Paid an account payable - - NE c. Declared and paid dividends - NE - f. Paid operating expenses in cash - NE - i. Repaid principal and interest on a bank loan - - - P2.
August 1 August 31 Net Change Total assets Interest is an expense because it represents a necessary payment to others i. When money is borrowed from the bank, an asset cash is increased and a liability notes payable is also increased by an equal amount. Net income is increased only when revenue has been earned—and money borrowed from the bank represents a liability that must be repaid, not revenue that has been earned.
Paying off accounts payable decreases an asset cash and decreases a liability accounts payable by an equal amount. Collecting an account receivable increases an asset cash and decreases another asset accounts receivable by equal amounts. In both cases, only balance sheet accounts are involved. Net income is increased by revenues and decreased by expenses. The expense associated with a cash payment of an account payable would have been recorded in an earlier transaction when the expense was incurred and the account payable was established ; by the same logic, the revenue associated with the collection of an account receivable would have been recorded in an earlier transaction when the revenue was earned and the account receivable was established.
Amounts shown in the balance sheet below reflect the following use of the data given: a. An asset should have a "probable future economic benefit"; therefore the accounts receivable are stated at the amount expected to be collected from customers. Assets are reported at original cost, not current "worth. Assets are reported at original cost, not at an assessed or appraised value. Total assets can be determined based on items a , b , and c ; total stockholders' equity is known after considering item e ; and the note payable is the difference between total liabilities and the accounts payable.
The retained earnings account balance represents the difference between cumulative net income and cumulative dividends. Fair market value is irrelevant. Calculate total current assets, total land and equipment, and total assets. As at November 30 and 24, respectively: Total assets…… The problem could be solved without calculating this number. In parts a, b and d, if students are willing to share the different kinds of assets, liabilities, revenues, expenses, and cash flows they have identified, this case can be used to review the basic characteristics of the balance sheet, income statement, and statement of cash flows.
In part c, the point is that projected income activity for the current period has a direct impact on the projected balance sheet. In part e, the point is that income and cash flow are two different things entirely. Also shown is a partially completed comparative balance sheet as of December 31, and Balance Sheets December 31, and Current assets: Cash…………………….. Complete the balance sheets for Marstore, Inc. Identify your strategy by listing, in general, the sequence of steps you used to find the unknown amounts.
Does the amount shown on the balance sheet for Net Store Fixtures represent the current fair market value of the store fixtures? Explain your answer. Knowing this, retained earnings at the end of the year can be determined.
Then, capital stock at the end of the year can be determined. The balance sheet shows the original cost of assets, less accumulated depreciation, which for accounting purposes is that portion of the cost of the asset that has been "used up.
All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Learning Objectives After studying this chapter you should understand and be able to: LO Explain what transactions are.
LO Identify and explain the kind of information reported in each financial statement and describe how financial statements are related to each other. LO Explain the meaning and usefulness of the accounting equation. LO Explain the meaning of each of the captions on the financial statements illustrated in this chapter. LO Identify and explain the broad, generally accepted concepts and principles that apply to the accounting process.
LO Discuss why investors must carefully consider cash flow information in conjunction with accrual accounting results. LO Identify and explain several limitations of financial statements. Financial Statements Transactions are economic interchanges between entities that are accounted for and reflected in financial statements.
Learning Objective Explain what transactions are. Accounts Transactions are summarized in accounts. Accounts Account balances are then Payable used in the preparation of Account financial statements.
Financial Statements Financial Statement that Required Disclosure Satisfies Requirement Financial position at the Balance Sheet end of the period Earnings for the period Income Statement Cash flows during the Statement of Cash Flows period Investments by and Statement of Changes in distributions to owners Owners' Equity during the period In addition to the financial statements, the annual report will probably include several accompanying notes or explanations of the accounting policies used and detailed information about many of the amounts and captions shown in the financial statements.
Learning Objective Identify and explain the kind of information reported in each financial statement and describe how financial statements are related to each other. Balance Sheet—Elements Assets represent the amount of resources owned by the entity. Liabilities are amounts owed to other entities.
