Solution Manual

TABLE OF CONTENTS
SOLUTIONS MANUAL
Chapter 1
Chapter 2
Chapter
Chapter
Chapter
Chapter
Chapter
Chapter
Chapter
Chapter
Chapter
Chapter

3
4
5
6
7
8
9
10
11
12

Chapter 13

Introduction to Financial Reporting . . . . . . . . . . . .
Introduction to Financial Statements and Other Financial
Reporting Topics. . . . . . . . . . . . . . . . . . . . . .
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . .
Income Statement. . . . . . . . . . . . . . . . . . . . . .
Basics of Analysis. . . . . . . . . . . . . . . . . . . . .
Liquidity of Short-term Assets; Related Debt-Paying Ability
Long-Term Debt-Paying Ability . . . . . . . . . . . . . . .
Profitability . . . . . . . . . . . . . . . . . . . . . . .
For the Investor. . . . . . . . . . . . . . . . . . . . . .
Statement of Cash Flows . . . . . . . . . . . . . . . . . .
Expanded Analysis . . . . . . . . . . . . . . . . . . . . .
Special Industries: Banks, Utilities, Oil and Gas,
Transportation, Insurance, Real Estate Companies. . . . . .
Personal Financial Statements and Accounting for
Governments and Not-For-Profit Organizations. . . . . . . .

1

1
20
41
68
88
107
160
187
234
260
299
340
366

Chapter 1
Introduction to Financial Reporting
TO THE NET
1.

a.

he Mission of the Financial Accounting Standard Board
(In Part)
The mission of the Financial Accounting Standards
Board (FASB)is to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors and users of financial information.
Accounting standards are essential to the efficient functioning of the economy because decisions about the allocation of resources rely heavily on credible, concise, transparent and understandable financial information. Financial information about the operations and financial position of individual entities also is used by the public in making various other kinds of decisions.