Solution Manual For Intermediate Accounting 18th Edition By Stice

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Edition: 18th Edition

Format: Downloadable ZIP File

Resource Type: Solution Manual

Duration: Unlimited downloads

Delivery: Instant Download

Solution Manual For Intermediate Accounting 18th Edition By Stice

ISBN-10 ‏ : ‎ 0538479736, ISBN-13 ‏ : ‎ 978-0538479738

1. The users of accounting information can be
divided into two groups: internal users, who
make decisions directly affecting the internal operations of an enterprise, and external users, who use the information to make
decisions concerning their relationships
with the enterprise. Members of the latter
group include creditors, investors, government, and the general public. Both types of
users benefit by receiving information
needed to make economic decisions. Generally, accounting information is used to
help make decisions that affect the allocation of scarce resources, including labor,
materials, and capital.
2. Because almost all resources used in the
world are limited in quantity, these resources must be allocated to specific activities. Accounting information can be used to
determine the profitability of activities relative
to the using up of resources. By structuring
the accounting information in different ways,
measurements can be reported that will suggest alternative ways to allocate the resources to better meet the goals and objectives of both society as a whole and specific
economic units in particular.
3. Accounting information is of most value in
making decisions that will affect the future.
There are many examples of how accounting information can be used to assist in this
process. Three examples follow:
(a) Creditors must evaluate a company’s
ability to repay money borrowed in the
present at specific dates in the future.
Past accounting information can be
used to forecast whether the future
cash flows will be sufficient to meet the
repayment schedule.
(b) Investors enter into investment arrangements that are expected to produce revenue streams that will meet
their needs. Projections of expected
cash flows of a company can indicate
the likelihood of a company’s paying future dividends equal to those needs.
(c) Management must use planning to realize the goals and objectives of the
company. A key ingredient in any planning process is a budget that projects
the inflows and outflows of resources
over future time periods. The base for
this information is past accounting information that establishes patterns and
trends most likely to continue into the
future.
4. Management accounting is concerned with
the information required by management as
a basis for making short- and long-term operating decisions. Financial accounting is
concerned with information reported to external users, primarily investors, and creditors. While some of the information required
by these different users could be the same,
internal accounting reports generally contain
more detail than external reports. The added
detail assists management in making specific decisions. The accounting system is
generally designed to meet the needs of
both groups, although accounting personnel
may specialize in one or the other areas.
5. The general-purpose financial statements
are made up of the following five items:
• Balance sheet
• Income statement
• Statement of cash flows
• Explanatory notes to the financial
statements
• Auditor’s opinion

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