Financial Accounting

Financial Accounting Tools for Business Decision Making, 9th Canadian Edition, 9e Kimmel, Weygandt, Mitchell, Trenholm, Irvine, Burnley

(Solution Manual all Chapters)

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Financial Accounting, Ninth Canadian Edition

Solutions Manual 1-1 Chapter 1 Copyright © 2023 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.

CHAPTER 1

THE PURPOSE AND USE OF FINANCIAL

STATEMENTS

LEARNING OBJECTIVES

• Identify the uses and users of accounting information.
• Describe the primary forms of business organization.
• Explain the three main types of business activity.
• Describe the purpose and content of each of the financial statements.

SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES

AND BLOOM’S TAXONOMY

Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT Questions

1. 1 K 7. 2 C 13. 3 C 19. 4 K 25. 4 C

2. 1 C 8. 2 C 14. 3 C 20. 4 K 26. 4 C

3. 1 K 9. 2 C 15. 3 C 21. 4 AP 27. 4 K

4. 1 C 10. 2 C 16. 3 C 22. 4 C 28. 4 C

5. 1 C 11. 2 C 17. 3 C 23. 4 K 29. 4 C

6. 1 C 12. 2 K 18. 3 C 24. 4 C 30. 4 C

Brief Exercises

1. 1 C 4. 3 C 7. 4 AP 10. 4 C

2. 1 C 5. 3 C 8. 4 K 11. 4 AN

3. 2 K 6. 4 AP 9. 4 K

Exercises

1. 1 C 4. 3 C 7. 4 AN 10. 4 AP 13. 4 AP

2. 2 C 5. 4 K 8. 4 AN 11. 4 AP 14. 4 AN

3. 3 K 6. 4 AP 9. 4 AP 12. 4 AP

Problems: Set A and B

1. 1 C 3. 3 C 5. 4 AP 7. 4 AP 9. 4 AN

2. 2 C 4. 4 K 6. 4 AN 8. 4 AN 10. 4 AN

Cases

1. 3,4 C 3. 3,4 AN 5. 3,4 AN 7. 4 AN 9 1,3 C

2. 1 C 4. 3,4 AN 6. 1 C 8. 1 E

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Kimmel, Weygandt, Kieso, Trenholm, Irvine, Burnley Financial Accounting, Ninth Canadian Edition

Solutions Manual 1-2 Chapter 1 Copyright © 2023 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.

Legend: The following abbreviations will appear throughout the solutions manual

file.

LO Learning objective BT Bloom's Taxonomy K Knowledge C Comprehension AP Application AN Analysis S Synthesis E Evaluation

Difficulty: Level of difficulty

S Simple M Moderate C Complex

Time: Estimated time to prepare in minutes

AACSB Association to Advance Collegiate Schools of Business Communication Communication Ethics Ethics Analytic Analytic Tech. Technology Diversity Diversity Reflec. Thinking Reflective Thinking CPA CM CPA Canada Competency cpa-e001 Ethics Professional and Ethical Behaviour cpa-e002 PS and DM Problem-Solving and Decision-Making cpa-e003 Comm. Communication cpa-e004 Self-Mgt. Self-Management cpa-e005 Team & Lead Teamwork and Leadership cpa-t001 Reporting Financial Reporting cpa-t002 Stat. & Gov. Strategy and Governance cpa-t003 Mgt. Accounting Management Accounting cpa-t004 Audit Audit and Assurance cpa-t005 Finance Finance cpa-t006 Tax Taxation

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Kimmel, Weygandt, Kieso, Trenholm, Irvine, Burnley Financial Accounting, Ninth Canadian Edition

Solutions Manual 1-3 Chapter 1 Copyright © 2023 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.

ANSWERS TO QUESTIONS

• Accounting is the information system that identifies and records the

economic events of an organization, and then communicates them to a wide variety of interested users.

LO 1 BT: K Difficulty: S TIME: 3 min. AACSB: None CPA: cpa-t001 CM: Reporting

• (a) Internal users of accounting information work for the company and

include finance directors, marketing managers, human resource personnel, production supervisors, and company officers. Internal users have access to company information that is not available to external users.

(b) Some external users may be individuals who are employees of the company but are not directly involved in managing the company. As a result, they do not have access to much information. External users of accounting information generally do not work for the company. The primary external users are investors and creditors. Other external users include labour unions, customers, the Canada Revenue Agency (CRA), and securities commissions.

LO 1 BT: C Difficulty: M TIME: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting

3. Internal users may want the following questions answered:

• Is there enough cash to purchase a new piece of equipment?• What price should we sell our product for to cover costs and to maximize net income?• How many employees can we afford to hire this year?• Which product line is the most profitable?• How much of a pay raise can the company afford to give me?

External users may want the following questions answered:

• Is the company earning enough to give me my required return on investment?• Will the company be able to repay its debts as the debts come due?• Will the company stay in business long enough to service the products I buy from it?

LO 1 BT: K Difficulty: M TIME: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting

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