Solution Manual for Fundamentals of Financial Accounting 5th CANADIAN by Phillips

Chapter 1:

Business Decisions and Financial Accounting

Summary

This chapter focuses on the key financial reports that business people rely on when evaluating a company’s performance. This chapter introduces the basic elements and uses of accounting, and introduces the focus company Pizza Palace Inc. as an example. Pizza Palace Inc. will be used as an example throughout the text. After outlining the origin of Pizza Palace, the chapter describes the purpose, set-up, and content of the four basic financial statements.  Then, the chapter begins to explore the fundamental role that accounting information plays in financial statement users’ decisions.  The chapter also has a discussion of the conceptual framework.

Where Are We?

Chapter 1 introduces the basic financial statements.  Chapters 2 and 3 will discuss the balance sheet and income statement, respectively, and introduce transaction analysis and the mechanics of debits and credits.  Chapter 4 explores more advanced accruals. Chapter 5 discusses internal controls and the accounting for Cash.  Later chapters discuss individual areas of the balance sheet and related income statement accounts.

What’s Unique?

This chapter introduces accounting by explaining the fundamental role that it plays in business.  At the beginning of this chapter the student learns about the various users of the financial reports.  This is discussed further later in the chapter with the discussion of the conceptual framework.  Students will be intrigued by the Pizza Palace example provided as some of the accounting decisions involved in starting a business are presented. The mechanics of debits and credits, and the role of organizations and securities legislation are saved for later. 

Learning Objectives