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College Accounting A Contemporary Approach 3e David Haddock John Ellis Price Michael Farina
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College Accounting A Contemporary Approach 3e David Haddock John Ellis Price Michael Farina
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College Accounting A Contemporary Approach 3e David Haddock John Ellis Price MichaelFarina (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) All Chapters
Solutions Manual Supplement files download link at the end of this file.
CHAPTER 1
ACCOUNTING: THE LANGUAGE OF BUSINESS
Chapter Opener: Thinking Critically
Stockholders, the IRS, SEC, banks, lenders and creditors are all examples of organizations that would be
interested in how Google is performing.
Fast Facts
• Google’s mission is to organize the world’s information and make it universally accessible and useful.
• “Googol” is the mathematical term for a 1 followed by 100 zeros. Google’s play on the term reflects
the company’s mission to organize the immense amount of information available on the web.
• Google’s interface can be customized into more than 100 languages.
• Google’s culture is unlike any in corporate America—lava lamps and large rubber balls dot company
headquarters and the company’s chef used to cook for the Grateful Dead. Google Inc. puts employees
first when it comes to daily life in all of their offices.
Managerial Implications: Thinking Critically
Managers use financial information to make decisions about adding new products and services, offering
current products and services, and choosing vendors.
Discussion Questions
Note to instructor: These questions are designed to check students’ understanding of new terms, concepts,
and procedures presented in the chapter.
1. Public, managerial, and governmental.
2. Auditing, tax, and management advisory services.
3. Advice on how to structure financial affairs in order to reduce taxes without violating tax laws.
4. Establish accounting policies, direct the accounting system, prepare and interpret financial statements,
provide financial advice, prepare tax forms.
5. Sole proprietorship (owned by one person). Partnership (owned by two or more people). Corporation
(can be owned by one person or many).
6. Measure business performance; separate entity.
7. Owners and managers: evaluate operations. Suppliers: assess ability of a firm to pay debts. Banks:
ability to repay loans. Tax authorities: determine a tax base. Governmental agencies: legal
compliance. Employees: wage levels and profit-sharing plans.
8. Statements of Financial Accounting Standards.
9. SEC, AICPA, AAA.
10. Regulation of financial reporting by publicly owned corporations.
11. The Public Company Accounting Reform and Investor Protection Act of 2002 was passed in response
to the wave of corporate accounting scandals starting with the demise of Enron Corporation in 2001,
the arrest of top executives at WorldCom and Adelphia Communications Corporations, and
ultimately, the demise of Arthur Andersen, an international public accounting firm.
12. The purpose of the Public Company Accounting Oversight Board is to oversee the accounting
profession through its investigative and enforcement powers and to discipline corrupt accountants and
auditors.
© 2015 McGraw-Hill Education. This is proprietary material soley for instructor use. Not authorized for sale or distribution in any manner.
1-1
,CRITICAL THINKING PROBLEM 1.1
Student answers will vary. The student’s reasons for choosing one form of ownership over another
are more important than the specific choice made. Generate a discussion on the proposed name of
the business. Ask the students if they think the name is creative.
Sole proprietorship:
Advantage—Heidi would be her own boss and could direct the business as she wants.
Disadvantages—Heidi would be responsible for the debts and taxes of the business and may be
limited in the amount of capital she could borrow to finance the business.
Partnership:
Advantage—Heidi would have one or more partners to assist with business operations and to
contribute capital.
Disadvantages—Heidi would have to share control of the business, as well as its profits. Heidi
could be liable for the debts of the partnership.
Corporation:
Advantages—The business would be a separate entity. Capital would be easier to raise and
liability would be limited to the assets of the business.
Disadvantages—A corporation is a more complicated form of ownership and is usually more
expensive to form. There is also more government regulation and, consequently, more paperwork
with a corporation.
© 2015 McGraw-Hill Education. This is proprietary material soley for instructor use. Not authorized for sale or distribution in any manner.
1-2
,SOLUTIONS TO BUSINESS CONNECTIONS
Managerial Focus:
1. Questions asked might include: What is the profit or loss?, How much cash does the business have?, How
much money do customers owe the business?.How much money is owed to suppliers?, What is the change
in sales volume?, and what is the cost of merchandise sold?
2. Financial information is used to evaluate performance and make decisions about a business or a nonprofit
3. Keep your employees, creditors, and investors happy. Yes, financial information is a tool for making
business decisions that will yield the above results.
4. Inaccurate accounting records and poor business decisions.
5. Every business needs an efficient accounting system which accumulates financial data, classifies and
summarizes the information. Without an accounting system, suppliers, lenders, investors, and governmental
tax authorities would not be able to accurately make decisions based on the financial information of the
company.
6. The manager makes financial decisions based upon the financial information provided by the accountant.
7. Yes. The firm’s financial records need to be separate from the owner’s personal financial records in order
to evaluate and measure the performance of the business.
8. These standards are important to management because they enhance comparability of reporting practices.
Ethical Dilemma:
Yes. Ethics and accounting are intertwined.
Financial Statement Analysis:
Analyze Online:
1. Clothing, accessories, outerwear and footwear.
2. Investors, suppliers, and banks. To assist the users when making financial decisions.
3. 15 to 25 year-olds.
4. Economic entity because it is a business for profit.
Teamwork:
The bank will ask for information to assess the firm's finanacial position. Questions such as how much
property does the firm own?; how much debt does the firm owe?; how much cash does the firm have?
Anticipated cost of expansion and future income projections may also be requested. Banks might also
require a list of your customers and vendors. There is no requirement to indicate to the bank problems you
are having with certain customers and vendors.
Internet Connection:
The number of Accounting Standards Update used will vary from year to year. Accounting Standards
Update are cited as “ASU2016-1 (year) (standard number in chronological order).
© 2015 McGraw-Hill Education. This is proprietary material soley for instructor use. Not authorized for sale or distribution in any manner.
1-3
, SOLUTIONS TO PRACTICE TEST
Part A True-False
1. TRUE
2. TRUE
3. FALSE
3. FALSE
4. TRUE
5. FALSE
6. FALSE
7. FALSE
8. TRUE
9. TRUE
10. TRUE
11. FALSE
12. FALSE
Part B Completion
1. language of business
2. international accounting
3. FBI
4. governmental accounting
5. AAA
6. AICPA
7. generally accepted accounting principles
8. SEC
9. IRS
10. stockholders or shareholders
11. shares of stock
12. partnerships
13. social entity
14. recording, classifying
15. financial statements
© 2015 McGraw-Hill Education. This is proprietary material soley for instructor use. Not authorized for sale or distribution in any manner.
1-4
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