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Solutions Manual for Accounting 29th Edition by Carl S. Warren Ch 1 to 24 A+
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Created By: A SolutionSolutions Manual for Accounting 29th Edition by Carl S.
Warren Ch 1 to 24 A+
CHAPTER 1: INTRODUCTION TO ACCOUNTING AND BUSINESS
DISCUSSION QUESTIONS
Some users of accounting information include managers, employees, investors, creditors,
customers, and the government.
2. The role of accounting is to provide information for managers to use in operating the
business. In addition, accounting provides information to others to use in assessing the economic
performance and condition of the business.
3. The corporate form allows the company to obtain large amounts of resources by issuing stock.
For this reason, most companies that require large investments in property, plant, and equipment
are organized as corporations.
4. No. The business entity assumption limits the recording of economic data to transactions
directly affecting the activities of the business. The payment of the interest of $4,500 is a
personal transaction of Josh Reilly and should not be recorded by Dispatch Delivery Service.
5. The land should be recorded at its cost of $167,500 to Reliable Repair Service. This is
consistent with the cost principle.
6. a. No. The offer of $2,000,000 and the increase in the assessed value should not be
recognized in the accounting records.
b. Cash would increase by $2,125,000, land would decrease by $900,000, and owner’s capital
would increase by $1,225,000.
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7. An account receivable is a claim against a customer for goods or services sold. An account
payable is an amount owed to a creditor for goods or services purchased. Therefore, an account
receivable in the records of the seller is an account payable in the records of the purchaser.
8. (b) The business realized net income of $91,000 ($679,000 – $588,000).
9. (a) The business incurred a net loss of $75,000 ($640,000 – $715,000).
10. (a) Net income or net loss
(b) Owner’s capital at the end of the period
(c) Cash at the end of the period
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