Introduction+to+Management+Accounting+(16th+Edition)+现货+ 答案
更新时间:2023-03-16 01:21:01 阅读量: 教育文库 文档下载
Chapter 15
Basic Accounting:
Concepts, Techniques, and Conventions
LEARNING OBJECTIVES:
When your students have finished studying this chapter, they should be able to: 1. Read and interpret basic financial statements. 2. Analyze typical business transactions using the balance sheet equation. 3. Distinguish between the accrual basis of accounting and the cash basis of accounting. 4. Make adjustments to the accounts under accrual accounting. 5. Explain the nature of dividends and retained earnings. 6. Select relevant items from a set of data and assemble them into a balance sheet, and
an income statement. 7. Distinguish between the reporting of corporate owners’ equity and the reporting of
owners’ equity for partnerships and sole proprietorships. 8. Explain the role of auditors in financial reporting and how accounting standards are set. 9. Identify how the measurement principles of recognition, matching and cost recovery,
and stable monetary unit affect financial reporting.
10. Define continuity, relevance, faithful representation, materiality, conservatism, and
cost-benefit (Appendix 15A).
11. Use T-accounts, debits, and credits to record transactions (Appendix 15B).
Copyright ?2014 Pearson Education, Inc., Publishing as Prentice Hall.
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CHAPTER 15:
ASSIGNMENTS
CRITICAL THINKING EXERCISES
24. Accounting Valuation of Fixed Assets
25. Marketing, the Income Statement, and the Balance Sheet 26. Revenue Recognition and Evaluation of Sales Staff
27. Relationship Between the Balance Sheet and the Income Statement 28. Concepts of Relevance and Faithful Representation
GENERAL EXERCISES and PROBLEMS
29. True or False
30. Simple Balance Sheet
31. Nature of Retained Earnings 32. Income Statement
33. Income Statement, Balance Sheet, and Dividends 34. Customer and Airline 35. Tenant and Landlord 36. Adjustments 37. Find Unknowns
38. Balance Sheet Equation: Solving for Unknowns
39. Fundamental Transaction Analysis and Preparation of Statements 40. Measurement of Income for Tax and Other Purposes 41. Debits and Credits 42. True or False
43. Use of T-Accounts 44. Use of T-Accounts 45. Use of T-Accounts
UNDERSTANDING PUBLISHED FINANCIAL REPORTS
46. Balance Sheet Effects
47. Preparation of Balance Sheet for Costco 48. Net Income and Retained Earnings 49. Earnings Statement, Retained Earnings 50. Sole Proprietorship and Corporation
51. Nike 10-K Problem: Interpreting the Income Statement and Balance
Sheet
EXCEL APPLICATION EXERCISE
52. Monthly Transactions Using the Balance Sheet Equation
Copyright ?2014 Pearson Education, Inc., Publishing as Prentice Hall.
229
COLLABORATIVE LEARNING EXERCISE
53. Implicit Transactions
INTERNET EXERCISE
54. McDonald’s Financial Statements
(http://www.mcdonalds.com)
CHAPTER 15:
OUTLINE
I.
The Need for Accounting
Accounting is the language of business. Managers, investors, and other interested groups usually want the answers to two important questions about an organization: How well did the organization perform for a given period? Where does the organization stand at a given point? Accountants answer these two questions with two major financial statements: an income statement and a balance sheet. To obtain these statements, accountants record an organization’s transactions. Transaction—any event that affects the financial position of an organization and requires recording. Through the years, many concepts, conventions, and rules have been developed regarding what events are to be recorded as accounting transactions and how their financial impact is measured.
II.
Financial Statements: Balance Sheet and Income Statement {L. O. 1}
Financial statements are summarized reports of accounting transactions. They can apply to any point in time and to any span of time.
