Exercises Topic Objectives Skills

BriefLearning ExercisesTopicObjectives Skills

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

accounting information

• Ex. 1.5FASB conceptual framework 1, 3, 5, 6 Analysis
• Ex. 1.6PCAOB5, 6 Analysis, research
• Ex. 1.7COSO2, 5, 6 Analysis, ethics
• Ex. 1.8Professional certifications in accounting 7, 8 Analysis
• Ex. 1.9AICPA code of professional conduct 5, 7 Analysis, ethics
• Ex. 1.10Personal benefits of accounting skills1 Analysis

Learning ExercisesTopicObjectives Skills 1.1 You as a user of accounting information 1 Analysis, judgmen t 1.23, 4 Analysis, research Users of accounting information 1.3 What is financial reporting? 3 Analysis, judgment 1.4 Generally accepted accounting principles 6 Analysis 1.5 Accounting organizations6 Analysis, communication 1.6 Investment return3 Analysis 1.7 Accounting terminolog y3-5, 7 Analysis 1.8 Accounting organizations 6 Analysis 1.9 Financial and management accounting 3, 4 Judgment 1.10 Management accounting information 4Communication, judgment 1.11 Accounting organizations6 Analysis, judgment 1.12 Purpose of an audit5 Analysis, judgment 1.13 Audits of financial statements 5 Analysis 1.14 Ethics and professional judgment 7 1.15 Careers in accounting8 Judgment, communication 1.16 Home Depot, Inc. general information 1, 3, 5

Real World: Boeing Company,

California Public Employees Retirement S ystem, China Airlines

CHAPTER 1

ACCOUNTING: INFORMATION FOR DECISION MAKING

OVERVIEW OF BRIEF EXERCISES, EXERCISES, AND CRITICAL THINKING

CASES Analysis, communication, judgment Analysis, judgment, research © The McGraw-Hill Companies, Inc., 2012 Overview Financial and Managerial Accounting 16th Edition Williams Solutions Manual Visit TestBankDeal.com to get complete for all chapters

1.1 Real World: Fannie Mae 5 Analysis, ethics, judgment

Reliability of financial statements 1.2 Objectives of financial accounting 3 1.3 Accounting systems 2 Analysis, communication 1.47 1.56, 7 Research, technologyAccessing information on the Internet (Internet) Critical Thinking Cases Codes of ethics (Ethics, fraud, and corporate governance) Analysis, communication, judgment 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.Analysis, communication, group, judgment © The McGraw-Hill Companies, Inc., 2012 Overview

Critical Thinking Cases Fannie Mae Reliability of Financial Statements Objectives of Financial Accounting Accounting Systems Codes of EthicsEthics, Fraud, and Cor porate Governance Accessing Information on the Internet Internet 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.

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 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 or ganizations.© The McGraw-Hill Companies, Inc., 2012 Desc. of Cases

SUGGESTED ANSWERS TO DISCUSSION QUESTIONS

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2.      5.

6.

7.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 interests 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 are agreed-upon ways that economic activity will be captured and reported in monetary terms. They are important in insuring the integrity of financial accounting information and being able to compare the information of one enterprise with that of another enterprise.While financial information has an appearance of precision, it often requires judgment and estimation and, thus, 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. Those estimates may or may not turn out, in the long term, to be precisely correct. This causes 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 your 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 at a point in time.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 lan guage 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.© The McGraw-Hill Companies, Inc., 2012 Q1-7