increasing liabilities in the course of delivering goods or

Chapter 1 Accounting and the Business Environment 1 Chapter 1 Accounting and the Business Environment Short Exercises (5 min.) S 1-1 Req. 1 Revenues are increases in equity from delivering goods or services to customers.Expenses are decreases in equity from using assets or increasing liabilities in the course of delivering goods or services to customers.Req. 2 If revenues increase, equity would increase.(5 min.) S 1-2 Req. 1 The banker is an external user of financial information.Req. 2 The financial statement that would provide the best information to answer the banker’s questions is the balance sheet.Accounting 9e Global Edition by Horngren Harrison Oliver (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) All Chapters Solutions Manual Supplement files download link at the end of this file. 1 / 4

Accounting 9/e Solutions Manual 2 (5 – 10 min.) S 1-3

Req. 1

This organization is the Financial Accounting Standards Board.

(5 – 10 min.) S 1-4 Req. 1

Chloe’s needs will best be met by organizing a corporation.

(5 – 10 min.) S 1-5 Req. 1

Advantages:

• Easy to organize.
• Neither stockholders to notify nor are there articles of

incorporation to file.

• Unification of ownership and management.

Disadvantages:

• No continuous life or transferability of ownership.
• Unlimited liability of owner. 2 / 4

Chapter 1 Accounting and the Business Environment 3 (5 - 10 min.) S 1-6 Req. 1 a.the entity concept b.the cost principle c.the stable monetary unit concept d.the faithful representation principle Req. 2 Michael McNamee has $11,000 equity in the business.Assets = Liabilities + Owner’s equity Accounts Cash + Furniture = Payable + Owner’s equity

$8,000 + $9,000 = $6,000 + $11,000 3 / 4

Accounting 9/e Solutions Manual 4 (5 min.) S 1-7 Req. 1

(5 min.) S 1-8

Req. 1

Account Amount Cash $ (26,000) Land $ 26,000

(5 min.) S 1-9

Req. 1 After this transaction (the first and only for the business), cash equals $ 0 and the total assets equal $2,800.Req. 2 The business’s asset which was increased as a result of the transaction is accounts receivable.

Assets = Liabilities + Owner’s equity Type of Transaction (a) Cash $320 = (not affected)

$ 0

+ Capital $320

Revenues (b) Cash

$(125)

= (not affected)

+ Capital

$(125)

Expenses (c) Accts receivable $440 = (not affected)

+ Capital $440

Revenues (d) (not affected)

= Accts payable $65 + Capital $(65)

Expenses

• / 4