Solution Manual for Financial Accounting
11 Edition by Libby
All Chapters 1-13
,Table of Contents
CHAPTERf1:fFinancialfStatementsfandfBusinessfDecisions
FocusfCompany:fLe-Nature’sfInc.
CHAPTERf2:fInvestingfandfFinancingfDecisionsfandfthefAccountingfSystem
FocusfCompany:fChipotlefMexicanfGrill
CHAPTERf3:fOperatingfDecisionsfandfthefAccountingfSystem
FocusfCompany:fChipotlefMexicanfGrill
CHAPTERf4:fAdjustments,fFinancialfStatements,fandfthefClosingfProcess
FocusfCompany:fChipotlefMexicanfGrill
CHAPTERf5:fCommunicatingfandfAnalyzingfAccountingfInformation
FocusfCompany:fApplefInc.
CHAPTERf6:fReportingfandfInterpretingfSalesfRevenue,fReceivables,fandfCash
FocusfCompany:fSkechersfU.S.A.
CHAPTERf7:fReportingfandfInterpretingfCostfoffGoodsfSoldfandfInventory
FocusfCompany:fHarley-Davidson,fInc.
CHAPTERf8:fReportingfandfInterpretingfProperty,fPlant,fandfEquipment;fIntangibles;fandfNaturalfResources
FocusfCompany:fFedExfCorporation
CHAPTERf9:fReportingfandfInterpretingfLiabilities
FocusfCompany:fStarbucks
CHAPTERf10:fReportingfandfInterpretingfBondfSecurities
FocusfCompany:fAmazon
CHAPTERf11:fReportingfandfInterpretingfStockholders’fEquity
FocusfCompany:fMicrosoft
CHAPTERf12:fStatementfoffCashfFlows
FocusfCompany:fNationalfBeveragefCorporation
CHAPTERf13:fAnalyzingfFinancialfStatements
FocusfCompany:fThefHomefDepot
,Chapter 1 f
Financial Statements and Business Decisions
f f f f
ANSWERS TO QUESTIONS
f f
1. Accountingfisfafsystemfthatfcollectsfandfprocessesf(analyzes,fmeasures,fandfrecords)ffinancialfin
formationfaboutfanforganizationfandfreportsfthatfinformationftofdecisionfmakers.
2. Financialfaccountingfinvolvesfpreparationfofftheffourfbasicffinancialfstatementsfandfrelatedfdiscl
osuresfforfexternalfdecisionfmakers.fManagerialfaccountingfinvolvesfthefpreparationfoffdetaile
dfplans,fbudgets,fforecasts,fandfperformancefreportsfforfinternalfdecisionfmakers.
3. Financialfreportsfarefusedfbyfbothfinternalfandfexternalfgroupsfandfindividuals.fThefinternalfgrou
psfarefcomprisedfoffthefvariousfmanagersfoffthefentity.fThefexternalfgroupsfincludefthefowners,fin
vestors,fcreditors,fgovernmentalfagencies,fotherfinterestedfparties,fandfthefpublicfatflarge.
4. Investorsfpurchasefallforfpartfoffafbusinessfandfhopeftofgainfbyfreceivingfpartfoffwhatfthefcomp
anyfearnsfand/orfsellingftheirfownershipfinterestfinfthefcompanyfinftheffuturefatfafhigherfpricefth
anftheyfpaid.fCreditorsflendfmoneyftofafcompanyfforfafspecificflengthfofftimefandfhopeftofgainf
byfchargingfinterestfonfthefloan.
, 5. Infafsociety,feachforganizationfcanfbefdefinedfasfafseparatefaccountingfentity.fAnfaccountingfenti
tyfisftheforganizationfforfwhichffinancialfdatafareftofbefcollected.fTypicalfaccountingfentitiesfaref
afbusiness,fafchurch,fafgovernmentalfunit,fafuniversityfandfotherfnonprofitforganizationsfsuchfasfaf
hospitalfandfafwelfareforganization.fAfbusinessftypicallyfisfdefinedfandftreatedfasfafseparatefe
ntityfbecausefthefowners,fcreditors,finvestors,fandfotherfinterestedfpartiesfneedftofevaluatefitsfpe
rformancefandfitsfpotentialfseparatelyffromfotherfentitiesfandffromfitsfowners.
6. NamefoffStatement AlternativefTitle
(a) IncomefStatement (a)fStatementfoffEarnings;fStatementfof
Income;fStatementfoffOperations
(b) BalancefSheet (b)fStatementfoffFinancialfPosition
(c) CashfFlowfStatement (c)f StatementfoffCashfFlows
7. Thefheadingfoffeachfofftheffourfrequiredffinancialfstatementsfshouldfincludeftheffollowing:
(a) Namefoffthefentity
(b) Namefoffthefstatement
(c) Datefoffthefstatement,forfthefperiodfofftime
(d) Unitfoffmeasure
8. (a)
Thefpurposefoffthefincomefstatementfisftofpresentfinformationfaboutfthefrevenues,fexpe
nses,fandfthefnetfincomefoffanfentityfforfafspecifiedfperiodfofftime.
(b) Thefpurposefoffthefbalancefsheetfisftofreportftheffinancialfpositionfoffanfentityfatfafgivenfda
te,fthatfis,ftofreportfinformationfaboutfthefassets,f liabilitiesfandfstockholders’fequityfoffthefe
ntityfasfoffafspecificfdate.
(c) Thefpurposefoffthefstatementfoffcashfflowsfisftofpresentfinformationfaboutfthefflowfoffcashfin
tofthefentityf(sources),fthefflowfoffcashfoutfoffthefentityf(uses),fandfthefnetfincreaseforfdecrea
sefinfcashfduringfthefperiod.
(d) Thefstatementfoffstockholders’fequityfreportsfthefchangesfinfeachfoffthefcompany’sfstockh
olders’fequityfaccountsfduringf thefaccountingfperiod,fincludingfissuefandfrepurchasefoffsto
ckfandfthefwayfthatfnetfincomefandfdistributionfoffdividendsfaffectedfthefretainedfearnin
gsfoffthefcompanyfduringfthatfperiod.
9. Thefincomefstatementfandfthefstatementfoffcashfflowsfarefdatedf―ForfthefYearfEndedfDecem
berf31‖fbecauseftheyfreportfthefinflowsfandfoutflowsfoffresourcesfduringfafperiodfofftime.fInfc
ontrast,fthefbalancefsheetfisfdatedf―AtfDecemberf31‖fbecausefitfrepresentsfthefresources,fob
ligations,fandfstockholders’fequityfatfafspecificfdate.
