityeisetheeorganizationeforewhichefinancialedataeareetoebeecollected.eTypic
aleaccountingeentitieseareeaebusiness,eaechurch,eaegovernmentaleunit,eaeuniversityean
deotherenonprofiteorganizationsesucheaseaehospitaleandeaewelfareeorganization.eAebusi
nessetypicallyeisedefinedeandetreatedeaseaeseparateeentityebecauseetheeowners,ecredit
ors,einvestors,eandeothereinterestedepartieseneedetoeevaluateeitseperformanceeandeitse
potentialeseparatelyefromeothereentitieseandefromeitseowners.
6. NameeofeStatement AlternativeeTitle
(a) IncomeeStatement (a)eStatementeofeEarnings;eStatementeof
Income;eStatementeofeOperations
(b) BalanceeSheet (b)eStatementeofeFinancialePosition
(c) CasheFloweStatement (c)e StatementeofeCasheFlows
7. Theeheadingeofeeacheofetheefourerequiredefinancialestatementseshouldeincludeetheef
ollowing:
(a) Nameeofetheeentity
(b) Nameeofetheestatement
(c) Dateeofetheestatement,eoretheeperiodeofetime
(d) Uniteofemeasure
8. (a)
Theepurposeeofetheeincomeestatementeisetoepresenteinformationeaboutetheerev
enues,eexpenses,eandetheeneteincomeeofeaneentityeforeaespecifiedeperiodeofetime
.
(b) Theepurposeeofetheebalanceesheeteisetoereportetheefinancialepositioneofeaneentityea
teaegivenedate,ethateis,etoereporteinformationeaboutetheeassets,e liabilitieseandestoc
kholders’eequityeofetheeentityeaseofeaespecificedate.
(c) Theepurposeeofetheestatementeofecasheflowseisetoepresenteinformationeaboutetheefl
oweofecasheintoetheeentitye(sources),etheefloweofecasheouteofetheeentitye(uses),ean
detheeneteincreaseeoredecreaseeinecasheduringetheeperiod.
(d) Theestatementeofestockholders’eequityereportsetheechangeseineeacheofetheecom
pany’sestockholders’eequityeaccountseduringetheeaccountingeperiod,eincludingei
ssueeanderepurchaseeofestockeandetheewayethateneteincomeeandedistributioneofe
dividendseaffectedetheeretainedeearningseofetheecompanyeduringethateperiod.
9. Theeincomeestatementeandetheestatementeofecasheflowseareedatede―ForetheeYeareE
ndedeDecembere31‖ebecauseetheyereportetheeinflowseandeoutflowseoferesourcesedu
ringeaeperiodeofetime.eInecontrast,etheebalanceesheeteisedatede―AteDecembere31‖ebec
auseeiterepresentsetheeresources,eobligations,eandestockholders’eequityeateaespecifi
cedate.
