OVERVIEW OF EXERCISES, PROBLEMS, AND CASES

2-1 © 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

CHAPTER 2

Financial Statements and the Annual Report

OVERVIEW OF EXERCISES, PROBLEMS, AND CASES

Estimated Time in Learning Outcomes Exercises Minutes Level

Module 1

• Describe the objectives of financial reporting.

• Describe the qualitative characteristics of accounting information. 1 10 Easy

Module 2

• Explain the concept and purpose of a classified balance sheet 2 10 Mod

and prepare the statement. 3 10 Easy

• 10 Easy

12* 10 Mod

• Use a classified balance sheet to analyze a company’s 4 10 Easy

financial position.

Module 3

• Explain the difference between a single-step and a 6 10 Easy

multiple-step income statement and prepare each type 7 10 Mod of income statement. 12* 10 Mod 13* 15 Mod 14* 5 Easy

• Use a multiple-step income statement to analyze a 8 10 Easy

company’s operations. 13* 15 Mod 14* 5 Easy

• Identify the components of the statement of retained earnings 9 10 Mod

and prepare the statement. 12* 10 Mod

• Identify the components of the statement of cash flows and 10 10 Easy

prepare the statement.

Module 4

• Read and use the financial statements and other elements 11 20 Diff

in the annual report of a publicly held company.

*Exercise, problem, or case covers two or more learning outcomes

Level = Difficulty levels: Easy; Moderate (Mod); Difficult (Diff)

Financial Accounting The Impact on Decision Makers 10th Edition Porter Solutions Manual Visit TestBankDeal.com to get complete for all chapters

2-2 FINANCIAL ACCOUNTING SOLUTIONS MANUAL

© 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Problems Estimated and Time in Learning Outcomes Alternates Minutes Level

Module 1

• Describe the objectives of financial reporting. 12* 45 Diff

• Describe the qualitative characteristics of accounting information. 1 15 Diff
• 15 Mod

10* 35 Mod 11* 20 Mod

Module 2

• Explain the concept and purpose of a classified balance sheet 3 50 Mod

and prepare the statement.

• Use a classified balance sheet to analyze a company’s 4 20 Easy

financial position. 5 15 Mod 10* 35 Mod 12* 45 Diff

Module 3

• Explain the difference between a single-step and a 6 30 Mod

multiple-step income statement and prepare each type 7 45 Mod of income statement. 11* 20 Mod

• Use a multiple-step income statement to analyze a

company’s operations.

• Identify the components of the statement of retained earnings

and prepare the statement.

• Identify the components of the statement of cash flows and 8 30 Mod

prepare the statement. 12* 45 Diff

Module 4

• Read and use the financial statements and other elements 9 30 Diff

in the annual report of a publicly held company.

*Exercise, problem, or case covers two or more learning outcomes

Level = Difficulty levels: Easy; Moderate (Mod); Difficult (Diff)

CHAPTER 2 • FINANCIAL STATEMENTS AND THE ANNUAL REPORT 2-3

© 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Estimated Time in Learning Outcomes Cases Minutes Level

Module 1

• Describe the objectives of financial reporting.

• Describe the qualitative characteristics of accounting information. 5 30 Mod

Module 2

• Explain the concept and purpose of a classified balance sheet

and prepare the statement.

• Use a classified balance sheet to analyze a company’s 1 30 Mod

financial position. 2 20 Mod 6* 30 Mod

Module 3

• Explain the difference between a single-step and a

multiple-step income statement and prepare each type of income statement.

• Use a multiple-step income statement to analyze a 6* 30 Mod

company’s operations.

• Identify the components of the statement of retained earnings

and prepare the statement.

• Identify the components of the statement of cash flows and 3 25 Mod

prepare the statement.

Module 4

• Read and use the financial statements and other elements 4 20 Mod

in the annual report of a publicly held company.

*Exercise, problem, or case covers two or more learning outcomes

Level = Difficulty levels: Easy; Moderate (Mod); Difficult (Diff)

2-4 FINANCIAL ACCOUNTING SOLUTIONS MANUAL

© 2017 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

EXERCISES

LO 2

EXERCISE 2-1 CHARACTERISTICS OF USEFUL ACCOUNTING INFORMATION

• materiality 4. consistency
• relevance 5. understandability
• faithful representation 6. comparability

LO 3

EXERCISE 2-2 THE OPERATING CYCLE

• For a company that sells a product, the operating cycle begins when the cash is in-

vested in inventory and ends when cash is collected by the company from its cus- tomers. Two Wheeler’s operating cycle would be a minimum of 45 days (for cash sales) and a maximum of 75 days (for sales on credit: 45 days to sell the bike and 30 days to collect).

• The operating cycle for Baxter, the manufacturer of the bikes, would normally be

longer than Two Wheeler’s. This is because a manufacturer incurs various costs to produce the bikes before it sells them to retailers such as Two Wheeler and even- tually collects cash from the sales. On the other hand, the retailer only buys a finished good from the manufacturer and then sells it to the customer.

LO 3

EXERCISE 2-3 CLASSIFICATION OF FINANCIAL STATEMENT ITEMS

1. CA 6. NCA

2. SE 7. CL

3. NCA 8. SE

4. CA 9. NCA

5. CL 10. LTL