Solution Manual For Accounting Principles 14th Edition by Jerry J. Weygandt, Paul D. Kimmel||ISBN NO:10,||ISBN NO:13,978-||All Chapters||Complete Guide A+

Test Bank for Accounting Principles, 14th Edition by Jerry J. Weygandt, Paul D.
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Kimmel oo




CHAPTER 1 o o




ACCOUNTING IN ACTION oo oo




CHAPTER LEARNING OBJECTIVES oo oo




1. Identify the activities and users associated with accounting. Accounting is an
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information system that identifies, records, and communicates the economic events of an
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organization to interested users. The major users and uses of accounting are as follows:
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(a) Management uses accounting information to plan, organize, and run the business. (b)
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Investors (owners) decide whether to buy, hold, or sell their financial interests on the basis
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of accounting data. (c) Creditors (suppliers and bankers) evaluate the risks of granting
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credit or lending money on
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accounting information are taxing authorities, regulatory agencies, customers, and labor
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unions.
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2. Explain the building blocks of accounting: ethics, principles, and assumptions.
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Ethics are the standards of conduct by which actions are judged as right or wrong.
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Effective financial reporting depends on sound ethical behavior.
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Generally accepted accounting principles are a common set of standards used by
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accountants. The primary accounting standard-setting body in the United States is the
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Financial Accounting Standards Board.
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3. State the accounting equation, and define its components. The basic accounting
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equation is:
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Assets = Liabilities + Owner's Equity oo oo oo oo oo




Assets are resources a business owns. Liabilities are creditorship claims on
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total assets. Owner's equity is the ownership claim on total assets.
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The expanded accounting equation is:
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Assets  Liabilities + Owner's Capital  Owner's Drawings + Revenues 
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Expenses
Investments by owners (assets the owner puts into the business) are recorded in a
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category called owner‘s capital. Owner‘s drawings are the withdrawal of assets by the
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owner for personal use. Revenues are the gross increase in owner‘s equity from business
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activities for the purpose of earning income. Expenses are the costs of assets consumed
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or services used in the process of earning revenue. Owner‘s equity is increased by an
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owner‘s investments and by revenues from business operations. Owner‘s equity is
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decreased by an owner‘s withdrawals of assets and by expenses.
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4. Analyze the effects of business transactions on the accounting equation. Each
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business transaction must have a dual effect on the accounting equation. For example, if
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an individual asset increases, there must be a corresponding (1) decrease in another
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asset, or (2) increase in a specific liability, or (3) increase in owner's equity.
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5. Describe the four financial statements and how they are prepared. An income
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statement presents the revenues and expenses, and resulting net income or net loss for a
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specific period of time. An owner's equity statement summarizes the changes in owner's
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equity for a specific period of time. A balance sheet reports the assets, liabilities, and
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owner's equity at a specific date. A statement of cash flows summarizes information about
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the cash inflows (receipts) and outflows (payments) for a specific period of time.
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,1 -2oo oo Test Bank for Accounting Principles, Fourteenth
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Edition
a
6. Explain the career opportunities in accounting. Accounting offers many different jobs in
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fields such as public and private accounting, governmental, and forensic accounting.
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Accounting is a popular major because there are many different types of jobs, with
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unlimited potential for career advancement.
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, Accounting in Action oo oo 1 -3 oo oo




TRUE-FALSE STATEMENTS oo




1. Owners of business firms are the only people who need accounting information.
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Ans: o o F, o o LO: o o 1, o o Bloom: o o K, o o Difficulty: o o Easy, o o Min: o o 1, o o AACSB: o o None, o o AICPA o o BB: o o Governance o o Perspective, o o AICPA o o FC: o o Reporting,
o o AICPA o o PC: o o None, o o IMA: o o Reporting




2. Transactions that can be measured in dollars and cents are recorded in
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the financial information system.
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Ans: ooT, ooLO: oo1, ooBloom: ooK, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting




3. The hiring of a new company president is an economic event recorded by
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the financial information system.
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Ans: ooF, ooLO: oo1, ooBloom: ooC, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting




4. Management of a business enterprise is the major external user of information.
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Ans: ooF, ooLO: oo1, ooBloom: ooK, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting




5. Accounting communicates financial information about a business enterprise to
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both internal and external users.
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Ans: ooT, ooLO: oo1, ooBloom: ooK, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting




6. Accounting information o o o o is used only by external
o o o o o o o o o o users o o with o o a
ofinancial interest in
o o o o o o o a business enterprise.
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Ans: ooF, ooLO: oo1, ooBloom: ooC, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting




7. Financial statements are the major means of communicating accounting
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information to interested parties.
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Ans: ooT, ooLO: oo1, ooBloom: ooK, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting




8. Bookkeeping and accounting are one and the same because the bookkeeping
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function includes the accounting process.
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Ans: ooF, ooLO: oo1, ooBloom: ooC, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting




9. The origins of accounting are attributed to Luca Pacioli, a famous mathematician.
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Ans: ooT, ooLO: oo1, ooBloom: ooK, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting

, 1 -4
oo oo Test Bank for Accounting Principles, Fourteenth
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Edition

10. The study of accounting is not useful for a business career unless your career
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objective is to become an accountant.
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Ans: ooF, ooLO: oo1, ooBloom: ooK, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting




11. A working knowledge of accounting is not relevant to a lawyer or an architect.
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Ans: ooF, ooLO: oo1, ooBloom: ooK, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting




12. Identifying is the process of keeping a chronological diary of events measured in
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dollars and cents.
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Ans: ooF, ooLO: oo1, ooBloom: ooK, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting




13. Management consulting includes examining the financial statements of companies
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and expressing an opinion as to the fairness of their presentation.
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Ans: ooF, ooLO: oo1, ooBloom: ooK, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting




14. A partnership must have more than one owner.
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Ans: ooT, ooLO: oo2, ooBloom: ooK, ooDifficulty: ooEasy, ooMin: oo1, ooAACSB: ooNone, ooAICPA ooBB: ooGovernance ooPerspective, ooAICPA ooFC: ooMeasurement
ooAnalysis ooand o o Interpretation, ooAICPA ooPC: ooNone, oo IMA: ooReporting