Solution Manual For Managerial Accounting 9th Edition by Crosson
Solution Manual For Managerial Accounting 9th Edition by Crosson
Solution Manual For Managerial Accounting 9th Edition by Crosson
MEMORANDA:
SE: Short Exercises
E: Exercises
P: Problems (Each problem has a User Insight question.)
C: Cases
All questions are in the text with related Learning Objectives (Stop, Think, and Apply).
Instructional Strategy
Learning activity: Group work, game
Learning environment: Interactive groups within classroom
Learning tool: Textbook assignment: Problem 4 or 7 or Case 5
Steps to Implement
1. Divide the class into small groups. One quick way to form groups is to divide the number of
students in class by three or four (the most effective group size for this activity). Ask students to
count off from 1 to the maximum number of groups. Remind them not to forget their number.
Have students get together after you give complete instructions. It will encourage a speedy
transition, as this activity has a time limit.
2. Assign one of the learning tools. (If one of the problems was done for homework, use another one
in this activity; it will reinforce learning.)
3. The first group to correctly complete the task wins. As the groups complete the task, they ask you
to mark their completion time. (You may want to keep their responses until the time limit has
expired. See Step 4.) The time limit is 25 minutes. If, for some reason, no group has the correct
response in 25 minutes, give them additional time as deemed appropriate.
4. The winning group could present the correct responses to the entire class using the solution
transparency and answer student questions. You may prefer to debrief this activity if time is
limited. If you have group responses, a quick check will identify where the problems are.
5. Reward each of the winning group members with one or two extra quiz points, “$100 Grand”
chocolate bars, novelty erasers, etc.
Assessment
Technical skills: Grade group written responses. Ask a related question on the next examination and/or
quiz.
Interpersonal skills: Ask students to answer one or more of the following: How well did your group
interact? How many were fully involved? What could your group do to improve next time?
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 1: Uses of Accounting Information and the Financial Statements 3
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4 Chapter 1: Uses of Accounting Information and the Financial Statements
Lecture Outline
I. Accounting is an information system that measures, processes, and communicates financial
information.
A. Accounting is a link between business activities and decision makers.
B. Management must have a good understanding of accounting to set financial goals and make
financial decisions.
C. Management must not only understand how accounting information is compiled and
processed but also realize that accounting information is imperfect and should be interpreted
with caution.
II. A business is an economic unit that aims to sell goods and services to customers at prices that will
provide an adequate return to its owners.
A. Goals
1. Profitability—earning a sufficient return to maintain owner interest
2. Liquidity—having enough cash to pay debts as they come due
B. Activities
1. Operating—selling goods and services to customers; employing managers and
workers; buying and producing goods and services; and paying taxes
2. Investing—spending the capital a company receives in productive ways that help it
achieve its objectives
3. Financing—obtaining funds to begin operations and to continue operating
C. Performance measures
1. Performance measures relate to achieving goals and assessing the management of
business activities.
2. Financial analysis is the evaluation and interpretation of the financial statements and
related performance measures.
3. Performance measures must be crafted to motivate managers to make decisions that are
in the best interest of the business.
III. Categories of accounting
A. Management accounting—accounting information for internal decision makers
B. Financial accounting—accounting information for external decision makers; reports are
called financial statements.
IV. Ways in which accounting information is processed
A. Bookkeeping is the mechanical and repetitive recordkeeping aspect of accounting.
B. Computerized accounting
1. Computerized accounting is useful for routine bookkeeping chores and complex
accounting calculations.
2. Computerized information is only as useful as the data input into the system.
C. A management information system (MIS) consists of the interconnected subsystems that
provide the information needed to run a business.
V. Ethical financial reporting
A. Ethics is a code of conduct that addresses whether actions are right or wrong.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 1: Uses of Accounting Information and the Financial Statements 5
1. Ethics in the preparation of financial reports is important because users of these reports
must depend on the good faith of the people involved in their preparation.
2. The intentional preparation of misleading financial statements is called fraudulent
financial reporting.
3. Fraudulent financial reporting can result from the distortion of records, falsified
transactions, or the misapplication of various accounting principles.
4. The motivation for fraudulent financial reporting could be to inflate the perceived
value of a business, meet stockholders’ and financial analysts’ expectations, obtain
financing, or receive personal gain.
B. Congress passed the Sarbanes-Oxley Act in 2002 to regulate financial reporting in public
corporations.
Teaching Strategy
A good place to begin is by discussing business goals and activities. Case 1 provides a good foundation
for such discussion. This sets the stage for a discussion of accounting and how it helps businesses
achieve goals and perform activities. Figure 2 in the text illustrates business goals and activities.
Distinguish between profitability and liquidity and explain why a business must maintain both if it is to
survive. The key components of the AICPA’s definition of accounting are “useful,” “financial
information,” and “decisions.” This leads into the next learning objective, which focuses on those who
rely on accounting information for decision making.
