Financial Accounting 4th Canadian Edition Solution Manual

Preview (31 of 805 Pages)

100%

Purchase to unlock

Financial Accounting 4th Canadian Edition Solution Manual - Page 1 preview image

Loading page image...

Chapter 1BusinessDecisions and Financial AccountingANSWERS TO QUESTIONS1.Accounting isa system ofanalyzing,recording, andsummarizingthe results of abusiness’s activitiesand then reporting them to decision makers.2.An advantage of operating as a sole proprietorship, rather than a corporation, is that it iseasy to establish. Another advantage is that income from a sole proprietorship is taxedonly once in the hands of the individual proprietor (income from a corporation is taxed inthe corporation and then again in the hands of the individual proprietor). A disadvantageof operating as a sole proprietorship, rather than a corporation, is that the individualproprietor can be held responsible for the debts of the business.3.Financial accounting focuses on preparing and using the financial statements that aremade available to owners and external users such as customers, creditors, and potentialinvestors who are interested in reading them. Managerial accounting focuses on otheraccounting reports that are not released to the general public, but instead are preparedand used by employees, supervisors, and managers who run the company.4.Financial reports are used by both internal and external groups and individuals. Theinternal groups are comprised of the various managers of the business. The externalgroups include investors, creditors, governmental agencies, other interested parties, andthe public at large.5.The business itself, not the individualshareholderswho own the business, is viewed asowning the assets and owing the liabilities on its balance sheet. A business’s balancesheet includes the assets, liabilities, andshareholders’equity of only that business andnotthe personal assets, liabilities, and equityof theshareholders. The financialstatements of a company show the results of the business activities of only that company.6.(a) Operating–These activities are directly related toearning profits. They includebuyingsupplies, makingproducts, serving customers, cleaning thepremises, advertising, rentinga building, repairingequipment, and obtaining insurance coverage.(b) Investing–These activities involve buying and selling productive resources with longlives(such as buildings, land, equipment, and tools), purchasing investments,and lendingto others.(c) Financing–Any borrowing from banks, repaying bank loans, receivingcontributions fromshareholders, or paying dividends toshareholdersareconsideredfinancing activities.

Preview Mode

This document has 805 pages. Sign in to access the full document!

Report

Study Now!

Document Details

Related Documents

Financial Accounting 5th Canadian Edition Test Bank

Financial Accounting 6th Canadian Edition Test Bank

Financial Accounting 4th Canadian Edition Test Bank

Financial Accounting 6th Canadian Edition Solution Manual

Accounting

Master Managerial Accounting Techniques

Controlling and Reporting of Real Assets

Sarbanes Oxley Act, GAAP and IFRS

Accounting Audit Final Exam MCQs 2015

Team A Week 5 Problems

Company

Explore

Study Tools