Solution Manual For Survey of Accounting 6th Edition by Warren

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Edition: 6th Edition

Format: Downloadable ZIP File

Resource Type: Solution Manual

Duration: Unlimited downloads

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Solution Manual For Survey of Accounting 6th Edition by Warren

CHAPTER 1
THE ROLE OF ACCOUNTING IN BUSINESS
CLASS DISCUSSION QUESTIONS
1. The objective of most businesses is to maximize profits. Profit is the difference between
the amounts received from customers for
goods or services provided and the amounts
paid for the inputs used to provide those
goods or services.
2. A manufacturing business changes basic
inputs into products that are then sold to
customers. In contrast, a merchandising business purchases products in a form that can be
sold to customers without any additional
changes. Examples of manufacturing businesses include Alcoa, Boeing, Caterpillar, and
Dow Chemical. Examples of merchandising
businesses include Best Buy, Macy’s, Target,
and Wal-Mart.
3. A manufacturing business changes basic
inputs into products that are then sold to
customers. A service business provides services rather than products to customers. A
restaurant such as McDonald’s has characteristics of both a manufacturing and a service business in that McDonald’s takes raw
inputs such as cheese, fish, and beef and
processes them into products for consumption by its customers. At the same time,
McDonald’s provides services of waiting on
its customers.
4. The corporate form allows the company to
obtain large amounts of resources by issuing stock. In addition, in a corporation the
stockholders’ liability to creditors for the
debts of the company is limited to their
investment in the corporation. For these
reasons, most large companies that require
large investments in property, plant, and
equipment are organized as corporations.
5. The business emphasis of KIA is a low-cost
emphasis. In contrast, the business emphasis of BMW is a premium-price emphasis.
The difference in emphases is directly
reflected in the prices of the autos. For
example, you can purchase a KIA for under
$15,000, while the entry-level BMW starts at
$30,000.
6. Super Wal-Mart will compete for customers
using a low-cost strategy. The size and buying power of Wal-Mart Corporation provides Wal-Mart a competitive advantage over your
friend in the ability to offer low prices. Thus,
your friend should attempt to compete using
a premium-price emphasis. For example,
your friend could offer personalized service
to customers such as knowing customers’
names and providing a friendly atmosphere,
home delivery of medicines, help in filing insurance forms, 24-hour call service, etc.
7. eBay services its customers by developing a
Web-based community in which buyers and
sellers are brought together in an efficient
format to browse, buy, and sell items such
as collectibles, automobiles, high-end or
premium art items, jewelry, consumer electronics, and a host of practical and miscellaneous items.
8. No. The stakeholders within a group do not
always share the same interests. For example, bankers are primarily concerned about
the ability of the business to repay its debt,
including interest. In contrast, stockholders
are more concerned about the long-term
profitability of the business, the business’s
ability to pay dividends, and the future appreciation of their stock.

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