Figure 1 in the text not only illustrates accounting as an information system but also indicates the
measurement, processing, and communication functions of accounting.
Students may have difficulty distinguishing between accounting and bookkeeping. Perhaps the use of a
Venn diagram, with bookkeeping as a small circle within a much larger circle identified as accounting,
will help them make the distinction. As they learn accounting, students will also tend to focus on the
bookkeeping aspects only. Remind them that theory, terminology, financial statement disclosure, and
other such topics also need to be learned.
Students often ask if computers have displaced accountants. Explain that although computers are a
useful tool, particularly for routine, repetitive processing, higher-level analytical skills are required to
interpret information, and professional judgment is required to make good decisions.
Distinguish between financial and managerial accounting. The discussion of internal versus external
users can be integrated with the next learning objective on the users of accounting information.
Be sure to mention management’s responsibility for ethical financial reporting, including the definition
of fraudulent financial reporting and the significance of the Sarbanes-Oxley Act.
Short Exercise 1 can be used in class to test students’ knowledge of terminology. Case 6 emphasizes the
importance of cash flows and the goal of liquidity.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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“She is from Havana,” said a Frenchman, who was at hand, working.
“The Raven, Captain Sudlip.”
“Captain Sudlip!” came from several of the boys.
“Was his full name Jason Sudlip?” questioned Professor Strong, with
equal interest.
“Yes. Then you knew him?”
“We did. But we didn’t know he was captain of a schooner like this.”
“It was a new command for him. At the last moment the regular
captain of the Raven was taken sick and Captain Sudlip took his
place. Poor fellow, it was a fatal trip for him.”
“Is Captain Sudlip dead?” questioned Darry.
“Not dead, but horribly burnt. They have taken him to the hospital at
Roseau, on the island of Dominica, but the doctors say he cannot
live.”
The Frenchman resumed his work, and the craft containing our
friends moved off down the coast. For some minutes nobody spoke.
Then Darry heaved a long sigh.
“It’s horrible!” he murmured. “Horrible! Captain Sudlip wasn’t our
friend, but I pity him.”
“And so do I pity him,” put in Sam. “I trust his case isn’t as bad as
reported.”
This was all that was said, but nobody forgot the matter until a long
time after. It may be as well to state here that the captain was in a
very bad way and that he died inside of the week.
It was utterly impossible to think of going ashore at St. Pierre, and
fearful of another eruption which might cost them their lives,
Professor Strong procured passage on a little ferry steamer which
had formerly run regularly between the fallen city and Fort de
France.
Turning southward again made the hearts of Mark and Frank sink
like lead within their bosoms. Their thoughts were constantly on their
parents.
“I can’t give my father up—I simply can’t!” said Frank to his chum, in
a choking voice. “It’s too awful to think of!”
“I feel exactly the same, Frank,” answered the older youth. “But what
more can we do?”
“I am going to make more inquiries when we reach Fort de France.”
“Oh, I shall do that, too.”
On the way down the coast they fell in with many vessels, all going
to St. Pierre to give aid to those who, alas, were beyond human
needs. These craft moved along silently, nobody feeling in the humor
to even discuss the situation.
As soon as they landed at the capital city they started for the post-
office, to learn if anything in the shape of a letter had been left for
one or another of the party. They found the streets crowded with
people of all nationalities and for the first time learned how Fort de
France had received a shower of dust and stones, and how
everybody had been terrorized and business brought to a standstill.
“It’s a fearful state of affairs,” said Sam. “They won’t recover from this
for years.”
“St. Pierre will never recover, Samuel,” returned the professor. “The
eruption has——”
Professor Strong stopped short, for a cry from Mark had interrupted
him. The youth was pointing up a street to their left.
“See! see! There is a crowd of negroes and they are beating a white
man! If somebody don’t help the white fellow they will kill him!”
They started forward, and were soon on the edge of the crowd which
numbered fully a dozen colored men. In the very midst was the white
man Mark had mentioned. His hat was off, his collar and tie loose,
his shirt torn, and he was fighting desperately. One cheek was
bleeding from a long cut and his left arm hung limply at his side.
“It is Dan Markel!” ejaculated Darry. “Dan Markel, the fellow who
once swindled Hockley!”
The crowd around the man was yelling fiercely and striking at every
available opportunity. Dan Markel was yelling in return, but nobody
appeared to listen to him.
“We must do something, or he’ll surely be killed,” said Frank.
By this time Professor Strong was close to the crowd. “Stop!” he
called out, in French. “Stop! What does this mean?”
“He is a rascal!” said one native, wrathfully. “He is not fit to live!”
“He robbed the dead,” said another. “We saw him doing it—up at the
Ladarosa plantation.”
“Let me go!” screamed Markel, in English. “It’s all a mistake.”
