Solution Manual For Survey of Accounting Accounting, 8th Edition

Preview (16 of 556 Pages)

100%

Purchase to unlock

Solution Manual For Survey of Accounting Accounting, 8th Edition - Page 1 preview image

Loading page ...

1CHAPTER 1THE ROLE OF ACCOUNTING IN BUSINESSCLASS DISCUSSION QUESTIONS1.The objective of most businesses is tomaximize profits. Profit is the differencebetweentheamountsreceivedfromcustomersforgoodsorservicespro-vided and the amounts paid for the in-putsusedtoprovidethosegoodsorservices.2.A manufacturing business changes ba-sic inputs into products that are sold tocustomers. In contrast, a merchandisingbusiness purchases products in a formthat can be sold to customers without anyadditional changes. Examples of manu-facturing businesses include Alcoa, Boe-ing,Caterpillar,andDowChemical.ExamplesofmerchandisingbusinessesincludeBestBuy,Macy’s,Target,andWal-Mart.3.A manufacturing business changes ba-sic inputs into products that are sold tocustomers. A service business providesservicesratherthanproductstocus-tomers.Arestaurant,suchasMcDo-nald’s,hascharacteristicsofbothamanufacturing and a service business inthat McDonald’s takes raw inputs, suchascheese,fish,andbeef,andprocesses them into products for con-sumption by its customers. At the sametime, McDonald’s provides services ofwaiting on its customers.4.The corporate form allows the companyto obtain large amounts of resources byissuing stock. In addition, in a corpora-tion the stockholders’ liability to creditorsfor the debts of the company is limited totheir investment in the corporation. Forthesereasons,mostlargecompaniesthat require large investments in proper-ty, plant, and equipment are organizedas corporations.5.The business emphasis of KIA is a low-cost emphasis. In contrast, the businessemphasis of BMW is a premium-priceemphasis. The difference in emphasesis directly reflected in the prices of theautos. For example, a new KIA starts forjust over $15,000, but a new BMW starts for justover $30,000.6.Super Wal-Mart will compete for customers us-ing a low-cost strategy. The size and buyingpower of Wal-Mart Corporation provides Wal-Mart a competitive advantage over your friend inthe ability to offer low prices. Thus, your friendshould attempt to compete using a premium-price emphasis. For example, your friend couldoffer personalized service to customers such asknowingcustomers’namesandprovidingafriendlyatmosphere,homedeliveryofmedi-cines, help in filing insurance forms, 24-hour callservice, etc.7.eBay servicesits customers by developing aWeb-based community in which buyers and sel-lers are brought together in an efficient format tobrowse, buy, and sell items such as collectibles,automobiles, high-end or premium art pieces,jewelry,consumerelectronics,andahostofpractical and miscellaneous items.8.No. The stakeholders within a group do not al-ways share the same interests. For example,bankers are primarily concerned about the abilityof the business to repay its debt, including inter-est.Incontrast,stockholdersaremorecon-cerned about the long-term profitability of thebusiness, the business’s ability to pay dividends,and the future appreciation of their stock.9.Examples of financing activities for SouthwestAirlines could include issuing stock, borrowingfrom banks, and paying dividends. Examples ofinvesting activities could include purchasing newaircraft,acquiringnewterminalfacilities,andupgrading its computerized reservation systems.Examples of operating activities could includetransporting passengers and freight.10.The role of accounting is to provide informationfor managers to use in operating the business.In addition, accounting provides information toother stakeholders to use in assessing the eco-nomic performance and condition of the busi-ness.11.The income statement presents a summary ofthe revenues and expenses of a business for aspecific period of time. The statement of stock-holders’ equity indicates the changes in retained

Preview Mode

This document has 556 pages. Sign in to access the full document!

Report

Study Now!

Document Details

Related Documents

Solution Manual For Survey of Accounting, 9th Edition

Accounting

Master Managerial Accounting Techniques

Controlling and Reporting of Real Assets

Sarbanes Oxley Act, GAAP and IFRS

Team A Week 5 Problems

Accounting Audit Final Exam MCQs 2015

Changing the Accounting Information System

Understanding Key Concepts in Managerial Accounting

IFRS or US GAAP Which is the Best Reporting Standard

Company

Explore

Study Tools