financial reporting is the unethical preparation of financial statements that misrepre-

DQ1.DQ2.DQ3.DQ4.DQ5.DQ6.DQ7.DQ8.financial reporting is the unethical preparation of financial statements that misrepre- sent a company's financial situation or contain false information.Unethical ways of accounting include recording and reporting business transactions that did not occur or being dishonest in recording those that did occur. Fraudulent resulting from net income.CHAPTER 1—Solutions leases aircraft.CVS and Southwest are comparable in that like all companies they have two main goals: profitability and liquidity. How companies such as CVS and Southwest achieve organizations in a financially prudent way.these goals may make them incomparable in certain ways. For instance, CVS is a retail (pharmacy and related) company, whereas Southwest is a service (air transpor- Expenses and withdrawals are the same in that they both reduce the owner's capital component of owner's equity. They are different in that expenses are also a compo- nent of net income, whereas withdrawals are a distribution of assets to the owner is an economic event, but no exchange of value has taken place with our company and thus our company records no transaction.GAAP differs from the laws of mathematics in that they are not unchanging but rather are constantly evolving. They may change as business conditions change or as im- proved methods of accounting are introduced.No. Not all economic events involve exchanges of value between the business and another party. For example, when a customer buys a product from a competitor, it The primary purpose of accounting is to provide decision makers with the financial Accounting treats sole proprietorships, partnerships, and corporations as entities separate and apart from their owners because each form represents a business of the usefulness of the information it generates.Like managers of profit-seeking businesses, managers of government and not-for- profit organizations must report to those who fund them, and they must operate their

ACCOUNTING PRINCIPLES AND

THE FINANCIAL STATEMENTS

Discussion Questions information they need to make intelligent decisions. It is a valuable discipline because (separate entity) for which financial performance must be measured and reported.tation) company. CVS buys and leases retail stores, whereas Southwest buys and 1-1 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.Principles of Accounting 12th Edition Needles Solutions Manual Visit TestBankDeal.com to get complete for all chapters

1.

2.

3.

1.

2.

3.

• =
• =
• =

1. = +

=+ –= =

2. = +

Assets – 0.2 Assets = 0.8 Assets = =/ = =×= SE3. The Accounting Equation Assets Owner's Equity

$240,000

$144,000

c Short Exercises SE1. Accounting Concepts 4.

5.

6.a c bb c 4.

• a

a a Liabilities b

$200,000

c SE2. Forms of Business Organization Owner's Equity

$90,000

$40,000

Owner's Equity

$150,000

$10,000

Liabilities

$40,000

0.2 SE4. The Accounting Equation

$150,000

Assets

$90,000

Owner's Equity

$240,000

$240,000

Liabilities 0.2 Assets Assets

$50,000

$50,000

0.8

$40,000

$40,000

Assets Assets 1-2 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

1.+ + + 2.+ + + = =+ =+ =+

$ 1,400

$ 1,400

57,400

$58,800

Owner's capital Total liabilities and owner's equityTotal assets Wages payable Total liabilities

*$58,800 – $3,200 – $44,000 = $11,600

Building Owner's Equity

$11,600

3,200

$58,800

44,000

Cash Accounts receivable = = Assets Liabilities Manteno Company Balance Sheet June 30, 2014 = = = SE7. Preparation and Completion of a Balance Sheet Investment Withdrawals Net Income*

*($260,000 – $160,000) – $40,000 + $48,000 = $108,000

$160,000

$260,000

48,000

$ 40,000

108,000

$400,000

End of year:

$140,000

During year:

SE5. The Accounting Equation Assets

End:

$108,000

$96,000

Owner's Equity

$280,000

Beginning of year:

Liabilities

$120,000

= = Net income SE6. The Accounting Equation and Net Income

Change:

$ 45,000

$ 75,000

$96,000

Owner's Equity

+ 5,000

$ 40,000

End:

Beginning: Assets

$100,000

$100,000

$196,000

Owner's Equity

$196,000

Assets

Beginning:

Change:

$ 90,000

Liabilities

$ 90,000 $50,000

$50,000

Owner's Equity = = = Liabilities

+ 30,000

$120,000

$ 40,000

–30,000

$166,000Owner's Equity

+ 40,000

$236,000 $ 70,000

* 1-3 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

$4,800

2,450

$2,350

$ 500 2,350

$2,850

410

$2,440

Accounts payable$ 450 Other assets Total liabilities $ 450 Owner's capital2,440 Total liabilities and Total assets owner's equity $2,890

• 6.
• 7.
• 8.
• 9.

5. 10.

• 3.
• 4.

bd ac SE 10. Ethics and Accounting cj eh gi fd ba SE9. Accounting and Business Enterprises Less withdrawals Owner's capital, December 31, 2014 Owner's capital, December 31, 2013 Net income for the year Randall Company Balance Sheet SE8. Preparation of Financial Statements For the Year Ended December 31, 2014 December 31, 2014 Total expenses Cash Liabilities Randall Company Statement of Owner's Equity Subtotal For the Year Ended December 31, 2014 Randall Company Income Statement Net income

Revenues:

Service revenue

Expenses:

$2,890

Owner's Equity Assets

$1,890

1,000 1-4 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.