FULL SOLUTION MANUAL FOR ss ss ss
Financial And Managerial Accounting 4th Edition by Jerry J
ss ss ss ss ss ss ss ss
ss Weygandt, Paul D Kimmel, Jill E Mitchel ss ss ss ss ss ss
CHAPTER 1 ss
Accounting in Action ss ss
ASSIGNMENT CLASSIFICATION TABLE ss ss
Brief A
Learning Objectives ss Questions Exercises
ss Do It!ss Exercises Problems
1. Identify the activities and ss ss ss 1, 2, 3, 4, 5
ss ss ss ss 1 1, 2 ss
users associated with
ss ss ss
accounting.
ss
2. s s Explain the building blocks 6, 7, 8, 9, 10
ss ss ss ss ss ss ss 2 3, 4 ss
ss of accounting: ethics,
ss ss
ss principles, and assumptions. ss ss
3. State the accountingss ss 11, 12, 13, 14. 1, 2, 3, 4, 5
ss ss ss ss ss ss ss 3 5
equation, and define its ss ss ss 22
components.
ss
4. Analyze the effects of ss ss ss 15, 16, 18ss ss 6, 7, 8, 9
ss ss ss 4 6, 7, 8
ss ss 1A, 2A, 4A,
ss ss
business transactions on
ss ss ss 5A
the accounting equation.
ss ss ss
5. Describe the four financial ss ss ss 17, 19, 20, 21, 10, 11
ss ss ss ss 5 8, 9, 10, 11,
ss 2A, 3A, 4A,
ss ss ss ss
statements and how they are ss ss ss ss 12, 13, 14, 15, 5A
ss ss ss
prepared. 16, 17, 18 ss ss
© 2021 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law.
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
Advice on how to obtain permission to reuse this material is available at http://www.wiley.com/go/permissions.
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
, ANSWERS TO QUESTIONS ss ss
1. True. Virtually every organization and person in our society uses accounting information.
ss ss ss ss ss ss ss ss ss ss ss
Businesses, investors, creditors, government agencies, and not-for-profit organizations must
ss ss ss ss ss ss ss ss ss
use accounting information to operate effectively.
ss ss ss ss ss ss
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
2. Accounting is the process of identifying, recording, and communicating the economic events of
ss ss ss ss s s ss ss ss ss ss ss ss
an organization to interested users of the information. The first activity of the accounting
s s ss ss ss ss ss ss ss ss ss ss ss ss ss
process is to identify economic events that are relevant to a particular business. Once
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
identified and measured, the events are recorded to provide a history of the financial activities
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
of the organization. Recording consists of keeping a chronological diary of these measured
ss ss ss ss ss ss ss ss ss ss ss ss ss
events in an orderly and systematic manner. The information is communicated through the
ss ss ss ss ss ss ss ss ss ss ss ss ss
preparation and distribution of accounting reports, the most common of which are
ss ss ss s s s s s s s s s s s s s s s s s s
called financial statements. A vital element in the communication process is the
s s s s s s ss ss ss ss ss ss ss ss ss
accountant’s ability and responsibility to analyze and interpret the reported information.
ss ss ss ss ss ss ss ss ss ss ss
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
3. (a) Internal users are those who plan, organize, and run the business and therefore are
s s ss ss ss ss ss ss ss ss ss ss ss ss ss
officers and other decision makers.
ss ss ss ss ss
(b) To assist management, accounting provides internal reports. Examples include financial
ss ss ss ss ss ss ss ss ss
comparisons of operating alternatives, projections of income from new sales campaigns,
ss ss ss ss ss ss ss ss ss ss ss
and forecasts of cash needs for the next year.
s s ss ss ss ss ss ss ss ss
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell stock.
ss ss ss ss ss ss ss ss ss ss ss ss ss
(b) Creditors use accounting information to evaluate the risks of granting credit or lending money.
ss ss ss ss ss ss ss ss ss ss ss ss ss
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
5. False. Bookkeeping usually involves only the recording of economic events and therefore is
ss ss ss ss ss ss ss ss ss ss ss ss
just one part of the entire accounting process. Accounting, on the other hand, involves the
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
entire process of identifying, recording, and communicating economic events.
ss ss ss ss ss ss ss ss ss
LO 1, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss s s ss ss ss ss ss s s ss ss ss ss ss
6. Harper Travel Agency should report the land at $85,000 on its December 31, 2022 balance
ss ss ss ss ss ss ss ss ss ss ss ss s s ss
sheet. This is true not only at the time the land is purchased, but also over the time the land
s s ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
is held. In determining which measurement principle to use (historical cost or fair value)
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
companies weigh the factual nature of cost figures versus the relevance of fair value. In
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
general, companies use historical cost. Only in situations where assets are actively traded do
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
companies apply the fair value principle.
ss ss ss s s ss ss
LO s s 2, s s BT: C, Difficulty: Easy, TOT:
s s s s s s s s s s 2 s s min., s s AACSB: s s None, s s AICPA s s FC: s s Measurement, s s Analysis s s and
s s Interpretation IMA: Reporting s s ss
7. The monetary unit assumption requires that only transaction data capable of being expressed
ss ss ss ss ss ss ss ss ss ss ss ss
in terms of money be included in the accounting records. This assumption enables accounting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
to quantify (measure) economic events.
