Exercise 1-17 (LO 1-3)
($ in billions)
Total change
in cash =Operating
cash flows +Investing
cash flows +Financing
cash flows
1. Total change
in cash =Operating
cash flows +Investing
cash flows +Financing
cash flows
2. Total change
in cash =Operating
cash flows +Investing
cash flows +Financing
cash flows
3. Total change
in cash =Operating
cash flows +Investing
cash flows +Financing
cash flows
4. Total change
in cash =Operating
cash flows +Investing
cash flows +Financing
cash flows
5. Total change
in cash =Operating
cash flows +Investing
cash flows +Financing
cash flows
Exercise 1-18 (LO 1-5)
1. d.
2. e.
3. a.
4. c.
5. f.
6. b.
7. g.
Exercise 1-19 (LO 1-7)
1. g. Comparability
2. f. Free from error
3. b. Predictive value
4. i. Timeliness
5. a. Confirmatory value
Exercise 1-20 (LO 1-7)
1. b.
2. c.
3. d.
4. a.
Problem 1-1A (LO 1-2)
Type of business
activity Transactions
1. Financing Pay amount owed to the bank for previous borrowing
2. Operating Pay utility costs
3. Investing Purchase equipment to be used in operations
4. Operating Provide services to customers
PROBLEMS: SET A
Problem 1-2A (LO 1-2)
Account classifications Account Names
1. Stockholders’ equity Common stock
2. Asset Equipment
3. Liability Salaries payable
4. Revenue Service revenue
Problem 1-3A (LO 1-3)
Longhorn Corporation
Income Statement
Service revenue $67,700
Expenses:
Cost of goods sold $53,400
Salaries 5,500
Delivery 2,600
Longhorn Corporation
Statement of Stockholders’ Equity
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Beginning balance $40,000 $18,200 $58,200
Issuance of common stock 4,000 4,000
Add: Net income 6,200 6,200
Problem 1-3A (concluded)
Longhorn Corporation
Balance Sheet
Assets Liabilities
Cash $ 1,200 Accounts payable $ 4,400
Supplies 3,400 Salaries payable 800
Stockholders’ Equity
Common stock 44,000
Retained earnings 24,400
Total stockholders’ equity 68,400
Total liabilities and
Problem 1-4A (LO 1-3)
(Suggested order of calculation)
On the statement of stockholders’ equity,
$7,000 + (c) − $3,000 = $10,000
From (c),
From (b),
From the statement of stockholders’ equity,
From total assets,
From (e), (f), and (g),
Problem 1-5A (LO 1-3)
Cornhusker Company
Income Statement
For the year ended December 31, 2015
Service revenues $37,000
Expenses:
Rent $ 7,000
Utilities 4,900
Salaries 13,300
Insurance 3,500
Cornhusker Company
Statement of Stockholders’ Equity
For the year ended December 31, 2015
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Beginning balance $16,000 $7,300 $23,300
Issuance of common stock 0 0
Add: Net income 8,300 8,300
Problem 1-5A (concluded)
Cornhusker Company
Balance Sheet
December 31, 2015
Assets Liabilities
Cash $ 4,800 Accounts payable $ 2,200
Accounts receivable 7,200 Salaries payable 2,400
Stockholders’ Equity
Common stock 16,000
Retained earnings 12,400
Total stockholders’ equity 28,400
Total liabilities and
Problem 1-6A (LO 1-7)
Assumption violated
1. Going concern
2. Economic entity
3. Monetary unit
4. Periodicity
Problem 1-7A (LO 1-7)
1. d.
2. b.
3. i.
4. c.
5. a.
6. g.
7. h.
8. f.
9. e.