会计学原理Financial-Accounting-by-Robert-Libby第八版-第三章-答.pdf

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1、Chapter 3Chapter 3Operating Decisions andOperating Decisions andthe Accounting Systemthe Accounting SystemANSWERS TO QUESTIONSANSWERS TO QUESTIONS1.Atypicalbusinessoperatingcycleforamanufacturerwouldbeasfollows: inventory is purchased, cash is paid to suppliers, the productis manufactured and sold o

2、n credit, and the cash is collected from thecustomer.Thetimeperiodassumptionmeansthatthefinancialconditionandperformance of a business can be reported periodically, usually everymonth, quarter, or year, even though the life of the business is muchlonger.2.3.Net Income = Revenues + Gains - Expenses -

3、 Losses. Each element is defined as follows:Revenues -increases in assets or settlements of liabilities fromongoing operations.Gains -increases in assets or settlements of liabilities fromperipheral transactions.Expenses - decreases in assets or increases in liabilities fromongoingoperations.Losses

4、-decreases in assets or increases in liabilities fromperipheral transactions.4.Both revenues and gains are inflows of net assets.However, revenuesoccur in the normal course of operations, whereas gains occur fromtransactions peripheral to the central activities of the company.Anexample is selling la

5、nd at a price above cost (at a gain) for companiesnot in the business of selling land.Both expenses and losses are outflows of net assets. However, expensesoccur in the normal course of operations, whereas losses occur fromtransactions peripheral to the central activities of the company.Anexample is

6、 a loss suffered from fire damage.1 / 77 5.Accrual accounting requires recording revenues when earned and recordingexpenses when incurred, regardless of the timing of cash receipts orpayments.Cash basis accounting is recording revenues when cash isreceived and expenses when cash is paid. 6.The four

7、criteria that must be met for revenue to be recognized undertheaccrualbasisofaccountingare(1)deliveryhasoccurredorservices have been rendered, (2) there is persuasive evidence of anarrangement for customer payment, (3) the price is fixed or determinable,and (4) collection is reasonably assured. 7.Th

8、e expense matching principle requires that expenses be recorded whenincurred in earning revenue.For example, the cost of inventory soldduring a period is recorded in the same period as the sale, not when thegoods are produced and held for sale. 8.Net income equals revenues minus expenses. Thus reven

9、ues increase netincome and expenses decrease net income. Because net income increasesstockholdersequity,revenuesincreasestockholdersequityandexpenses decrease it. 9.Revenuesincreasestockholdersequityandexpensesdecreasestockholders equity.To increase stockholders equity, an accountmust be credited; t

10、o decrease stockholders equity, an account must bedebited. Thus revenues are recorded as credits and expenses as debits.10.ItemItemIncreaseIncreaseDecreaseDecrease11.12.RevenuesLossesGainsExpensesItemItemRevenuesLossesGainsExpensesTransactionTransactionCreditDebitCreditDebitDebitDebitDecreaseIncreas

11、eDecreaseIncreaseOperating,Operating,Investing, orInvesting, orFinancingFinancingOperatingNoneOperating3 / 77DebitCreditDebitCreditCreditCreditIncreaseDecreaseIncreaseDecreaseDirectionDirectionof the Effectof the Effecton Cashon CashNone+Cash paid to suppliersSale of goods on accountCash received fr

12、om customers13.Purchase of investmentsCash paid for interestIssuance of stock for cashInvestingOperatingFinancing+Total net profit margin ratio is calculated as Net Income Net Sales(or Operating Revenues). The net profit margin ratio measures how muchof every sales dollar is profit. An increasing ra

13、tio suggests that thecompany is managing its sales and expenses effectively.ANSWERS TO MULTIPLE CHOICEANSWERS TO MULTIPLE CHOICE 1. c 2. a 3. b 4. b 5. c 6. c 7. d 8. b 9. a10. bAuthors Recommended Solution TimeAuthors Recommended Solution Time(Time in minutes)(Time in minutes)Mini-exercisesNo.Time1

14、23456789101156655556666ExercisesNo.Time12345678910111015202020201820202020ProblemsNo.Time123456720202540204030AlternateProblemsNo.Time123456303035402040Cases andProjectsNo.Time1202303304205306607308*ContinuingCase1213141516171815202020202010130*Due to the nature of this project, it is very difficult

