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QUICK STUDIES
Quick Study 1-1 (10 minutes)
1. f. Technology
2. c. Recording
3. e. Recordkeeping (bookkeeping)
Quick Study 1-2 (10 minutes)
a. E g. E
Quick Study 1-3 (10 minutes)
a. The choice of an accounting method when more than one alternative
To illustrate, many companies base compensation of managers on the
amount of reported income. When the choice of an accounting method
b. Internal controls serve several purposes:
They involve monitoring an organization’s activities to promote
efficiency and to prevent wrongful use of its resources.
1-1
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Examples of internal controls include cash registers with internal tapes
or drives, scanners at doorways to identify tagged products, overhead
video cameras, security guards, and many others.
Quick Study 1-4 (5 minutes)
Quick Study 1-5 (10 minutes)
Attribute Present Proprietorship Partnership Corporation
1. Business taxed no no yes
Quick Study 1-6 (10 minutes)
a. Revenue recognition principle
Quick Study 1-7 (5 minutes)
Assets = Liabilities + Equity
Quick Study 1-8 (10 minutes)
1.
Assets = Liabilities + Equity
$75,000 (a) $35 ,000 $40,000
1-2
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
2.
Assets = Liabilities + Owner,
Capital
- Owner,
Withdrawals
+ Revenues - Expenses
a. For December 31, 2013, the account and its dollar amount (in KRW
millions) for Samsung are:
b. Using Samsung’s amounts from (a) we verify that (in KRW millions):
Assets = Liabilities + Equity
Quick Study 1-10 (15 minutes)
Assets = Liabilities + Equity
Cash + Accounts
Recble. =Accounts
Payable +Owner,
Capital -Owner,
Withdrawals + Revenues - Expenses
(a) $5,500 = $5,500
Consulting
(b) + $4,00
0
= + 4,000
Commission
Cleaning
1-3
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Quick Study 1-11 (15 minutes)
Assets = Liabilities + Equity
Cash + Supplies + Equip. + Land = Accts.
Pay. +Notes
Pay. +A. Carr,
Capital -
A.Carr,
With-dr
awals
+ Rev. - Exp.
(a) $15,00
0
= $15,000
(b) -500 + $500 =
0
Quick Study 1-12 (10 minutes)
[Code: Income statement (I), Balance sheet (B), Statement of owner’s equity (E), or
Statement of cash flows (CF).]
a. B d. B g. CF
*An advanced student might know that this item would also appear on CF, which is an acceptable answer.
Quick Study 1-13 (5 minutes)
1. EX
1-4
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Quick Study 1-14 (5 minutes)
1. A
Quick Study 1-15 (10 minutes)
Interpretation: Its return of 8.2% is slightly above the 8% of its competitors.
Home Depot’s performance can be rated as above average.
Quick Study 1-16 (10 minutes)
a. International Financial Reporting Standards (IFRS)
Quick Study 1-17 (10 minutes)
1. D
EXERCISES
Exercise 1-1 (10 minutes)
1-5
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
C 1. Analyzing and interpreting reports
C 2. Presenting financial information
Exercise 1-2 (20 minutes)
Part A.
1. I 5. I
Part B.
1. I 5. I
Exercise 1-3 (10 minutes)
1. B 5. C
Exercise 1-4 (10 minutes)
1. A 4. F
1-6
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Exercise 1-5 (20 minutes)
a. Auditing professionals with competing audit clients are likely to learn
b. Accounting professionals who prepare tax returns can face situations
c. Managers face several situations demanding ethical decision making
in their dealings with employees. Examples include fairness in
performance evaluations, salary adjustments, and promotion
d. Situations involving ethical decision making in coursework include
performing independent work on examinations and individually
Exercise 1-6 (10 minutes)
a. (C) Corporation e. (C) Corporation
Exercise 1-7 (10 minutes)
Code Description Principle/Assumption
H. 1. A company reports details behind financial
statements that would impact users' decisions.
Full disclosure
principle
1-7
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
G 2. Financial statements reflect the assumption that
the business continues operating.
Going-concern
assumption
Exercise 1-8 (10 minutes)
Assets = Liabilities + Equity
(a) $ 65,000 = $ 20,000 + $45,000
Exercise 1-9 (20 minutes)
a. Using the accounting equation at the beginning of the year:
Assets = Liabilities + Equity
Thus, beginning liabilities = $200,000
Using the accounting equation at the end of the year:
Assets = Liabilities + Equity
1-8
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Alternative approach to solving part (b):
Assets($80,000) = Liabilities($50,000) + Equity(?)
where “” refers to “change in.”
Thus: Ending Equity = $100,000 + $30,000 = $130,000
b. Using the accounting equation:
Assets = Liabilities + Equity
c. Using the accounting equation at the end of the year:
Assets = Liabilities + Equity
Using the accounting equation at the beginning of the year:
Assets = Liabilities + Equity
Exercise 1-10 (20 minutes)
a. Started the business with the owner investing $40,000 cash in the
business.
Exercise 1-11 (20 minutes)
a. Purchased land for $4,000 cash.
1-9
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Exercise 1-12 (15 minutes)
Examples of transactions that fit each case include:
a. Cash withdrawals (or some other asset) paid to the owner of the
business; OR, the business incurs an expense paid in cash.
b. Business purchases equipment (or some other asset) on credit.
1-10
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
