Chapter 2 - Cambridge Business Publishers, 2011 Solutions...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Cambridge Business Publishers, 2011 Solutions Manual, Chapter 2 2-1 Chapter 2 Constructing Financial Statements Learning Objectives coverage by question Mini-exercises Exercises Problems Cases LO1 Describe and construct the balance sheet and understand how it can be used for analysis. 14, 15, 16, 17, 19, 21, 22, 23, 25, 26, 27, 29, 30, 31 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46 47, 48, 49, 50, 51, 52, 53, 54, 55, 57, 58, 59, 60, 62, 64, 65, 67 69 LO2 Use the financial statement effects template (FSET) to analyze transactions. 20, 29 33, 42, 45 55, 60, 65, 67 LO3 Describe and construct the income statement and discuss how it can be used to evaluate management performance. 19, 20, 21, 22, 23, 28, 29 33, 34, 35, 37, 38, 39, 40, 41 47, 48, 49, 50, 51, 52, 53, 54, 55, 57, 58, 59, 60, 62, 63, 64, 65, 67 69, 70 LO4 Explain revenue recognition, accrual accounting, and their effects on retained earnings. 20, 22, 23, 24, 29 37, 38 53, 55, 57, 58, 60, 64, 65, 67 69 LO5 Illustrate equity transactions and the statement of stockholders equity. 18, 19, 21, 22, 23, 27, 29 33, 39, 41 51, 64, 65, 67 69 LO6 Use journal entries and T-accounts to analyze and record transactions. 25, 26, 29, 30, 31 43, 44, 46 53, 56, 57, 58, 61, 66, 68 69 LO7 Compute net working capital, the current ratio, and the quick ratio, and explain how they reflect liquidity. 32, 34, 36, 38, 40, 44 50, 53, 54, 57, 58 Cambridge Business Publishers, 2011 Financial Accounting, 3 rd Edition 2-2 QUESTIONS Q2-1. An asset is something that we own that is expected to provide future benefits. A liability is a current obligation that will require a future sacrifice. Equity is the difference between assets and liabilities. It represents the claims of the companys owners to its income and assets. The following are some examples of each: Assets Cash Receivables Inventories Plant, property and equipment Liabilities Accounts payable Accrued liabilities Notes payable Long-term debt Equity Contributed capital (common and preferred stock) Additional paid-in capital Earned capital (retained earnings) Treasury stock Q2-2. The revenue recognition principle requires that revenues be recognized when earned. Revenues are earned when the product has been delivered to the buyer and is usually signified by a formal transfer of title. A good test of whether revenue has been earned is whether the rights, risks and obligations of ownership have been transferred to the buyer. If a service is involved, revenues are not earned until the service has been provided. The matching principle prescribes that the expenses incurred in providing the service or product be matched against the revenues recognized from the sale or the provision of the service. When these two principles are followed, income can be properly measured in a given accounting reporting period....
View Full Document

This note was uploaded on 08/16/2011 for the course ECON 300 taught by Professor Laren during the Spring '11 term at Missouri State University-Springfield.

Page1 / 53

Chapter 2 - Cambridge Business Publishers, 2011 Solutions...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online