Exercises Topic Objectives Skills

BriefLearning ExercisesTopicObjectives Skills

• Ex. 1.1Users of accounting information 1-1, 1-3, 1-5Analysis
• Ex. 1.2Components of internal control 1-2, 1-5Analysis
• Ex. 1.3Inexact or approximate measures 1-3, 1-4Analysis, judgment
• Ex. 1.4Standards for the preparation of 1-5, 1-6Analysis

accounting information

• Ex. 1.5FASB conceptual framework 1-1, 1-3, 1-5, 1-6Analysis
• Ex. 1.6PCAOB1-5, 1-6Analysis, research
• Ex. 1.7COSO1-2, 1-5, 1-6Analysis, ethics
• Ex. 1.8Professional certifications in accounting1-7,1- 8Analysis
• Ex. 1.9AICPA code of professional conduct 1-5, 1-7Analysis, ethics
• Ex. 1.10Personal benefits of accounting skills1-1 Analysis

Learning ExercisesTopicObjectives Skills 1.1 You as a user of accounting information1-1 Analysis, judgment 1.21-3, 1-4Analysis, research Users of accounting information 1.3 What is financial reporting? 1-3 Analysis, judgment 1.4 Generally accepted accounting principles1-6 Analysis 1.5 Accounting organizations1-6 Analysis, communication 1.6 Investment return1-3 Analysis 1.7 Accounting terminology1-3-1-5, 1-7Analysis 1.8 Accounting organizations1-6 Analysis 1.9 Financial and management accounting 1-3, 1-4Judgment 1.10 Management accounting information 1-4 Communication, judgment 1.11 Accounting organizations1-6 Analysis, judgment 1.12 Purpose of an audit1-5 Analysis, judgment 1.13 Audits of financial statements 1-5 Analysis 1.14 Ethics and professional judgment 1-7 1.15 Careers in accounting1-8 Judgment, 1.16 Home Depot, Inc. general information1-1, 1-3, 1-5

1.1 Real World: American Airlines Group 1-5 Analysis, ethics,

Reliability of financial statements 1.2 Objectives of financial accounting 1-3 1.3 Accounting systems1-2 Analysis, communication

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1.51-6, 1-7Research, technology Analysis, communication, group,

CHAPTER 1

ACCOUNTING: INFORMATION FOR DECISION MAKING

OVERVIEW OF BRIEF EXERCISES, EXERCISES, AND CRITICAL THINKING

CASES Analysis, communication, Analysis, communication, Analysis, judgment, research Due to the introductory nature of this chapter and the conceptual nature of its contents, no items labeled Problems are included. In all future chapters you will find a series of Problems that generally include computations, are more complex, and generally require more time to complete than Exercises.

Real World: Boeing Company,

California Public Employees Retirement System, China Airlines Accessing information on the Internet (Internet) Critical Thinking Cases Codes of ethics (Ethics, fraud, and corporate governance) Copyright © 2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.This is excel file, converted in PDF for Preview only, you will get complete solutions manual in Excel files download link after payment. (For Complete File, Download link at the end of this File) (Financial and Managerial Accounting The Basis for Business Decisions, 20e Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello (Solution Manual) 1 / 4

Critical Thinking Cases American Airlines Group Inc.Reliability of Financial Statements Objectives of Financial Accounting Accounting Systems Codes of Ethics Ethics and Social Responsibility Accessing Information on the Internet Internet 1.530 Medium Students are introduced to learning on the Internet by accessing the Rutgers University web page on accounting information. Once there, they learn about accounting firms, accounting textbook publishers, and professional accounting organizations.

1.430 Medium The purpose and functions of accounting systems are covered, as well as the definition of what an accounting system is and who is responsible for designing and implementing accounting systems.Students are placed in the position of a new employee who is faced with the challenge of becoming familiar with an appropriate code of ethics and must think through how that code might influence his/her behavior on the job.

1.315 Easy Below are brief descriptions of each case. These descriptions are accompanied by the estimated time (in minutes) required for completion and by a difficulty rating.

DESCRIPTIONS OF CRITICAL THINKING CASES

1.115 Easy Characteristics of accounting and accounting information (e.g., useful for decision making, language of business) are used to explain the importance of accounting information.

1.215 Medium This case explores the general subject of integrity in financial statements—what causes potential investors to be able to rely on information and what precludes management from portraying a company in more positive terms than it should.Copyright © 2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 2 / 4

SUGGESTED ANSWERS TO DISCUSSION QUESTIONS

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7.Note to instructor: We regularly include discussion questions as part of the assigned homework. One objective of these questions is to help students develop communications skills; however, we find that they also increase students’ conceptual understanding of accounting.Accounting is a way of communicating the results of business activity and, therefore, is sometimes described as the language of business. Among the important accounting measurements that communicate business activity and justify describing accounting as the language of business are costs, prices, sales volume, profits, and return on investment.Income statement—A statement that details the results of the company’s profit-seeking activities during a period of time.

