Test bank for Accounting Principles, 14tḣ Edition Author:
Weygandt, Kimmel All Chapters 1 to 27 100% Complete A+ Study
Guide Latest Version
,TA B LE OF CONTENTS
1 Accounting in Action
2 The Recor d ing Process
3 A dj usting the Accounts
4 Com p leting the Accounting Cycle
5 Accounting f or Merc h an d ising O p erations
6 In ventories
7 Accounting In f ormation Systems
8 F rau d, Internal Control, and Cash
9 Accounting f or Recei v a b les
10 P lant Assets, Natural Resources, and Intangi b le Assets
11 Current Lia b ilities and P ayroll Accounting
12 Accounting for P artners h i p s
13 Cor p orations: Organization and Ca p ital Stoc k TrAnsactions
14 Cor p orations: D i v i d en d s, Retaine d Earnings, and Income R e p orting
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15 Long-Term Lia b ilities
16 In v estments
17 Statement of Cas h F lows
18 F inancial Analysis: The Big P icture
19 Managerial Accounting
20 Job Or d er Costing
21 P rocess Costing
22 Cost- V olume- Pro fit
23 Incremental Analysis
24 B u d getary P lanning
25 B u d getary Control and Res p onsi b ility Accounting
26 Stan d ar d Costs and B alance d Scorecar d
27 P lanning for Ca p ital In v estments
, C H A P TER 1
ACCOUNTING IN ACTION
C HA PTERe LEARNING OBJECTIVES
1. Identify the activities and users associated with accounting. Accounting is an information system that i
dentifies, records, and communicates the economic events of an organization to interested users. The
major users and uses of accounting are as follows: (a) Management uses accounting information to
pla n, organize, and run the business. (b) Investors (owners) decide whether to buy, hold, or sell
their finan cial interests on the basis of accountinge data. (c)Creditors (suppliers and bankers)
evaluate the risks of g ranting credit or lending money on the basis of accounting information. Other
groups that use accou nting information are taxing authorities, regulatory agencies, customers, and labor
unions.
2. Explain the building blocks of accounting: ethics, principles, and assumptions. Ethics are the standards
of conduct by which actions are judged as right or wrong. Effective financial reporting depends on
soun d ethical behavior.
Generally accepted accounting principles are a common set of standards used by accountants. The pri
mary accounting standard-
setting body in the United States is the Financial Accounting Standards Board.
3. State the accounting equation, and define its components. The basic accounting equation is:
Assets = Liabilities + Owner's Equity
Assets are resources a business owns. Liabilities are creditorship claims on total assets.Owner's
equity is the ownership claim on total assets.
The expanded accounting equation is:
Assets Liabilities + Owner's Capital Owner's Drawings + Revenues
Expenses
Investments by owners (assets the owner puts into the business) are recorded in a category called
own er‘s capital. Owner‘s drawings are the withdrawal of assets by the owner for personal use.
Revenues ar e the gross increase in owner‘s equity from business activities for the purpose of earning
income. Expen ses are the costs of assets consumed or services used in the process of earning
revenue. Owner‘s e quity is increased by an owner‘s investmentsand by revenues from business
operations. Owner‘s e quity is decreased by an owner‘s withdrawals of assets and by expenses.
4. Analyze the effects of business trAnsactions on the accounting equation. Each businesstrAnsaction mu st
have a dual effect on the accounting equation. For example, if an individual asset increases, there mu
st be a corresponding (1) decrease in another asset, or (2) increase in a specific liability, or (3)
increase i n owner's equity.
5. Describe the four financial statements and how they are prepared. An income statement presents the
revenues and expenses, and resulting net income or net loss for a specific period of time. An
owner's equity statement summarizes the changes in owner's equity for a specific period of time. A
balance she et reports the assets, liabilities, and owner's equity at a specific date. Ae statement of
cash flows summar izes information about the cash inflows (receipts) and outflows (payments) for a
specific period of time.