Equity is the ownership right of the owner s of the entity in the assets that remain after deducting the liabilities. Learning Objective Explain the meaning and usefulness of the accounting equation. Balance Sheet Current assets are those assets that are likely to be converted into cash or used to benefit the entity within one year. Plant and equipment includes long- term assets that will benefit the entity over several years. Learning Objective Explain the meaning of each of the captions on the financial statements illustrated in this chapter.
Balance Sheet Long-term liabilities are those liabilities that will not be repaid within one year of the balance sheet date. Current liabilities are those liabilities that are to be paid within one year.
Income Statement The income statement shows the net income or net loss for the period of time under consideration. Notice that the statement starts with net sales and that the various expenses are subtracted to arrive at net income Learning Objective Explain the meaning of each of the captions on the financial statements illustrated in this chapter.
Income Statement Earnings per share of common Income taxes are shown after stock outstanding is reported as a separate item at the bottom of the all the other income statement income statement because of its items have been reported. Statement of Cash Flows The purpose of this financial statement is to identify the sources and uses of cash during the year. Time-Line Model Learning Objective Explain the meaning of each of the captions on the financial statements illustrated in this chapter.
Financial Statement Relationships The arrow indicates that net income affects retained earnings, which is a component of stockholders' equity. Financial Statement Relationships Learning Objective Explain the meaning of each of the captions on the financial statements illustrated in this chapter.
Standards for Other Types of Accounting 1. Auditing 3. Governmental and Not-for-Profit Accounting 4. International Accounting Standards F. The Conceptual Framework A. Context B. Summary of Concepts Statement No. Plan of the Book A. To present a definition of accounting. To identify and describe different classifications of accounting.
Accountants need to apply professional judgment in the application of accounting principles. To emphasize the role and sources of ethics for the accounting profession. Supporting: 5.
To summarize how accounting has evolved over time. To identify sources of standards for other types of accounting and to contrast these with financial accounting standards.
To introduce the issues associated with the development of international accounting standards. To summarize Concepts Statement No. To relate the objectives of financial reporting for nonbusiness organizations to those of business enterprises. Students should be put on notice about the jargon of accounting, the use of synonymous terms, the importance of the context within which a term is used, and the need for precision in the use of terminology.
The first example of jargon is the term entity. Emphasize that a "clean opinion" is not a "clean bill of health. Discuss the Summary of Concepts Statement No. The accounting equation.
Financial statement relationships. Limitations of financial statements. A significant amount of time should be spent illustrating and explaining the purpose and content—by account category asset, liability, stockholders' equity, revenue, expense —of each financial statement, and how the financial statements tie together.
Some instructors may wish to discuss gains and losses at this point, but the key is to keep it as simple as possible! It is recommended that the following models be emphasized: a. Income Statement:.
This is a function of instructor preference and the extent to which students have been previously exposed to real world financial statements. It is appropriate to emphasize the limitations of financial statements now, because they can create a mindset that helps students understand more specific accounting principles when they are covered later.
The Business In Practice boxes are designed to enhance student understanding by removing some jargon and explanation from the flow of the text material, while providing a context for that material. These provide good class discussion topics. You may wish to encourage students to self-study this material by using the PowerPoint presentations available on the website.
Be careful not to over-assign or under-assign homework from this chapter. See M2. Good in-class demo exercise. Challenging mini-exercise. Requires clear-cut understanding of income statement relationships. Encourage use of Exhibit as a solution model. Good way to review and reinforce the structure of the income statement in class. Basic identification of asset accounts. Basic identification of income statement accounts. Simple account identification exercise. See E2. Good homework assignment.
Other effects on retained earnings i. The worksheet format is used to help students understand financial statement relationships. Good in-class demonstration exercise. Most instructors omit this problem. See P2. Straight-forward problem emphasizing financial statement relationships. Students respond well. Similar to P2. Good for in-class demonstration. Excel problem. Can use later as a Chapter 4 assignment.
Group learning problem. Good in-class demonstration problem. Stress the importance of the historical cost principle. Emphasizes the structure of the income statement.
Excellent conceptual case, but be sure to relate student responses back to the terminology introduced in the chapter. Net income increases retained earnings and dividends decrease retained earnings. Net sales Cost of goods sold Gross profit.. Selling, general, and administrative expenses Income from operations Interest expense Income before taxes.