4.Statement of cash flows—A statement that presents details of the company’s cash balance—how it increased, how it decreased, and how the ending balance compares with the beginning balance—for a period of time.

3.Internal accounting information is primarily oriented toward the future. While some management accounting information is historical, the purpose of management accounting information is to facilitate current and future decision making that is in the best interest of the company and that is consistent with the company’s mission. Financial accounting information, while also used for current and future decision making, is generally more historical in nature than is management accounting. Financial accounting information deals primarily with the financial activities of the enterprise during recent past periods.Generally accepted accounting principles (GAAP) are agreed-upon ways that economic activity will be captured and reported in monetary terms. GAAP are important in insuring the integrity of financial accounting information and being able to compare the information of one enterprise with that of other enterprises.While financial information has an appearance of precision, it often requires judgment and estimation and, as a result, is less precise than one might think. For example, to determine certain information about a company for a certain year, or at a certain point in time, it may be necessary to make estimates about the future. For example, how many years will a building be used by a company? At what price will products a company manufactures be sold? These estimates may or may not turn out, in the long term, to be precisely correct. This results in the information about the current year to be less precise and accurate than would otherwise be the case.The return of your investment is the repayment to you of the amount you invested earlier. The return on your investment is what the company pays you for having the use of your money while it was invested as opposed to you having use of the money while it was invested.The three primary objectives of financial reporting, from general to specific, are to provide: Information that is useful in making investment and credit decisions.Information useful in assessing the amount, timing, and uncertainty of future cash flows.Information about economic resources, claims to resources, and changes in resources and claims on them.The three primary financial statements that are the means of communicating financial

accounting information are:

Statement of financial position (balance sheet)—A statement that shows where the company stands in financial terms at a point in time.Copyright © 2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 3 / 4

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15.CPA. CMA. and CIA are earned designations that signify that the holder has expertise in various areas of accounting. CPA means Certified Public Accountant. CMA means Certified Management Accountant. CIA means Certified Internal Auditor. All of these provide assurance of the competence of the individual. In addition to signifying general expertise in accounting, the CPA is a legal license to issue opinions on the fairness of financial statements.The Sarbanes-Oxley Act was passed largely in response to several major financial frauds that occurred in 2001 and 2002. It is generally viewed as the most important legislation affecting the accounting profession since the securities acts were passed in the 1930s. It places increased responsibilities on auditors, boards of directors, audit committees, chief executive officers, and chief financial officers of public corporations to take specific steps to insure the integrity of the company’s financial reports.Internal control is a process designed to provide reasonable assurance that the organization produces reliable financial reports, complies with applicable laws and regulations, and conducts operations in an efficient and effective manner. The five components of internal control per the COSO framework are the control environment, risk assessment, control activities, information and communication, and monitoring activities.An audit is an examination of a company’s financial information, including financial statements, by an independent expert (e.g., a Certified Public Accountant) who issues an expert opinion that indicates the findings of that examination. the audit opinion adds assurance for investors, creditors, and other users that the information provided by the company is accurate and reliable, and that the information is in accordance with generally accepted accounting principles.The primary role of the PCAOB with respect to audits of financial statements is its involvement in establishing auditing standards that are used by the Certified Public Accountants who conduct audits of public companies. The PCAOB also has a number of different roles, including providing oversight of the public accounting profession.The FASB is the primary standard-setting body in the United States. The FASB is a private- sector organization that is responsible for establishing generally accepted accounting principles to guide the preparation of financial statements by companies. It works closely with the Securities and Exchange Commission, which is a government body, to develop standards that promote integrity, improve the quality of information reported to external users, and result in financial information that is comparable from one time period to another and from one reporting entity to another.The SEC is a government body that has the legal authority to establish generally accepted accounting principles for publicly held companies. Generally, however, the SEC has permitted the process of establishing GAAP to be carried out in the private sector and has accepted the work of the FASB rather than being directly involved in the process of determining GAAP.The IASB is the organization that creates and promotes International Financial Reporting Standards (IFRS). Its goals are to create a single set of global accounting standards and to work to achieve acceptance of those standards, referred to as convergence, throughout the world. IASB standards are increasingly accepted throughout the world. For example, IFRS are required by companies in the European Union, Australia, and Canada, as well as other countries, and they are acceptable for foreign companies whose securities are sold in the U.S.capital markets.Hill Education.

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