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SOLUTIONS MANUAL FOR FINANCIAL ACCOUNTING FOR UNDERGRADUATES 4TH EDITION
SOLUTIONS MANUAL FOR FINANCIAL ACCOUNTING FOR UNDERGRADUATES 4TH EDITION
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©Cambridge Business Publishers, 20 20 Test Bank, Chapter 1 1-1 Chapter 1 Financial Accounting and Business Decisions Learning Objectives – Coverage by question True / False Multiple Choice Exercises Problems LO1 – Explain business organization and its three forms. 1-3 1 LO2 – Describe business activities. 6-8 4-10 3 LO3 – Indicate who uses accounting information. 1-5 11-17 1, 2 LO4 – Explain the accounting process and generally accepted accounting principles. 9-12 18-23 LO5 – Describe the accounting equation and each financial statement. 13-24 24-105 4-17 1-3 LO6 – Explain additional disclosures that accompany financial statements. 106-110 18 LO7 – Describe careers in accounting. LO8 – Appendix 1A: Discuss FASB’s conceptual framework. 25-30 111-125 19, 20 ©Cam bridge Business Publishers, 2020 1-2 Financial Accounting for Undergraduates, 4th Edition Chapter 1: Financial Accounting and Business Decisions True / False Topic: Managerial Accounting LO: 3 1. A major function of managerial accounting is to provide general purpose financial statements for parties outside the organization. Answer: False Rationale: A major function of managerial accounting is to provide management with accounting data for decisions related to a firm’s operations. Providing general purpose financial statements for parties outside an organization is a function of financial accounting. Topic: Ethics LO: 3 2. It is unusual for U.S. businesses to develop written codes of ethics to guide their employees. Answer: False Rationale: It is now commonplace for businesses to develop written codes of ethics to help guide the behavior of their employees. Topic: Ethics LO: 3 3. An emphasis on short -term profits may contribute to ethical breakdowns within a business. Answer: True Rational e: A criticism of U.S. business practices is that they are too “bottom -line” (that is, short -term profit ) oriented. This orientation can lead to unethical actions by management to increase reported short -term profits. Topic: Accounting Information Users LO: 3 4. Financial accounting is designed primarily for decision makers within a company. Answer: False Rationale: Financial accounting is designed primarily to provide information to decision makers outside of a company, while managerial accounting is designed primarily to provide accounting information for decision makers within a company. Topic: Ethics and Accoun ting LO: 3 5. The goal of the Sarbanes -Oxley Act of 2002 was to increase the level of confidence that external users have in a company’s financial statements. Answer: True Rationale: In the wake of various business scandals, like that involving Enron Corporation , the U.S. Congress passed the Sarbanes -Oxley Act to improve external user confidence in financial statement reporting. ©Cambridge Business Publishers, 20 20 Test Bank, Chapter 1 1-3 Topic: Investing Activities LO: 2 6. Investing activities involve the acquiring and disposing of liabilities that a company needs in order to finance its operating activities. Answer: False Rationale: Investing activities are the acquiring and disposing of assets that a company needs for the production and sale of a company’s products and services . Topic: Financing Activities LO: 2 7. Other than operating profit, there are three main sources of external financing. Answer: False Rationale: There are two main sources of financing: equity (also called shareholder or owner) financing and debt (also called creditor or lender) financing. Topic: Financing and Investing Activities LO: 2 8. Financing activities are defined as the acquiring and disposing of resources for the purpose of selling products and services. Answer: False Rationale: Financing activities are defined as methods a company uses to raise funds to pay for resources. Investing activities are defined as the acquiring and disposing of resources for the purpose of selling products and services. Topic: Purpose of Accounting LO: 4 9. The basic purpose of accounting is to provide useful financial information. Answer: True Rationale: The purpose of accounting is to provide useful financial information. Accordingly, the accounting process (1) prepared financial reports to meet the needs of the user and (2) helps interpret the financial results for the user. Topic: GAAP LO: 4 10. Generally accepted accounting principles apply to the general -purpose financial statements prepared primarily for parties outside of an organization. Answer: True Rationale: Financial statement users who rely on accounting data expect that all companies will follow the same standards and procedures when preparing their statements. These standards and procedures are called generally accepted accounting principles .The benefits of buying summaries with Stuvia:
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