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Chapter 1

MGAC01H3 Chapter Notes - Chapter 1: John Wiley & Sons, International Accounting Standards Board, Public Company Accounting Oversight Board


Department
Financial Accounting
Course Code
MGAC01H3
Professor
Daga
Chapter
1

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Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Ninth Canadian Edition
CHAPTER 1
THE CANADIAN FINANCIAL REPORTING
ENVIRONMENT
ASSIGNMENT CLASSIFICATION TABLE
Topic Brief Exercises Writing
Assignments
1. Financial statements and financial reporting. 1, 2, 5
2. Capital allocation. 3 4
3. Stakeholders. 4 4
4. Objectives of financial reporting. 5, 6
5. Management bias in financial reporting. 1
6. Importance of user needs in financial reporting. 1, 2, 8
7. Need for accounting standards. 7, 8 1, 2, 8
8. Parties involved in standard-setting. 9, 10, 11, 12, 13,
14, 15, 16
3, 6,7
9. GAAP. 17, 18, 19 6,
10. Professional judgement. 20, 21 6
11. Ethical issues. 22, 23, 24 5
12. Challenges facing financial accounting 21, 25, 26 5, 8
Solutions Manual 1-1 Chapter 1
Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.

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Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Ninth Canadian Edition
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 1-1
Accounting collects, analyzes, measures, and records financial
information about an organization and reports that information
to stakeholders and decision makers.
Accounting has three essential characteristics. Accounting is
the (1) identification, measurement, and communication of
financial information about (2) economic entities to (3) interested
persons.
Like other social sciences, accounting is largely a product of its
environment. Over time, economic entities have become ever
increasing in size and complexity. As a result, accounting
objectives and practices are not the same today as they were in
the past. Accounting theory and practice have always evolved
and will continue to evolve.
BRIEF EXERCISE 1-2
Financial accounting measures, classifies, and summarizes in
report form those activities and that information which relate to
the enterprise as a whole for use by parties both internal and
external to a business enterprise. The principal focus can be
seen to be external to the enterprise. Managerial accounting
also measures, classifies, and summarizes in report form
enterprise activities, but the communication is for the use of
internal, managerial parties, and relates more to subsystems of
the entity. Managerial accounting is management decision
oriented and directed more toward product line, division, and
profit centre reporting.
Solutions Manual 1-2 Chapter 1
Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Kieso, Weygandt, Warfield, Young, Wiecek Intermediate Accounting, Ninth Canadian Edition
BRIEF EXERCISE 1-3
Accounting has the responsibility of measuring company
performance accurately and fairly on a timely basis. This
enables investors and creditors to assess the relative risks and
returns of investment opportunities and channel resources more
effectively. If a company’s financial performance is measured
accurately, fairly, and on a timely basis, the right managers and
companies are able to attract investment capital. Unreliable and
irrelevant information leads to poor capital allocation, which
adversely affects the securities market and ultimately the
performance of the economy as a whole.
BRIEF EXERCISE 1-4
Some stakeholders using financial accounting information and
financial statements include:
Investors These stakeholders are interested in the
performance of their investment in the company. They will use
the financial statements to evaluate management stewardship
and effectiveness.
Creditors These stakeholders are interested in evaluating the
company to decide whether to lend money to it. They will use
the statements to evaluate the risk that will be taken in making
the loan. For example, lenders want to know whether the
company will be able to repay its loans when due and service
interest and principal on a timely basis.
Solutions Manual 1-3 Chapter 1
Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
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