Inquiries click here
Weygandt, Kimmel All Chapters 1 to 27 100% Complete A+ Study
Guide Latest Version
,TA B LE OF CONTENTS
1 Accounting in Action
2 The Recor d ing Process
3 A dj usting the Accounts
4 Com p leting the Accounting Cycle
5 Accounting f or Merc h an d ising O p erations
6 In ventories
7 Accounting In f ormation Systems
8 F rau d, Internal Control, and Cash
9 Accounting f or Recei v a b les
10 P lant Assets, Natural Resources, and Intangi b le Assets
11 Current Lia b ilities and P ayroll Accounting
12 Accounting for P artners h i p s
13 Cor p orations: Organization and Ca p ital Stoc k TrAnsactions
14 Cor p orations: D i v i d en d s, Retaine d Earnings, and Income R e p orting
Inquiries click here
,Full tesbank click here
15 Long-Term Lia b ilities
16 In v estments
17 Statement of Cas h F lows
18 F inancial Analysis: The Big P icture
19 Managerial Accounting
20 Job Or d er Costing
21 P rocess Costing
22 Cost- V olume- Pro fit
23 Incremental Analysis
24 B u d getary P lanning
25 B u d getary Control and Res p onsi b ility Accounting
26 Stan d ar d Costs and B alance d Scorecar d
27 P lanning for Ca p ital In v estments
, C H A P TER 1
ACCOUNTING IN ACTION
C HA PTERe LEARNING OBJECTIVES
1. Identify the activities and users associated with accounting. Accounting is an information system that i
dentifies, records, and communicates the economic events of an organization to interested users. The
major users and uses of accounting are as follows: (a) Management uses accounting information to
pla n, organize, and run the business. (b) Investors (owners) decide whether to buy, hold, or sell
their finan cial interests on the basis of accountinge data. (c)Creditors (suppliers and bankers)
evaluate the risks of g ranting credit or lending money on the basis of accounting information. Other
groups that use accou nting information are taxing authorities, regulatory agencies, customers, and labor
unions.
2. Explain the building blocks of accounting: ethics, principles, and assumptions. Ethics are the standards
of conduct by which actions are judged as right or wrong. Effective financial reporting depends on
soun d ethical behavior.
Generally accepted accounting principles are a common set of standards used by accountants. The pri
mary accounting standard-
setting body in the United States is the Financial Accounting Standards Board.
3. State the accounting equation, and define its components. The basic accounting equation is:
Assets = Liabilities + Owner's Equity
Assets are resources a business owns. Liabilities are creditorship claims on total assets.Owner's
equity is the ownership claim on total assets.
The expanded accounting equation is:
Assets Liabilities + Owner's Capital Owner's Drawings + Revenues
Expenses
Investments by owners (assets the owner puts into the business) are recorded in a category called
own er‘s capital. Owner‘s drawings are the withdrawal of assets by the owner for personal use.
Revenues ar e the gross increase in owner‘s equity from business activities for the purpose of earning
income. Expen ses are the costs of assets consumed or services used in the process of earning
revenue. Owner‘s e quity is increased by an owner‘s investmentsand by revenues from business
operations. Owner‘s e quity is decreased by an owner‘s withdrawals of assets and by expenses.
4. Analyze the effects of business trAnsactions on the accounting equation. Each businesstrAnsaction mu st
have a dual effect on the accounting equation. For example, if an individual asset increases, there mu
st be a corresponding (1) decrease in another asset, or (2) increase in a specific liability, or (3)
increase i n owner's equity.
5. Describe the four financial statements and how they are prepared. An income statement presents the
revenues and expenses, and resulting net income or net loss for a specific period of time. An
owner's equity statement summarizes the changes in owner's equity for a specific period of time. A
balance she et reports the assets, liabilities, and owner's equity at a specific date. Ae statement of
cash flows summar izes information about the cash inflows (receipts) and outflows (payments) for a
specific period of time.
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