15、 to estimate theamount of time students will need to complete the assignment.As with anyopen-ended project, it is possible for students to devote a large amount oftime to these assignments. While students often benefit from the extra effort,we find that some become frustrated by the perceived diffic

16、ulty of the task.You can reduce student frustration and anxiety by making your expectationsclear. For example, when our goal is to sharpen research skills, we devoteclass time discussing research strategies. When we want the students to focuson a real accounting issue, we offer suggestions about pos

17、sible companies orindustries.MINI-EXERCISESMINI-EXERCISESM3M31.1.GCFEBM3M32.2.Cash BasisCash BasisIncome StatementIncome StatementRevenues: Cash sales Customer depositsExpenses: Inventory purchases$8,0005,000Accrual BasisAccrual BasisIncome StatementIncome Statement Revenues: Sales to$18,000customer

18、s Expenses: Cost of sales9,000TERMTERM(1)Losses(2)Expense matchingprinciple(3)Revenues(4)Time period assumption(5)Operating cycle1,0005 / 77 Wages paidNet Income900 Wages expense Utilitiesexpense$11,100 Net Income900300$7,800M3M33.3.Revenue Account AffectedRevenue Account Affecteda.Games Revenueb.Sa

19、les Revenuec.NoneAmount of Revenue Earned in JulyAmount of Revenue Earned in July$15,000$8,000No revenue earned in July; cashcollections in July related to earnings inJune.No revenue earned in July; earningsprocess is not yet complete UnearnedRevenue is recorded upon receipt of cash.d.NoneM3M34.4.Ex

20、pense Account AffectedExpense Account Affectede.Cost of Goods Soldf.Noneg.Wages Expenseh.Insurance ExpenseAmount of Expense Incurred in JulyAmount of Expense Incurred in July$6,800No expense is incurred in July; paymentrelated to June electricity usage.$3,500$500 incurred and expensed in July and$1,

21、000 not incurred until future months (recorded as Prepaid Expense(A).$700$900i.Repairs Expensej.Utilities Expense7 / 77M3M35.5.a.Cash (+A)Games Revenue (+R, +SE)b.Cash (+A)Accounts Receivable (+A)Sales Revenue (+R, +SE)c.Cash (+A)Accounts Receivable (A)d.Cash (+A)Unearned Revenue (+L)M3M36.6.e.Cost

22、of Goods Sold (+E, SE)Inventory (A)f.Accounts Payable (L)Cash (A)g.Wages Expense (+E, SE)Cash (A)h.Insurance Expense (+E, SE)Prepaid Expenses (+A)Cash (A)i.Repairs Expense (+E, SE)Cash (A)j.Utilities Expense (+E, SE)Accounts Payable (+L)M3M37.7.Balance SheetBalance SheetStockholdersStockholdersAsset

23、sAssetsLiabilitiesLiabilities Equity Equity15,0003,0005,0004,0002,50015,0008,0004,0002,5006,8008003,5005001,007009006,8008003,5001,500700900Income StatementIncome StatementNetNetRevenuesRevenuesExpensesExpensesIncomeIncomea.+15,000b.c.d.+8,000+4,0004,000+2,500NENENE+15,000+8,000NE+15,000+8,000NENENE

24、NE+15,000+8,000NE+2,500NENENENETransaction(c) results in an increase in an asset (cash) and a decrease in anasset (accounts receivable). Therefore, there is no net effect on assets.M3M38.8.Balance SheetBalance SheetIncome StatementIncome StatementStockholdersStockholdersNetNetAssetsAssetsLiabilities

25、Liabilities Equity EquityRevenuesRevenuesExpensesExpensesIncomeIncomee.6,800f.800NE800NENE6,800NE3,500500NENENENE+6,800NE+3,500+5006,800NE3,500500g.3,500h.1,500+1,000i.j.700NENE+900700900NENE+700+900700900Transaction(h) results in an increase in an asset (prepaid expenses) and adecrease in an asset

26、(cash). Therefore, the net effect on assets is 500.M3M39.9.Craigs Bowling, Inc.Craigs Bowling, Inc.Income StatementIncome StatementFor the Month of July 2014For the Month of July 2014Revenues:Games revenue9 / 77$15,000Sales revenueTotal revenuesExpenses:Cost of goods soldUtilities expenseWages expen