Income tax expense. Net income Solution approach: Set up an income statement using the structure and format as shown in Exhibit , then solve for missing amounts. An alternative calculation sequence would have been to solve for gross profit and net sales first, and to then solve for income before taxes and net income.
The assets listed are: land, merchandise inventory, equipment, accounts receivable, supplies, cash, and buildings. Sales and service revenues are revenues accounts on the income statement; income tax expense, cost of goods sold, and rent expense are expenses on the income statement.
Common stock………………………………… Depreciation expense………………………….. Net sales……………………………………….. Income tax expense……………………………. Short-term investments……………………… Gain on sale of land……………………………. Retained earnings……………………………… Dividends payable…………………………….. Accounts receivable…………………………… Short-term debt…………………………………. Category A Accumulated depreciation…………………… E Cost of goods sold……………………………… SE Additional paid-in capital……………………….
R Interest income…………………………………. E Selling expenses……………………………….. Dividends paid are distributions of earnings that reduce retained earnings on the balance sheet.Financial Statements A. From Transactions to Financial Statements Accounting what the numbers mean solutions manual free. Financial Statements Illustrated 1. Explanations and Definitions a. Balance Sheet b. Income Statement c. Statement of Changes in Stockholders' Equity d. Statement of Cash Freee 2. Comparative Statements in Subsequent Years 3. Accounting Concepts and Principles A. Schematic Model of Concepts and Principles B. To illustrate the four principal financial statements and their basic form. To introduce students to the terminology of financial statements. To present the accounting equation. To explain several of the concepts of accounting what the numbers mean solutions manual free accounting and financial statement presentation. Supporting: 5. sud-ouest-tai-chi-chuan.org › Solution Manuals. Instant download Solution Manual For Accounting What the Numbers Mean 11th Edition David Note: This is not Textbook Click here to Download Free Samples. Accounting-What-the-Numbers-Meanth-Edition-Marshall-Solutions-Manual.pdf McGraw-Hill Education, Instructor's Manual / Solutions Manual 3. were required to purchase separately) is also available on the website for free. Full file at sud-ouest-tai-chi-chuan.org Solution Manual for Accounting What the Numbers Mean 11th Edition by Marshall Complete downloadable file at. Instructor's Manual / Solutions Manual TEACHING/LEARNING OBJECTIVES: Principal: 1. To illustrate the four principal financial statements and. *FREE* shipping on qualifying offers. Accounting: What the numbers mean: instructor's manual, solutions, and test bank (The Irwin series in undergraduate. Solution Manual for Accounting What the Numbers Mean 11th Edition by Marshall. Download FREE Sample Here for Solution Manual for Accounting What the. Solution-Manual-for-Accounting-What-the-Numbers-Meanth-sud-ouest-tai-chi-chuan.org You've reached the end of your free preview. Want to. Solution Manual for Accounting: What the Numbers Mean 12th Edition MarshallSolution Manual for Accounting: What the Numbers Mean, 12th Edition, David. Access Accounting: What the Numbers Mean 11th Edition solutions now. Our solutions are written by Chegg experts so you can be assured of the highest. Accepting a contingent fee arrangement would normally cause an impairment of his independence because he would directly benefit if the loan were to be approved. Click here to sign up. Total assets can be determined based on items a , b , and c ; total stockholders' equity is known after considering item e ; and the note payable is the difference between total liabilities and the accounts payable. Declared and paid dividends - NE - f. Balance Sheet Long-term liabilities are those liabilities that will not be repaid within one year of the balance sheet date. Gains or losses can be calculated for the sale or collection of each of Kimber Co. Statement of Changes in Stockholders' Equity d. Follow up with a brief look at Exercise concerning audit independence standards. Click here to sign up. E IS Net sales……………………………………….. FAQ: How to download solutions testbank after payment? Be careful not to get too carried away with details. Marshall, the leading text in the Survey market, takes readers through the basics: what accounting information is, what it means, and how it is used. When money is borrowed from the bank, an asset cash is increased and a liability notes payable is also increased by an equal amount.