Instructor’s Manual Accounting for Non-Accounting Students Tenth Edition
John R. Dyson and Ellie Franklin Tutorial questions solutions contained therein have been updated for this edition by Ellie Franklin
For further instructor material please visit:
go.pearson.com/uk/he/resources ISBN: 978-1-292-28695-2
Pearson Education Limited 2020 Lecturers adopting the main text are permitted to download and photocopy the manual as required.
PEARSON EDUCATION LIMITED KAO Two KAO Park Harlow CM17 9SR United Kingdom Tel: +44 (0)1279 623623 Web: www.pearson.com/uk __________________________________
Eighth edition published 2010 Ninth edition published 2017 This edition published 2020 © Pearson Education Limited 2020 The right of Eliza Franklin to be identified as author of this work has been asserted by her in accordance with the Copyright, Designs and Patents Act 1988. ISBN:-978-1-292-28695-2 All rights reserved. Permission is hereby given for the material in this publication to be reproduced for student handouts, without express permission of the Publishers, for educational purposes only. In all other cases, no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without either the prior written permission of the Publishers or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd., Barnard’s Inn, 86 Fetter Lane, London EC4A 1EN. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior consent of the Publishers. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. Contains public sector information licensed under the Open Government Licence (OGL) v3.0. http://www.nationalarchives.gov.uk/doc/opengovernment-licence/version/3/. Please note that, unless the material is specifically cited with a source, any company names used within this Instructor’s Manual have been created by the authors and are intended to be fictitious. Pearson Education is not responsible for the content of third-party internet sites. Copyright Notice: “This publication contains copyright material of the IFRS® Foundation in respect of which all rights are reserved. Reproduced by Pearson Education Ltd with the permission of the IFRS Foundation. No permission granted to third parties to reproduce or distribute. For full access to IFRS Standards and the work of the IFRS Foundation please visit http://eifrs.ifrs.org”. Disclaimer: The International Accounting Standards Board®, the IFRS Foundation, the authors and the publishers do not accept responsibility for any loss caused by acting or refraining from acting in reliance on the material in this publication, whether such loss is caused by negligence or otherwise. 2 © Pearson Education Limited 2020
Contents Chapters
Pages
Preface
5
SECTION 1 ANSWERS TO TUTORIAL QUESTIONS (IF NOT PRINTED IN APPENDIX 4)
7
PART 1
INTRODUCTION TO ACCOUNTING
8
1. Accounting and the business world
9
2. Accounting rules and regulations
13
PART 2
17
FINANCIAL ACCOUNTING
3. Recording data
18
4. Sole trader accounts
34
5. Company accounts
51
6. Other entity accounts
61
7. Statement of cash flows
64
Case studies: Preparation of financial statements
73
Accounting policies
76
Statement of cash flows
78
FINANCIAL REPORTING
79
PART 3
8. The annual report
80
9. The annual accounts
81
10. Interpretation of accounts
83
11. Contemporary issues
88
Case study: Interpretation of accounts
90
PART 4
91
MANAGEMENT ACCOUNTING
12. Foundations
92
13. Direct costs
96
14. Indirect costs
99
15. Budgeting
105 3 © Pearson Education Limited 2020
16. Standard costing
113
17. Contribution analysis
119
18. Decision making
124
19. Capital investment
129
20. Emerging issues
137
Case studies: Fixed and flexible budgets
140
Standard cost operating statements
141
Pricing
143
SECTION 2 MULTIPLE CHOICE QUESTIONS AND ANSWERS
145
Multiple choice questions
146
Answers to multiple choice questions
183
Case studies
198
Case studies: Lecturer’s guidelines
237
4 © Pearson Education Limited 2020
Preface Non-accounting students will not normally be asked to prepare financial statements or cost analyses, but they are probably going to use them. The underlying theme behind this book is the belief that they will be in a better position to do that if they have a fairly extensive knowledge of how the information is prepared. This means that they have to have some practise in compiling cost and financial information, but it is certainly not necessary for them to do long and complex technical questions that would tax even a professionally qualified accountant. The actual depth required will vary from module to module and lecturers must use their professional judgement in determining how much material in the book their students need to cover. Experience suggests that the book is sufficient for most non-accounting modules and any wider coverage (or greater depth) would go beyond most requirements. These are different types of questions accompanying the 10th edition of Accounting for non-accountants textbook: In-chapter ‘Activities’ are included throughout the test so that you can introduce an element of questions and answers or discussion during your teaching. Answers to selected activities are available in Appendix 3 to the printed text. ‘Check your learning’ knowledge-based questions are based on the content of the chapters and the answers could be found within the chapters themselves. ‘News stories critical thinking questions’ are open-ended discussion questions which do not have one set answer. They can be used to encourage your students’ critical thinking as part of a seminar or a lecture discussion setting. ‘Tutorial questions’ test knowledge and often invite practical application of the concepts introduced in each chapter. At the time the first edition of Accounting for Non-Accounting Students was published, it was believed that the answers to all tutorial questions should be included in the same volume. This decision was made for two main reasons: (1) to avoid lecturers having to waste time preparing answers; and (2) to help those students who were using the book as part of a distance learning programme. When preparing later editions, we have been requested to include a number of tutorial questions without answers. To respond to such requests some Tutorial questions (marked with asterisk) have their answers provided in Appendix 4 to the printed edition, and the answers to the remaining Tutorial questions are provided in this Instructor’s Manual. The tutorial questions and answers included in the first nine editions of the book have been largely retained within this edition. The solutions contained both within the main book and within this Manual (especially those relating to the discussion-type questions) should only be treated as pointers to a possible answer. Wherever possible, students should be encouraged to question the presentation and procedures adopted in the solutions and to judge them critically. 5 © Pearson Education Limited 2020