Managerial accounting solutions manual walther pdf download

They work for public accounting firms, businesses, government, or educational institutions. They work for a single company. The FASB oversees the creation and governance of accounting standards. They work with governmental regulatory agencies, congressionally created groups, and private groups. Explain the purpose of Generally Accepted Accounting Principles GAAP , including the organization currently responsible for the creation and governance of these standards.

The guidelines for accounting information are called GAAP. It is the main U. Investors and lenders must have information that is relevant and has faithful representation in order to make decisions and the GAAP provides the framework for this financial reporting.

Describe the similarities and differences among the four different types of business entities discussed in the chapter.

A limited-liability company has one or more members and each is only liable for his or her own actions, has an indefinite life, and is not a separate tax entity. What value should the land be recorded at, and which accounting principle supports your answer? The cost principle states that assets should be recorded at their historical cost. What does the going concern assumption mean for a business? The going concern assumption assumes that the entity will remain in business for the foreseeable future and long enough to use existing resources for their intended purpose.

Which concept states that accounting information should be complete, neutral, and free from material error? The faithful representation concept states that accounting information should be complete, neutral, and free from material error. Financial statements in the United States are reported in U. What assumption supports this statement? The monetary unit assumption states that items on the financial statements should be measured in terms of a monetary unit.

What is the accounting equation? Briefly explain each of the three parts. Assets are economic resources that are expected to benefit the business in the future. They are things of value that a business owns or has control of. Liabilities are debts that are owed to creditors. They are one source of claims against assets. Equity is the other source of claims against assets. It represents the net worth of the corporation. How do retained earnings increase?

What are the two ways that retained earnings decreases? Retained earnings increases with revenues. Retained earnings decreases with expenses and dividends. How is net income calculated? Define revenues and expenses. Revenues are earnings resulting from delivering goods or services to customers. Expenses are the cost of selling goods or service. What are the steps used when analyzing a business transaction? Step 1: Identify the accounts and the account type. Step 2: Decide if each account increases or decreases.

Step 3: Determine if the accounting equation is in balance. List the four financial statements. Briefly describe each statement. Statement of Retained Earnings — Shows the changes in retained earnings for a specific period including net income loss and dividends. What is the calculation for return on assets ROA?

Explain what ROA measures. ROA measures how profitably a company uses its assets. Solution: a. What are those guidelines called? In addition, the owners stockholders have limited liability. Chloe could also consider a limited liability company LLC as an option. A LLC meets two of the three criteria.

It has an unlimited life and limited liability for the owner. However, a LLC is not a separate tax entity. Solution: Advantages: 1. Easy to organize. Unification of ownership and management. Less government regulation. Owner has more control over business. Disadvantages: 1.

The owner pays taxes since it is not a separate tax entity. No continuous life or transferability of ownership. Unlimited liability of owner. The economic entity assumption b. The cost principle. The monetary unit assumption. The going concern assumption. Use the accounting equation to solve for equity. Use the accounting equation to solve for the missing information. Increase asset Cash ; Increase equity Service Revenue b.

Decrease asset Cash ; Decrease equity Salaries Expense c. Increase asset Cash ; Increase equity Common Stock b. Increase asset Equipment ; Increase liability Accounts Payable c. Increase asset Office Supplies ; Decrease asset Cash d.

Increase asset Cash ; Increase equity Service Revenue e. Decrease asset Cash ; Decrease equity Wages Expense f. Decrease asset Cash ; Decrease equity Dividends g. Decrease asset Cash ; Decrease equity Rent Expense i. The company issued no common stock. By how much? Requirement 2 a. Increase through issuance of common stock. Increase through net income. Decrease through dividend payment.

Decrease through net loss. Compute the missing amount for Meehan Company. You will need to determine Retained Earnings, December 31, , and total stockholders' equity. Did Meehan earn a net income or suffer a net loss for the year? Compute the amount. Increase one asset and decrease another asset. Decrease an asset and decrease equity. Decrease an asset and decrease a liability. Increase an asset and increase equity. Increase an asset and increase a liability. Solution: Student responses will vary.

Examples include: a. Cash purchase of office supplies. Cash dividends paid to stockholders. Paid cash on accounts payable. Received cash for services provided. Borrowed cash from the bank. Increase asset Cash ; Decrease asset Accounts Receivable e. Decrease asset Cash ; Decrease liability Accounts Payable f.

Increase asset Cash ; Increase equity Rental Revenue g. Increase asset Land ; Decrease asset Cash c. Decrease asset Cash ; Decrease liability Accounts Payable d. Increase asset Equipment ; Increase liability Notes Payable e. Increase asset Cash ; Decrease asset Accounts Receivable h.

Increase asset Cash ; Increase liability Notes Payable i. Decrease asset Cash ; Decrease equity Dividends j. Download Free PDF. Managerial Accounting 15th Edition Garrison solutions manual. Mamun Hossen. A short summary of this paper. In the case of manufactured goods, these costs consist of a. Direct materials are an integral part of a direct materials, direct labor, and manufacturing finished product and their costs can be overhead.

A period cost is a cost that is taken conveniently traced to it. Indirect materials are generally small in the period in which it is incurred. They may be an integral part of a finished product but their costs can be traced to the product only at great cost or inconvenience.

Direct labor consists of labor costs that can be easily traced to particular products. Indirect labor consists of the labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products. These labor costs are incurred to support production, but the workers involved do not directly work on the product. Manufacturing overhead includes all manufacturing costs except direct materials and direct labor.

As the anticipated level of activity a. Variable cost: The variable cost per unit is changes, the level of fixed costs needed to constant, but total variable cost changes in support operations may also change. Most fixed direct proportion to changes in volume.

Fixed cost: The total fixed cost is constant large steps, rather than being absolutely fixed at within the relevant range. The average fixed one level for all ranges of activity. Mixed cost: A mixed cost contains both points to determine a cost formula.

These two variable and fixed cost elements. Total fixed costs remain constant as volume increases. Total variable costs increase as volume increases.

Cost behavior: Cost behavior refers to the way in which costs change in response to changes in a measure of activity such as sales volume, production volume, or orders processed. Relevant range: The relevant range is the range of activity within which assumptions about variable and fixed cost behavior are valid.

Examples of activity bases include units produced, units sold, letters typed, beds in a hospital, meals served in a cafe, service calls made, etc. Such costs arise from annual decisions by management to spend on certain fixed cost items, such as advertising, research, and management development. A committed fixed cost has a long planning horizon—generally many years.

The traditional approach organizes costs by function, such as production, selling, and administration. Within a functional area, fixed and variable costs are intermingled. An opportunity cost is the potential benefit that is given up when one alternative is selected over another.

A sunk cost is a cost that has already been incurred and cannot be altered by any decision taken now or in the future. For example, the alternatives might consist of purchasing one machine rather than another to make a product.

The difference between the fixed costs of purchasing the two machines is a differential cost. Direct materials Sales commissions Number of units sold d Variable cost per unit sold a Total fixed manufacturing cost see requirement 1 a