Balance Sheet (more accurately called Statement of Financial Position or Statement of Financial Condition)—a snapshot of financial status at an instant of time. The balance sheet equation is
assets = equities
The equities side of this equation is often divided into two parts:
assets = liabilities + owners’ equity
Liabilities—the entity’s economic obligations to nonowners. Owners’ Equity—the excess of the assets over the liabilities. For Corporations (i.e., a business organized as a separate legal entity and owned by its stockholders), owners’ equity is called
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Copyright ?2014 Pearson Education, Inc., Publishing as Prentice Hall.
Stockholders’ Equity. Stockholders’ equity is a result of Paid-in Capital (i.e., the ownership claim arising from funds paid-in by the owners) plus Retained Earnings or Retained Income (the ownership claim arising from the investment of previous profits). The balance sheet equation for corporations becomes:
assets = = liabilities + stockholders’ equity
liabilities + (paid-in capital + retained earnings)
{L. O. 2}
See EXHIBIT 15-1 and EXHIBIT 15-2 for illustrations of the
effects of transactions on the balance sheet equation. Accounts Receivable—amounts due from customers on open account. Accounts Payable—amounts owed on open accounts. A.
Revenue and Expenses
Revenues—increases in ownership claims arising from the delivery of goods or services. To be recognized (i.e., formally recorded in the accounting records as revenue during the current period), revenue (1) must be earned by fully rendering goods or services to customers, and (2) must be realized (i.e., the seller must be reasonably assured that the resources promised in exchange for the goods or services will be received).
Expenses—decreases in ownership claims arising from delivery of goods or services, or using up assets. Profits (or Earnings of Income)—the excess of revenues over expenses.
Account—each item in a financial statement. Increases in revenues are increases in stockholders’ equity and increases in expenses decrease stockholders’ equity.
B.
Relationship Between Balance Sheet and Income Statement
Income Statement—measures the operating performance of the corporation by matching its accomplishments (i.e., revenues or sales) with its efforts (i.e., expenses such as cost of goods sold). The balance sheet shows the financial position at an instant of time, but the income statement measures performance for a span of time, whether it be a month, a quarter, or longer. Thus, the income statement is the major link between balance sheets. The Analytical Power of the Balance Sheet Equation
The balance sheet equation can highlight the link between the income statement and the balance sheet. The relationships between income statement
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C.
Copyright ?2014 Pearson Education, Inc., Publishing as Prentice Hall.
items and those for the balance sheet can be seen in transforming the balance sheet equation as shown below:
1. assets (A) = liabilities (L) + stockholders’ equity (SE) 2. A = L + paid-in capital + retained earnings 3. A = L + paid-in capital + revenue - expenses
Revenue and expense accounts are subdivisions of stockholders’ equity (i.e., temporary stockholders’ equity accounts). For every transaction, the balance sheet equation is always kept in balance.
III. Accrual Basis and Cash Basis {L. O. 3}
Accrual Basis—recognizes the impact of transactions on the financial statements in the periods when revenues and expenses occur instead of when cash is received or disbursed. Revenues are recorded as they are earned and expenses recorded as they are incurred, not necessarily when cash changes hands. Cash Basis—revenue and expense recognition would depend solely on the timing of various cash receipts and disbursements. The major deficiency of the cash basis is that it is incomplete. It fails to match efforts with accomplishments (expenses and revenues) in a manner that properly measures economic performance and financial position. It omits key assets (such as accounts receivable and prepaid rent) and key liabilities (such as accounts payable) from the balance sheets. A.
Nonprofit Organizations
Balance sheets and income statements are also used in nonprofit organizations. Some have not adopted all the conventions used by their profit-seeking counterparts. For instance, some governmental agencies still use the cash basis of accounting rather than the accrual basis. The lack of accrual-based financial statements has hampered the evaluation of the performance of such organizations.
IV. Adjustments to the Accounts
Adjustments—recording of implicit transactions, in contrast to the explicit transactions that trigger nearly all day-to-day routine entries, at the end of each reporting period in order to measure income for accrual accounting. They refine the accountant’s accuracy and provide a more complete and significant measure of efforts,
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