27、seInsurance expenseRepairs expenseTotal expensesNet incomeM3M310.10.TransactionTransaction8,00023,0006,8009003,500500700 12,400$ 10,600O, I, or F ActivityO, I, or F Activity(or No Effect) on(or No Effect) onStatement of CashStatement of CashFlowsFlowsOOOONEOOOONEDirection and AmountDirection and Amo

28、untof Effectof Effect+15,000+3,000+4,000+2,500NE-800-3,500-1,500-700NEa.b.c.d.e.f.g.h.i.j.M3M311.11.20152014NetNetIncomeIncome$51,000 40,000Net SalesNet SalesRevenueRevenue$163,000 151,000= =Net Profit MarginNet Profit MarginRatioRatio0.3129 or 31.3%0.2649 or 26.5%2013 25,000 132,0000.1894 or 18.9%T

29、hese results suggest that Jens Jewelry Company earned approximately $0.31for every dollar of revenue in 2015, and over time, the ratio has improved.Jens has become more effective at managing sales and expenses.As additional analysis:Percentage ChangePercentage ChangePercentage ChangePercentage Chang

30、ein Net Incomein Net Incomein Net Sales Revenuein Net Sales RevenueFrom 2014 to 2015($51,000 - $40,000) /$40,000+27.5%From 2013 to 2014($40,000 - $25,000) /$25,000+60.0%($163,000 - $151,000) /$151,000+7.9%($151,000 - $132,000) /$132,000+14.4%Between 2013 to 2014 and 2014 to 2015, sales have increase

31、d at a lowerpercentage than net income. This suggests that the company has been moreeffective at controlling expenses than generating revenues.EXERCISESEXERCISESE3E31.1.K (1) ExpensesE (2) GainsG (3) Revenue realization principleI (4) Cash basis accounting11 / 77TERMTERMM (5) Unearned revenueC (6) O

32、perating cycleD (7) Accrual basis accountingF (8) Prepaid expensesJ (9) Revenues Expenses = Net IncomeL(10) Ending Retained Earnings = Beginning Retained Earnings + Net Income DividendsDeclaredE3E32.2.Req. 1Cash BasisCash BasisIncome StatementIncome StatementRevenues: Cash sales Customer depositsExp

33、enses: Inventory purchases Wages paid Utilities paidNet Income$500,00070,000Accrual BasisAccrual BasisIncome StatementIncome Statement Revenues: Sales to$750,000customers Expenses: Cost of sales485,000 Wages expense184,000 Utilities19,130expense Net Income$61,87090,000180,30017,200$282,500Req. 2Accr

34、ual basis financial statements provide more useful information to externalusers. Financial statements created under cash basis accounting normallypostpone (e.g., $250,000 credit sales) or accelerate (e.g., $70,000 customerdeposits) recognition of revenues and expenses long before or after goods ands

35、ervices are produced and delivered (until cash is received or paid). Theyalso do not necessarily reflect all assets or liabilities of a company on aparticular date.E3E33.3.ActivityActivityRevenue AccountRevenue AccountAffectedAffectedNoneInterest revenueAmount of RevenueAmount of RevenueEarned in Se

36、ptemberEarned in SeptemberNo revenue earned in September; earningsprocess is not yet complete.$12.50(= $1,500 x 10% x 1 month/12 months)a.b.c.d.e.Sales revenueNoneSales revenue$19,500No transaction has occurred; exchange ofpromises only.$15,000(= 1,000 shirts x $15 per shirt)Revenue earned when good

37、s are delivered.f.g.h.i.j.k.l.m.NoneNoneNoneNonePayment related to revenue recordedpreviously in (e) above.No revenue earned in September; earningsprocess is not yet complete.No revenue is earned; the issuance of stockis a financing activity.No revenue earned in September; earningsprocess is not yet

38、 complete.Ticket sales revenue$3,900,000(= $19,500,000 5 games)NoneSales revenueSales revenueNo revenue earned in September; earningsprocess is not yet complete.$9,600$30013 / 77E3E34.4.Activity Expense Account AffectedActivity Expense Account AffectedAmount of ExpenseAmount of ExpenseIncurred in Ja

