Test bank for accounting principles 14th edition weygandt full chapte

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n n n n n n n n n




CHAPTER 1 n




ACCOUNTING IN ACTION n n




CHAPTER LEARNING OBJECTIVES
n n



1. Identifynthenactivitiesnandnusersnassociatednwithnaccounting.nAccountingnisnanninformationn
systemnthatnidentifies,nrecords,nandncommunicatesntheneconomicneventsnofnannorganizationntoni
nterestednusers.nThenmajornusersnandnusesnofnaccountingnarenasnfollows:n(a)nManagementnuses
naccountingninformationntonplan,norganize,nandnrunnthenbusiness.n(b)nInvestorsn(owners)ndeciden

whetherntonbuy,nhold,nornsellntheirnfinancialninterestsnonnthenbasisnofnaccountingndata.n(c)nCreditor
sn(suppliersnandnbankers)nevaluatenthenrisksnofn grantingncreditnornlendingnmoneyn onnthenbasisn
ofnaccountingninformation.nOtherngroupsnthatnusenaccountingninformationnarentaxingnauthorities,n
regulatorynagencies,ncustomers,nandnlabornunions.
2. Explainnthenbuildingnblocksnofnaccounting:nethics,nprinciples,nandnassumptions.nEthicsna
renthenstandardsnofnconductnbynwhichnactionsnarenjudgednasnrightnornwrong.nEffectivenfinancialnre
portingndependsnonnsoundnethicalnbehavior.
Generallynacceptednaccountingnprinciplesnarenancommonnsetnofnstandardsnusednbynaccountants
.nThenprimarynaccountingnstandard-
settingnbodyninnthenUnitednStatesnisnthenFinancialnAccountingnStandardsnBoard.


3. Statenthenaccountingnequation,nandndefinenitsncomponents.nThenbasicn accountingnequatio
nnis:
Assetsn=nLiabilitiesn+nOwner'snEquity
Assetsnarenresourcesnanbusinessnowns.nLiabilitiesnarencreditorshipnclaimsnonntotalnassets.nOwner'
snequitynisnthenownershipnclaimnonntotalnassets.
Thenexpandednaccountingnequationnis:
Assetsnn Liabilitiesn+nOwner'snCapitalnn Owner'snDrawingsn+nRevenuesn
Expenses
Investmentsnbynownersn(assetsnthenownernputsnintonthenbusiness)narenrecordedninnancategorynca
llednowner’sncapital.nOwner’sndrawingsnarenthenwithdrawalnofnassetsnbynthenownernfornpersonaln
use.nRevenuesnarenthengrossnincreaseninnowner’snequitynfromnbusinessnactivitiesnfornthenpurpos
enofnearningnincome.nExpensesnarenthencostsnofnassetsnconsumednornservicesnusedninn then proc
essn ofn earningn revenue.n Owner’sn equityn isn increasedn byn ann owner’sn investmentsnandnbynreve
nuesnfromnbusinessnoperations.nOwner’snequitynisndecreasednbynannowner’snwithdrawalsnofnass
etsnandnbynexpenses.
4. Analyzentheneffectsnofnbusinessntransactionsnonnthenaccountingnequation.nEachnbusinessn
transactionnmustnhavenandualneffectnonnthenaccountingnequation.nFornexample,nifnannindividualna
ssetnincreases,ntherenmustnbenancorrespondingn(1)ndecreaseninnanothernasset,norn(2)nincreaseninn
anspecificnliability,norn(3)nincreaseninnowner'snequity.
5. Describenthenfournfinancialnstatementsnandnhowntheynarenprepared.nAnnincomenstatementn
presentsnthenrevenuesnandnexpenses,nandnresultingnnetnincomenornnetnlossnfornan specificnperio
dnofntime.nAnnowner'snequitynstatementnsummarizesnthenchangesninnowner'snequitynfornanspecific
nperiodnof ntime.nAnbalancensheetnreportsnthenassets,nliabilities,nandnowner'snequitynatnanspecificnd

ate.nAnstatementnofncashnflowsnsummarizesninformationnaboutnthencashninflowsn(receipts)nandno
utflowsn(payments)nfornanspecificnperiodnofntime.


