,TABLE OF CONTENTS
r r r
CHAPTERr1:rFinancialrStatementsrandrBusinessrDecisions
FocusrCompany:rLe-Nature’srInc.
CHAPTERr2:rInvestingrandrFinancingrDecisionsrandrtherAccountingrSystem
FocusrCompany:rChipotlerMexicanrGrill
CHAPTERr3:rOperatingrDecisionsrandrtherAccountingrSystem
FocusrCompany:rChipotlerMexicanrGrill
CHAPTERr4:rAdjustments,rFinancialrStatements,randrtherClosingrProcess
FocusrCompany:rChipotlerMexicanrGrill
CHAPTERr5:rCommunicatingrandrAnalyzingrAccountingrInformation
FocusrCompany:rApplerInc.
CHAPTERr6:rReportingrandrInterpretingrSalesrRevenue,rReceivables,randrCash
FocusrCompany:rSkechersrU.S.A.
CHAPTERr7:rReportingrandrInterpretingrCostrofrGoodsrSoldrandrInventory
FocusrCompany:rHarley-Davidson,rInc.
CHAPTERr8:rReportingrandrInterpretingrProperty,rPlant,randrEquipment;rIntangibles;randrNaturalrRe
sources
FocusrCompany:rFedExrCorporation
CHAPTERr9:rReportingrandrInterpretingrLiabilities
FocusrCompany:rStarbucks
CHAPTERr10:rReportingrandrInterpretingrBondrSecurities
FocusrCompany:rAmazon
CHAPTERr11:rReportingrandrInterpretingrStockholders’rEquity
FocusrCompany:rMicrosoft
CHAPTERr12:rStatementrofrCashrFlows
FocusrCompany:rNationalrBeveragerCorporation
CHAPTERr13:rAnalyzingrFinancialrStatements
FocusrCompany:rTherHomerDepot
,Chapter 1 r
Financial Statements and Business Decisions
r r r r
ANSWERSrTOrQUESTIONS
1. Accountingrisrarsystemrthatrcollectsrandrprocessesr(analyzes,rmeasures,randrrecord
s)rfinancialrinformationraboutranrorganizationrandrreportsrthatrinformationrtordecisionr
makers.
2. Financialraccountingrinvolvesrpreparationrofrtherfourrbasicrfinancialrstatementsrandrre
latedrdisclosuresrforrexternalrdecisionrmakers.rManagerialraccountingrinvolvesrtherpr
eparationrofrdetailedrplans,rbudgets,rforecasts,randrperformancerreportsrforrinternalrd
ecisionrmakers.
3. Financialrreportsrarerusedrbyrbothrinternalrandrexternalrgroupsrandrindividuals.rTherint
ernalrgroupsrarercomprisedrofrthervariousrmanagersrofrtherentity.rTherexternalrgroupsr
includertherowners,rinvestors,rcreditors,rgovernmentalragencies,rotherrinterestedrpart
ies,randrtherpublicratrlarge.
4. Investorsrpurchaserallrorrpartrofrarbusinessrandrhopertorgainrbyrreceivingrpartrofrwhat
rthercompanyrearnsrand/orrsellingr theirrownershiprinterestrinrthercompanyrinrtherfutur
eratrarhigherrpricerthanrtheyrpaid.rCreditorsrlendrmoneyrtorarcompanyrforrarspecificrle
ngthrofrtimerandrhopertorgainrbyrchargingrinterestronrtherloan.
, 5. Inrarsociety,reachrorganizationrcanrberdefinedrasrarseparateraccountingrentity.rAnracc
ountingrentityrisrtherorganizationrforrwhichrfinancialrdatararertorbercollected.rTypicalrac
countingrentitiesrarerarbusiness,rarchurch,rargovernmentalrunit,raruniversityrandrotherr
nonprofitrorganizationsrsuchrasrarhospitalrandrarwelfarerorganization.rArbusinessrtypi
callyrisrdefinedrandrtreatedrasrarseparaterentityrbecausertherowners,rcreditors,rinvesto
rs,randrotherrinterestedrpartiesrneedrtorevaluateritsrperformancerandritsrpotentialrsepa
ratelyrfromrotherrentitiesrandrfromritsrowners.
6. NamerofrStatement AlternativerTitle
(a) IncomerStatement (a)r StatementrofrEarnings;rStatementrof
Income;rStatementrofrOperations
(b) BalancerSheet (b)rStatementrofrFinancialrPosition
(c) CashrFlowrStatement (c)r StatementrofrCashrFlows
7. Therheadingrofreachrofrtherfourrrequiredrfinancialrstatementsrshouldrincludertherfol
lowing:
(a) Namerofrtherentity
(b) Namerofrtherstatement
(c) Daterofrtherstatement,rorrtherperiodrofrtime
(d) Unitrofrmeasure
8. (a)
Therpurposerofrtherincomerstatementrisrtorpresentrinformationraboutrtherreve
nues,rexpenses,randrther netrincomerofranrentityrforrarspecifiedrperiodrofrtime.
(b) Therpurposerofrtherbalancersheetrisrtorreportrtherfinancialrpositionrofranrentityratr
argivenrdate,rthatris,rtorreportrinformationraboutrtherassets,r liabilitiesrandrstockh
olders’requityrofrtherentityrasrofrarspecificrdate.
(c) Therpurposerofrtherstatementrofrcashrflowsrisrtorpresentrinformationraboutrtherflo
wrofrcashrintortherentityr(sources),rtherflowrofrcashroutrofrtherentityr(uses),randrth
ernetrincreaserorrdecreaserinrcashrduringrtherperiod.
(d) Therstatementrofrstockholders’requityrreportsrtherchangesrinreachrofrthercompa
ny’srstockholders’requityraccountsrduringr theraccountingrperiod,rincludingrissu
erandrrepurchaserofrstockrandrtherwayrthatrnetrincomerandrdistributionrofrdivide
ndsraffectedrtherretainedrearningsrofrthercompanyrduringrthatrperiod.
9. Therincomerstatementrandrtherstatementrofrcashrflowsrarerdatedr―ForrtherYearrEn
dedrDecemberr31‖rbecausertheyrreportrtherinflowsrandroutflowsrofrresourcesrdurin
grarperiodrofrtime.rInrcontrast,rtherbalancersheetrisrdatedr―AtrDecemberr31‖rbecaus
eritrrepresentsrtherresources,robligations,randrstockholders’requityratrarspecificrdat
e.