By this time the crowd was growing larger, and the shouting
continued, until to make out what one individual was saying was
impossible. Those nearest to Markel continued to strike at the man
from Baltimore, until he went down from a blow on the head, and
several in the crowd fell on top of him.
It was at this critical moment that several gens-d’armes appeared.
They were doing police duty in that neighborhood, and at once set to
work to restore peace. But it was not without great difficulty that they
succeeded in quieting the negroes, who insisted upon it that Dan
Markel be arrested.
“He is a looter—a robber of the dead,” said one of the natives. And
then he explained that he was an assistant foreman on the Ladarosa
plantation not far from St. Pierre. The master of the plantation had
been killed, along with several others of the household, while the
negroes had fled to a rocky cave for safety. On returning to the
house two days after the first eruption they had found Dan Markel
there and in the act of stealing the silverware and jewelry. Markel
had escaped them but they remembered his face well.
The man from Baltimore tried to deny this story, saying he had
reached Fort de France from La Guayra that morning, but on being
searched some jewelry which the negroes identified was found in his
pockets. He was at once marched off to the local jail, there to await
trial, the natives following the gens-d’armes to see that the prisoner
did not get away.
“It will go hard with Markel,” said Darry. “Robbery under such
circumstances becomes a double crime.”
“In some countries such looters would be hung,” answered Professor
Strong. “You may depend upon it that Markel will get the full penalty
of the law.”
“This will please Hockley,” came from Sam. “He was always sorry
the rascal got away. I wonder if Hockley is still up at the hotel?” he
continued.
“I shouldn’t be surprised if he got out of Fort de France when that
shower of dust and stones came,” returned Mark. “He was scared to
death as it was.”
A short while later found them at the post-office asking for letters.
Owing to the general disorder it was half an hour before any mail
was handed out.
The first communication proved to be from Hockley, and was
addressed to Professor Strong. It was short, and had evidently been
written while the youth was in an excited frame of mind. It ran as
follows:
“Dear Professor: It looks now as if this island was
doomed and I don’t propose to be burnt up or be drowned.
There is a steamer sailing from here to Port-of-Spain,
Trinidad, and other ports in South America, and I have
secured passage. If I stop off at Port-of-Spain you can
look for me at the hotel at which we stopped before, and if
I go further I will leave word in a letter at the post-office.
Have cabled my father to send necessary money.”
“I knew Hockley wouldn’t stay,” said Darry. “I’ll wager he was almost
paralyzed with terror.” And he was right. Hockley had acted so
thoroughly scared that he had made himself the laughing stock of all,
both at the hotel and on board the steamer on which he had secured
passage. It was to be some time before they would see their tall
traveling companion again.
CHAPTER XXXIII
A HAPPY MEETING—CONCLUSION
The letter from Hockley read, they waited patiently until some mail
matter which had just come in should be sorted out. This took the
best part of an hour—a wait which to Mark and Frank seemed an
age.
But at last the little window was opened once more and the crowd
surged forward. Professor Strong was well to the front and presently
they saw him turn from the window with half a dozen
communications held aloft.
“Letters!” cried Frank. “Oh, if only they bring good news!”
The professor was soon beside them. There were letters for all, but
just then the interest was concentrated on a communication
addressed to Mark and another addressed to Frank. Both bore the
postmark of Kingstown, St. Vincent.
“My father’s handwriting!” cried Mark, in a trembling voice.
“And this is in my father’s hand!” came from Frank, falteringly. His
hand shook so he could not open the envelope. “Yo—you read it,
professor.”
Professor Strong did so. The communication had been written the
day before and ran in this wise:
“My dear son Frank:
“I am writing this in the hope that you are safe despite the
fearful volcano eruptions which have taken place in this
quarter of the globe. I know you were bound for St. Pierre,
but I have learned that by the goodness of an all-wise
Providence the Vendee escaped the eruption that
destroyed St. Pierre and all the shipping in that harbor.
“Mr. Robertson and myself have had a narrow escape
from death, and we do not yet know if we are entirely safe,
for the volcano on this island is now as active as that on
Martinique. We were within four miles of Mont Pelee when
the eruption of May 8th occurred. We escaped by what
was little short of a miracle, and were lucky enough to get
on a trading vessel bound for this port. I had my lower
limbs and feet considerably burnt, and Mr. Robertson
suffered from burns on his feet and on his left arm. But
none of the burns are serious, and we are resting here
quite comfortably. If we were well enough we would set
out in search of you, but as it is neither of us can do any
walking at present.
“I am sending this letter in duplicate to half a dozen ports
in this territory, and Mr. Robertson is sending similar letters
addressed to Mark. As soon as you receive a letter let me
hear from you, as both of us are anxious for news. And
also send word home if you are safe. Address me at the
Windsor Hotel, Kingstown, Island of St. Vincent.”