39、nuaryIncurred in Januarya.b.Utilities expenseAdvertising expense$3,800$321(= $963 x 1 month/3 months) incurred inJanuary.The remainder is a prepaid expense (A) thatis not incurred until February and March.c.d.e.f.g.h.i.Salaries expense$201,500 incurred in January.The remaining half was incurred in D

40、ecember.NoneNoneCost of goods soldNoneCommission expenseNoneExpense will be recorded when the relatedrevenue has been earned.Expense will be recorded in the future whenthe related revenue has been earned.$47,500(= 500 books x $95 per book cost)December expense paid in January.$15,560Expense will be

41、recorded as depreciation(used portion of assets cost) over theequipments useful life.$4,700 (= $3,500 + $2,600 - $1,400)j.k.l.Supplies expenseWages expense$120(= 8 hours x $15 per hour)Insurance expense$400(= $4,800 12 months)The remaining amount is Prepaid Insurance.m.n.o.Repairs expenseUtilities E

42、xpenseConsulting Expense$600$154$2,034p.q.E3E35.5.NoneCost of goods soldDecember expense paid in January.$4500(= 450 shirts x $10 per shirt)a.b.c.d.e.f.g.h.i.j.k.l.m.n.AssetsAssets+-+NE+ / Balance SheetBalance SheetStockholdersStockholdersLiabilitiesLiabilities Equity EquityNE+NENE+NENENE+NENE+NE+NE

43、-+NE+NENEIncome StatementIncome StatementNetNetRevenuesRevenuesExpensesExpensesIncomeIncomeNENENE+NE+NENE+NENENENENENENENENE+NENE+NENENE+ *+NENENE+NE+NENETransaction(k) results in an increase in an asset (cash) and a decrease in anasset (accounts receivable). Therefore, there is no net effect on ass

44、ets.* A loss affects net income negatively, as do expenses.15 / 77E3E36.6.AssetsAssetsBalance SheetBalance SheetStockholdersStockholdersLiabilitiesLiabilities Equity EquityNE+878,418+11,000+14,083NENEIncome StatementIncome StatementNetNetRevenuesRevenuesExpensesExpensesIncomeIncomeNENENENENENENE+852

45、,316NENE+386,534NE+1,395NENENE+1,409,068852,316NENE386,534+3701,395a.+14,083b.+878,418c.+11,000d.+1,409,068852,316NE+1,409,068+1,409,068NNE852,316ENENE+96,633NE+1,39522,737NE386,534+3701,395NENENE+370NEe.22,737f.+/19,397g.289,901h.i.+370NETransaction(f) results in an increase in an asset (property,

46、plant, andequipment) and a decrease in an asset (cash). Therefore, there is no neteffect on assets.E3E37.7.(in thousands)a.b.Plant and equipment (+A)636 Cash ( A)636Debits equal credits. Assets increase and decrease by the same amount.Cash (+A)181 Short-term notes payable (+L)181Debits equal credits

47、. Assets and liabilities increase by the sameamount.c.Cash (+A)10,765Accounts receivable (+A)28,558 Service revenue (+R, +SE)39,323Debits equal credits. Revenue increases retained earnings (part ofstockholders equity). Stockholders equity and assets increase by thesame amount.E3E37. (continued)7. (c

48、ontinued)d.Accounts payable (L)32,074 Cash (A)32,074Debits equal credits. Assets and liabilities decrease by the sameamount.e.Inventory (+A)32,305 Accounts payable (+L)32,305Debits equal credits. Assets and liabilities increase by the sameamount.f.Wages expense (+E, SE)3,500 Cash (A)3,500Debits equa

49、l credits. Expenses decrease retained earnings (part ofstockholders equity). Stockholders equity and assets decrease by thesame amount.g.Cash (+A)39,043 Accounts receivable (A)39,043Debits equal credits. Assets increase and decrease by the same amount.h.Fuel expense (+E, SE)750 Cash (A)750Debits equ

50、al credits. Expenses decrease retained earnings (part ofstockholders equity). Stockholders equity and assets decrease by thesame amount.i.Retained earnings (SE)597 Cash (A)597Debits equal credits. Assets and stockholders equity decrease by thesame amount.j.Utilities expense (+E, SE)68 Cash (A)55 Acc