Intermediate Accounting, 7th edition, Solution Manual Essay

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Chapter 1 Environment and Theoretical Structure of Financial Accounting AACSB assurance of learning standards in accounting and business education require documentation of outcomes assessment. Although schools, departments, and faculty may approach assessment and its documentation differently, one approach is to provide specific questions on exams that become the basis for assessment. To aid faculty in this endeavor, we have labeled each question, exercise and problem in Intermediate Accounting, 7e with the following AACSB learning skills: Questions AACSB Tags 1–1 1–2 1–3 1–4 1–5 1–6 1–7 1–8 1–9 1–10 1–11 1–12 1–13 1–14 1–15 1–16 1–17 1–18 1–19 1–20 1–21 1–22 1–23 1–24 1–25 1–26 1–27 1–28 1–29…show more content…
Net operating cash flows may not be a good indicator of future cash flows because, by ignoring uncompleted transactions, they may not match the accomplishments and sacrifices of the period. Solutions Manual, Vol.1, Chapter 1 © The McGraw-Hill Companies, Inc., 2013 1-3 Answers to Questions (continued) Question 1–7 GAAP (generally accepted accounting principles) are a dynamic set of both broad and specific guidelines that a company should follow in measuring and reporting the information in their financial statements and related notes. It is important that all companies follow GAAP so that investors can compare financial information across companies to make their resource allocation decisions. Question 1–8 In 1934, Congress created the SEC and gave it the job of setting accounting and reporting standards for companies whose securities are publicly traded. The SEC has retained the power, but has delegated the task to private sector bodies. The current private sector body responsible for setting accounting standards is the FASB. Question 1–9 Auditors are independent, professional accountants who examine financial statements to express an opinion. The opinion reflects the auditors’ assessment of the statements' fairness, which is determined by the extent to which they are prepared in compliance with GAAP. The auditor adds credibility to the financial

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