Solutions Manual For Survey of Accounting 7th Edition by Thomas Edmonds, Christopher Edmonds, Philip Olds|complete guide graded A+
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Managerial Accounting
Institution
Managerial Accounting
Solutions Manual For Survey of Accounting 7th Edition by Thomas Edmonds, Christopher Edmonds, Philip Olds|complete guide graded A+Solutions Manual For Survey of Accounting 7th Edition by Thomas Edmonds, Christopher Edmonds, Philip Olds|complete guide graded A+Solutions Manual For Survey of Accounti...
, Survey 7e – Chapter 1 – Solutions Manual ki ki ki ki ki ki ki
SOLUTIONS TO QUESTIONS - CHAPTER 1 ki ki ki ki ki
1. Stakeholders are the parties that use accounting information. ki ki ki ki ki ki ki
Stakeholders with a direct interest include owners, managers, creditors, ki ki ki ki ki ki ki ki
suppliers, and employees. These individuals are directly affected by
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what happens to the business.
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Stakeholders with an indirect interest include financial analysts, ki ki ki ki ki ki ki
brokers, attorneys, government regulators, and news reporters. These
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individuals use information in the financial reports to advise and
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influence their clients.
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Students may give many different answers under the above ki ki ki ki ki ki ki ki
categories depending on their level of experience in business.
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All students are direct users of accounting information related to tuition
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and fees, financial aid, and account balances.
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2. Accounting provides information that is useful in making decisions ki ki ki ki ki ki ki ki
by all participants in the market for resource goods and services,
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both profit-oriented and nonprofit oriented. Because accounting’s
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role is so important, it is often called the language of business.
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3. The primary mechanism used to allocate resources in the U.S. is
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competition for resources in the open market.
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4. A market is a group of people or organizations that come together for
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the purpose of exchanging items of value.
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5. The market for business resources involves three distinct
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participants: consumers, conversion agents, and resource owners.
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See Exhibit 1-1 that illustrates how market trilogy is involved in
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resource allocation.
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1-1
,6. Financial Resource: money k i k i
Physical Resource: natural resources (i.e. land, forests, mine ore,
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petroleum, etc.), buildings, machinery and equipment, furniture and
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fixtures
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Labor Resource: includes both intellectual and physical labor; i.e.
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employees
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7. Investors expect a distribution of the business’s profits as a return
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on their financial investment (capital allocation).
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Creditors lend financial resources to businesses and receive interest as
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a return or profit on the loan.
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8. Financial accounting provides information that is useful to external
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resource providers.
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Managerial accounting provides information that is useful to
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managers in operating an organization (i.e., internal users).
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9. Not-for-profit or nonprofit entities provide goods or services to ki ki ki ki ki ki ki ki
consumers for humanitarian or special reasons rather than to earn a
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profit for owners. For example, certain not-for-profit entities
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allocate resources to provide for research of diseases or
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social/environmental welfare; others allocate resources to promote
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the arts and provide education.
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10. The U.S. rules of accounting information measurement are called
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generally accepted accounting principles (GAAP).
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, Survey 7e – Chapter 1 – Solutions Manual ki ki ki ki ki ki ki
11. Careers in public accounting consist of providing services to the
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general public from a public accounting firm. These services include
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auditing, tax, and consulting services. Careers in private accounting
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usually consist of working for a specific company (which would be a
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client of the public accounting firm) providing a wide variety of
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services to the company including recording transactions, preparing
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financial statements, internal auditing, and others.
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12. The three elements of the accounting equation are:
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1. Assets
2. Liabilities
3. Stockholders’ Equity ki
Accounts are specific items or subclassifications of the elements.
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Examples of accounts include cash, land, and accounts payable.
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13. Assets, the economic resources of a business, are used to produce
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earnings.
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14. The assets of a business belong to that business entity and there
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may be claims on the assets. Claims on the assets belong to
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resource providers.
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15. Creditors are individuals and/or institutions that have provided goods
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or services to the business which are not yet paid for, or loaned money
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to the business. These parties have first claim to the assets of the
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business, and the owners have a residual interest in the assets.
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16. The term “liabilities” is used to describe creditors' claims on the
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assets of a business. ki ki ki
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