solution manual downloadable files for financial and managerial accounting
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NURSE 311
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Solution Manual (Downloadable
Files) for Financial and Managerial
Accounting, 8th Edition, John Wild,
Ken Shaw, ISBN10: 1260247856,
ISBN13: 9781260247855
QUESTIONS
1. The purpose of accounting is to provide decision makers with relevant and reliable
information to help them make better decisions. Examples include information for
people making investments, loans, and business plans.
2. Technology reduces the time, effort, and cost of recordkeeping. There is still a
demand for people who can design accounting systems, supervise their operation,
analyze complex transactions, and interpret reports. Demand also exists for people
who can effectively use computers to prepare and analyze accounting reports.
Technology will never substitute for qualified people with abilities to prepare, use,
analyze, and interpret accounting information.
3. External users and their uses of accounting information include: (a) lenders, to
measure the risk and return of loans; (b) shareholders, to assess whether to buy, sell,
or hold their shares; (c) directors, to oversee the organization; (d) employees and
labor unions, to judge the fairness of wages and assess future employment
opportunities; and (e) regulators, to determine whether the organization is complying
with regulations. Other users are voters, legislators, government officials,
contributors to nonprofits, suppliers, and customers.
4. Business owners and managers use accounting information to help answer questions
such as: What resources does an organization own? What debts are owed? How much
income is earned? Are expenses reasonable for the level of sales? Are customers’
accounts being promptly collected?
5. Service businesses include: Standard and Poor’s, Dun & Bradstreet, Merrill Lynch,
Southwest Airlines, CitiCorp, Humana, Charles Schwab, and Prudential. Businesses
offering products include Nike, Reebok, Gap, Apple, Ford Motor Co., Philip Morris,
Coca-Cola, Best Buy, and WalMart.
6. The internal role of accounting is to serve the organization’s internal operating
functions. It does this by providing useful information for internal users in completing
their tasks more effectively and efficiently. By providing this information, accounting
helps the organization reach its overall goals.
7. Accounting professionals offer many services including auditing, management
advice, tax planning, business valuation, and money management.
8. Marketing managers are likely interested in information such as sales volume,
advertising costs, promotion costs, salaries of sales personnel, and sales
commissions.
9. Accounting is described as a service activity because it serves decision makers by
providing information to help them make better business decisions.
10. Some accounting-related professions include consultant, financial analyst,
underwriter, financial planner, appraiser, FBI investigator, market researcher, and
system designer.
11. Ethics rules require that auditors avoid auditing clients in which they have a direct
investment, or if the auditor’s fee is dependent on the figures in the client’s reports.
This will help prevent others from doubting the quality of the auditor’s report.
12. In addition to preparing tax returns, tax accountants help companies and individuals
plan future transactions to minimize the amount of tax to be paid. They are also
actively involved in estate planning and in helping set up organizations. Some tax
accountants work for regulatory agencies such as the IRS or the various state
departments of revenue. These tax accountants help to enforce tax laws.
13. The objectivity concept means that financial statement information is supported by
independent, unbiased evidence other than someone’s opinion or imagination.
14. This treatment is justified by both the cost principle and the going-concern
assumption.
15. The revenue recognition principle provides guidance for managers and auditors so
they know when to recognize revenue. If revenue is recognized too early, the business
looks more profitable than it is. On the other hand, if revenue is recognized too late
the business looks less profitable than it is. This principle demands that revenue be
recognized when it is both earned (when service or product is provided) and can be
measured reliably. The amount of revenue should equal the value of the assets
received or expected to be received from the business’s operating activities covering
a specific time period.
16. Business organizations can be organized as a sole proprietorship, partnership,
corporation, or LLC. These forms have implications for legal entity and liability,
business life, taxation, and number of owners as follows.
Proprietorship Partnership Corporation LLC
Business entity yes yes yes yes
Legal entity no no yes yes
Limited liability no no yes yes
Unlimited life no no yes yes
Business Taxed no no yes no
One owner allowed yes no yes yes
17. (a) Assets are resources owned or controlled by a company that are expected to yield
future benefits. (b) Liabilities are creditors’ claims on assets that reflect obligations to
provide assets, products, or services to others. (c) Equity is the owner’s claim on
assets and is equal to assets minus liabilities. (d) Net assets refer to equity.
18. Equity is increased by investments (stock issuances) from the owner and by net
income (which is the excess of revenues over expenses). It is decreased by dividends
and by a net loss (which is the excess of expenses over revenues).
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