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1n-n2 TestnBanknfornAccountingnPrinciples,nFourteenthnEdition

a
6.nExplainnthencareernopportunitiesninnaccounting.nAccountingnoffersnmanyndifferentnjobsninnfiel
dsnsuchnasnpublicnandnprivatenaccounting,ngovernmental,nandnforensicnaccounting.nAccountingni
snanpopularnmajornbecausentherenarenmanyndifferentntypesnofnjobs,nwithnunlimitednpotentialnfornc
areernadvancement.




FORnINSTRUCTORnUSEnONLY
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AccountingninnAction 1n-n3

TRUE-FALSE STATEMENTS n


1. Ownersnofnbusinessnfirmsnarenthenonlynpeoplenwhonneednaccountingninformation.

Ans:n F,n LO:n 1,n Bloom:n K,n Difficulty:n Easy,n Min:n 1,n AACSB:n None,n AICPAn BB:n Governancen Perspective,n AICPAn FC:n Reporting,n AICPAn PC:n None,n I
MA:nReporting


2. Transactionsn thatn cann ben measuredn inn dollarsn andn centsn aren recordedn inn then financialni
nformationnsystem.

Ans:nT,nLO:n1,nBloom:nK,nDifficulty:nEasy,nMin:n1,nAACSB:nNone,nAICPAnBB:nGovernancenPerspective,nAICPAnFC:n MeasurementnAnalysisna
ndnInterpretation,nAICPAnPC:nNone,nIMA:nReporting


3. Then hiringn ofn an newn companyn presidentn isn ann economicn eventn recordedn byn then financialni
nformationnsystem.

Ans:nF,nLO:n1,nBloom:nC,nDifficulty:nEasy,nMin:n1,nAACSB:nNone,nAICPAnBB:nGovernancenPerspective,nAICPAnFC:nMeasurementnAnalysisna
ndnInterpretation,nAICPAnPC:nNone,nIMA:nReporting

4. Managementnofnanbusinessnenterprisenisnthenmajornexternalnusernofninformation.


Ans:nF,nLO:n1,nBloom:nK,nDifficulty:nEasy,nMin:n1,nAACSB:nNone,nAICPAnBB:nGovernancenPerspective,nAICPAnFC:n MeasurementnAnalysisna
ndnInterpretation,nAICPAnPC:nNone,nIMA:nReporting

5. Accountingn communicatesn financialn informationn aboutn an businessn enterprisen ton bothnintern
alnandnexternalnusers.

Ans:nT,nLO:n1,nBloom:nK,nDifficulty:nEasy,nMin:n1,nAACSB:nNone,nAICPAnBB:nGovernancenPerspective,nAICPAnFC:n MeasurementnAnalysisna
ndnInterpretation,nAICPAnPC:nNone,nIMA:nReporting

6. Accountingninformationnisnusednonlynbynexternalnusersnwithnanfinancialninterestninnanbusiness
nenterprise.




Ans:nF,nLO:n1,nBloom:nC,nDifficulty:nEasy,nMin:n1,nAACSB:nNone,nAICPAnBB:nGovernancenPerspective,nAICPAnFC:nMeasurementnAnalysisna
ndnInterpretation,nAICPAnPC:nNone,nIMA:nReporting


7. Financialn statementsn aren then majorn meansn ofn communicatingn accountingn informationn toni
nterestednparties.

Ans:nT,nLO:n1,nBloom:nK,nDifficulty:nEasy,nMin:n1,nAACSB:nNone,nAICPAnBB:nGovernancenPerspective,nAICPAnFC:n MeasurementnAnalysisna
ndnInterpretation,nAICPAnPC:nNone,nIMA:nReporting


8. Bookkeepingn andn accountingn aren onen andn then samen becausen then bookkeepingn functionni
ncludesnthenaccountingnprocess.

Ans:nF,nLO:n1,nBloom:nC,nDifficulty:nEasy,nMin:n1,nAACSB:nNone,nAICPAnBB:nGovernancenPerspective,nAICPAnFC:nMeasurementnAnalysisna
ndnInterpretation,nAICPAnPC:nNone,nIMA:nReporting



9. ThenoriginsnofnaccountingnarenattributedntonLucanPacioli,nanfamousnmathematician.

Ans:nT,nLO:n1,nBloom:nK,nDifficulty:nEasy,nMin:n1,nAACSB:nNone,nAICPAnBB:nGovernancenPerspective,nAICPAnFC:n MeasurementnAnalysisna
ndnInterpretation,nAICPAnPC:nNone,nIMA:nReporting


FORnINSTRUCTORnUSEnONLY
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