,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;EandENaturalE
Resources
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
ANSWERSETOEQUESTIONS
1. AccountingEisEaEsystemEthatEcollectsEandEprocessesE(analyzes,Emeasures,EandEre
cords)EfinancialEinformationEaboutEanEorganizationEandEreportsEthatEinformationEtoE
decisionEmakers.
2. FinancialEaccountingEinvolvesEpreparationEofEtheEfourEbasicEfinancialEstatementsEa
ndErelatedEdisclosuresEforEexternalEdecisionEmakers.EManagerialEaccountingEinvolv
esEtheEpreparationEofEdetailedEplans,Ebudgets,Eforecasts,EandEperformanceEreports
EforEinternalE decisionEmakers.
3. FinancialEreportsEareEusedEbyEbothEinternalEandEexternalEgroupsEandEindividuals.ET
heEinternalEgroupsEareEcomprisedEofEtheEvariousEmanagersEofEtheEentity.ETheEexter
nalEgroupsEincludeEtheEowners,Einvestors,Ecreditors,EgovernmentalEagencies,EotherE
interestedEparties,EandEtheEpublicEatElarge.
4. InvestorsEpurchaseEallEorEpartEofEaEbusinessEandEhopeEtoEgainEbyEreceivingEpartEo
fEwhatEtheEcompanyEearnsEand/orEsellingEtheirEownershipEinterestEinEtheEcompany
EinEtheEfutureEatEaEhigherEpriceEthanEtheyEpaid.ECreditorsElendEmoneyEtoEaEcompa
nyEforEaEspecificElengthEofEtimeEandEhopeEtoEgainEbyEchargingEinterestEonEtheEloan.
, 5. InEaEsociety,EeachEorganizationEcanEbeEdefinedEasEaEseparateEaccountingEentity.EA
nEaccountingEentityEisEtheEorganizationEforEwhichEfinancialEdataEareEtoEbeEcollected.
ETypicalE accountingEentitiesEareEaEbusiness,EaEchurch,EaEgovernmentalE unit,EaEuniv
ersityEandEotherEnonprofitEorganizationsEsuchEasEaEhospitalEandEaEwelfareEorganiza
tion.EAEbusinessEtypicallyEisEdefinedEandEtreatedEasEaEseparateEentityEbecauseEtheE
owners,Ecreditors,Einvestors,EandEotherEinterestedEpartiesEneedEtoEevaluateEitsEperf
ormanceEandEitsEpotentialEseparatelyEfromEotherEentitiesEandEfromEitsEowners.
6. NameEofEStatement AlternativeETitle
(a) IncomeEStatement (a)EStatementEofEEarnings;EStatementEof
Income;EStatementEofEOperations
(b) BalanceESheet (b)EStatementEofEFinancialEPosition
(c) CashEFlowEStatement (c)E StatementEofECashEFlows
7. TheEheadingEofEeachEofEtheEfourErequiredEfinancialEstatementsEshouldEincludeEt
heEfollowing:
(a) NameEofEtheEentity
(b) NameEofEtheEstatement
(c) DateEofEtheEstatement,EorEtheEperiodEofEtime
(d) UnitEofEmeasure
8. (a)
TheEpurposeEofEtheEincomeEstatementEisEtoEpresentEinformationEaboutEtheEr
evenues,Eexpenses,EandEtheEnetEincomeEofEanEentityEforEaEspecifiedEperiodE
ofEtime.
(b) TheEpurposeEofEtheEbalanceEsheetEisEtoEreportEtheEfinancialEpositionEofEanEent
ityEatEaEgivenEdate,EthatEis,EtoEreportEinformationEaboutEtheEassets,EliabilitiesEa
ndEstockholders’EequityEofEtheEentityEasEofEaEspecificEdate.
(c) TheEpurposeEofEtheEstatementEofEcashEflowsEisEtoEpresentEinformationEaboutEt
heEflowEofEcashEintoEtheEentityE(sources),EtheEflowEofEcashEoutEofEtheEentityE(us
es),EandEtheEnetEincreaseEorEdecreaseEinEcashEduringEtheEperiod.
(d) TheEstatementEofEstockholders’EequityEreportsEtheEchangesEinEeachEofEtheEco
mpany’sEstockholders’EequityEaccountsEduringEtheEaccountingEperiod,Eincludi
ngEissueEandErepurchaseEofEstockEandEtheEwayEthatEnetEincomeEandEdistribut
ionEofEdividendsEaffectedEtheEretainedEearningsEofEtheEcompanyEduringEthatEp
eriod.
9. TheEincomeEstatementEandEtheEstatementEofEcashEflowsEareEdatedE―ForEtheEYea
rEEndedEDecemberE31‖EbecauseEtheyEreportEtheEinflowsEandEoutflowsEofEresourc
esEduringEaEperiodEofEtime.EInEcontrast,EtheEbalanceEsheetEisEdatedE―AtEDecemb
erE31‖EbecauseEitErepresentsEtheEresources,Eobligations,EandEstockholders’Eequit
yEatEaEspecificEdate.