“Oh, how glad I am that they are safe!” murmured Frank, and then
he looked at Mark, who had been reading his own letter. There were
tears in the eyes of both and that look meant more than any words of
mine can tell.
“I must go to Kingstown at once,” said Mark. “I can’t be satisfied until
I see for myself just how they are faring.”
“And I will go with you,” answered Frank. “Perhaps the burns are
worse than we imagine. I know father. He wouldn’t want to worry
me.”
The matter was talked over by all, and in the end Professor Strong
agreed to see about passage to St. Vincent. Darry and Sam wanted
to keep with Frank and Mark, and the whole party sailed southward
the next morning at sunrise.
The run to St. Vincent, past the Island of St. Lucia, which, strange to
say, had entirely escaped the eruptions on both sides of it, was
made without anything unusual occurring. While still some miles
north of the island for which they were bound they could see the
smoke of La Soufriere and through the marine glasses took note of
some of the terrible damage done.
“It is very fortunate that no large city was located near this volcano,”
said Professor Strong. “No living thing could have escaped such an
outburst as has taken place here.”
When the vessel reached Kingstown harbor the boys could scarcely
wait to get ashore. They learned that the Windsor Hotel was in a
suburb, and hired a carriage to take them to the hostelry.
“There is father now!” cried Frank, as they entered the beautiful
grounds, and he pointed to a figure reclining in an invalid chair on
the veranda.
“And my father is there, too!” exclaimed Mark.
In another moment they were out of the carriage and rushing up the
veranda steps. As they came closer both Mr. Newton and Mr.
Robertson sat up to greet them.
“My boy!” cried Mr. Newton, and flung his arms around Frank. “My
own boy!”
“Mark!” came from Mr. Robertson, and his face broke out into a
warm smile of welcome. “We were just talking about you and
wondering if we would get a letter.”
“You don’t know how glad I am to see you, even like this, father,”
answered Mark. “We were afraid you had been burnt up.”
“Yes, and we went on a regular search for both of you,” broke in
Frank.
“And they came pretty close to losing their own lives in that search,”
came from the professor, as he shook hands.
“Then you went ashore—” began Mr. Newton, in wonder.
“Yes, we went volcano exploring,” said Darry.
“And we climbed Mont Pelee,” finished Sam. “I don’t believe we’ll
ever want to do it again.”
“No,” finished Mark. “Once was enough. Now we are all safe away
from it, I never want to see the island of Martinique again.”
And the others agreed with him.
Let me add a few words more, and then we will bring to a close this
tale of sight-seeing and adventures in the West Indies.
What Mr. Newton and Mr. Robertson had written in their letters
concerning their injuries was true. Although painful, none of the
burns were serious, and they were both doing as well as could be
expected. In a few days each was able to walk a little, and inside of a
month both were practically as well as ever.
For the time being all business in Martinique, and a good part of that
in St. Vincent, came to a standstill, and this being so nothing could
be done regarding the dyewood scheme the two gentlemen had had
in mind. Consequently the pair returned to the United States at the
first available opportunity.
“Take good care of yourselves in the future, boys,” said Mr.
Robertson, on leaving.
“And let the active volcanoes alone,” added Mr. Newton.
And all of the party agreed to heed the advice.
During the time spent in St. Vincent the boys made one trip
northward toward La Soufriere. But though they inspected the great
volcano from a distance they took good care to keep out of the zone
of fire.
“It’s a fearful spot,” said Mark. “Worse even than around Mont Pelee.
It’s a regular Inferno on earth,” and the others said the same.
At last came the day for the young explorers to leave St. Vincent.
Anxious to learn what had become of Hockley, who had not
answered a letter sent to Trinidad by him, Professor Strong engaged
passage on a vessel bound for Port-of-Spain.
“Hurrah, we are off at last!” cried Darry, as they set sail. “Good-bye to
the West Indies.”
“After all, the trip through the islands wasn’t so bad,” said Sam. “We
saw lots of interesting things.”
“I guess we shall see even more interesting things in the future,”
came from Mark.
“Of course, our sight-seeing isn’t half over yet,” added Frank. He was
right, and what the immediate future held in store for our young
friends will be told in the next volume of this “Pan-American Series.”
In that book we shall meet all our boys and the professor once more,
and learn of many things as interesting, curious, or exciting as those
related in these pages.
But for the present we will leave them, and also these ill-fated
islands of the Lesser Antilles, the fate of which even to-day seems
uncertain. Our friends made a happy group as they steamed rapidly
southward, and here let us say good-bye.
THE END
TRANSCRIBER’S NOTES:
Obvious typographical errors have been corrected.
Inconsistencies in hyphenation have been
standardized.
Archaic or variant spelling has been retained.
New original cover art included with this eBook is
granted to the public domain.
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