ss ss ss ss ss
LO s s 2, s s BT: K, Difficulty: Easy, TOT:
s s s s s s s s s s 2 s s min., s s AACSB: s s None, s s AICPA s s FC: s s Measurement, s s Analysis s s and
s s Interpretation IMA: Reporting s s ss
1-2 © ss2021 ssJohn ssWiley ss& ssSons, ssInc. ssAll ssrights ssreserved. s s s s Weygandt, ssFinancial ss& ssManagerial ssAccounting ss4e, ssSolutions ssManual s s s s (For
Instructor Use Only)
,Questions Chapter 1 (Continued) ss ss ss
8. The economic entity assumption requires that the activities of the entity be kept
s s s s s s s s s s s s s s s s s s s s s s s s
separate and distinct from the activities of its owners and all other economic entities.
s s s s ss ss ss ss ss ss ss ss ss ss ss ss
LO s s 2, s s BT: K, Difficulty: Easy, TOT:
s s s s s s s s s s 2 s s min., s s AACSB: s s None, s s AICPA s s FC: s s Measurement, s s Analysis s s and
s s Interpretation IMA: Reporting s s ss
9. The three basic forms of
s s s s s s s s s s business s s organizations are s s s s (1) proprietorship,
s s s s (2)
partnership, and
s s s s
(3) corporation.
ss
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
10. One of the advantages Juana would enjoy is that ownership of a corporation is represented by
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
transferable shares of stock. This would allow Juana to raise money easily by selling a part of
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
her ownership in the company. Another advantage is that because holders of the shares
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
(stockholders) enjoy limited liability, they are not personally liable for the debts of the corporate
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
entity. Also, because ownership can be transferred without dissolving the corporation, the
ss ss ss ss ss ss ss ss ss ss ss ss
corporation enjoys an unlimited life.
ss ss ss ss ss
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss s s ss ss ss ss ss s s ss ss ss ss ss
11. The basic accounting equation is Assets = Liabilities + Stockholders’ Equity.
ss ss ss ss ss ss ss ss ss ss
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
12. (a) Assets are resources owned by a business. Liabilities are creditor claims against
s s ss ss ss ss ss ss ss ss s s ss ss
assets— that is, existing debts and obligations. Stockholders’ equity is the ownership claim
ss ss ss ss ss ss ss ss ss ss ss ss ss
on total assets. ss ss ss
(b) Stockholders’ equity is affected by stockholders’ investments, dividen s s s s s s s s s s s s s s
revenues, and s s s s
expenses.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
13. The liabilities are (b) Accounts payable and (g) Salaries and Wages Payable.
ss ss ss ss ss ss ss ss ss ss ss
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
14. Yes, a business can enter into a transaction in which only the left side of the accounting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
equation is affected. An example would be a transaction where an increase in
ss ss s s s s s s s s s s s s s s s s s s s s s s
one asset is offset by a decrease in another asset. An increase in the Equipment
s s s s s s s s s s ss ss ss ss ss ss ss ss ss ss
account which is offset by a decrease in the Cash account is a specific example.
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss s s ss ss ss ss ss s s ss ss ss ss ss
15. Business transactions are the economic events of the enterprise recorded
s s s s s s s s s s s s s s s s s s
s by accountants because they affect the basic accounting equation.
s s s ss ss ss ss ss ss ss
(a) No, the death of the president of the company is not a business transaction as it
ss ss ss s s ss ss ss ss ss ss ss ss ss ss ss
does not affect the basic accounting equation.
ss ss ss ss ss ss ss
(b) Yes, supplies purchased on account is a business transaction as it
s s s s s s s s s s s s s s s s s s s s
affects the basic accounting equation.
s s s s s s ss ss
(c) No, an employee being fired is not a business transaction as it does not
s s s s s s s s s s s s s s s s s s s s s s s s s s
affect the basic accounting equation.
s s s s s s ss ss
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss s s ss ss ss ss ss s s ss ss ss ss ss
16. (a) Decrease assets and decrease stockholders’ equity. ss ss ss ss ss
(b) Increase assets and decrease assets. ss ss ss ss
(c) Increase assets and increase stockholders’ equity. ss ss ss ss ss
(d) Decrease assets and decrease liabilities. ss ss ss ss
© ss2021 ssJohn ssWiley ss& ssSons, ssInc. ssAll ssrights ssreserved. s s s s Weygandt, ssFinancial ss& ssManagerial ssAccounting ss4e, ssSolutions ssManual s s s s (For 1-3
Instructor Use Only)
, Questions Chapter 1 (Continued)
ss ss ss
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss s s ss ss ss ss ss s s ss ss ss ss ss
1-4 © ss2021 ssJohn ssWiley ss& ssSons, ssInc. ssAll ssrights ssreserved. s s s s Weygandt, ssFinancial ss& ssManagerial ssAccounting ss4e, ssSolutions ssManual s s s s (For
Instructor Use Only)
Financial And Managerial Accounting 4th Edition by Jerry J
ss ss ss ss ss ss ss ss
ss Weygandt, Paul D Kimmel, Jill E Mitchel ss ss ss ss ss ss
CHAPTER 1 ss
Accounting in Action ss ss
ASSIGNMENT CLASSIFICATION TABLE ss ss
Brief A
Learning Objectives ss Questions Exercises
ss Do It!ss Exercises Problems
1. Identify the activities and ss ss ss 1, 2, 3, 4, 5
ss ss ss ss 1 1, 2 ss
users associated with
ss ss ss
accounting.
ss
2. s s Explain the building blocks 6, 7, 8, 9, 10
ss ss ss ss ss ss ss 2 3, 4 ss
ss of accounting: ethics,
ss ss
ss principles, and assumptions. ss ss
3. State the accountingss ss 11, 12, 13, 14. 1, 2, 3, 4, 5
ss ss ss ss ss ss ss 3 5
equation, and define its ss ss ss 22
components.
ss
4. Analyze the effects of ss ss ss 15, 16, 18ss ss 6, 7, 8, 9
ss ss ss 4 6, 7, 8
ss ss 1A, 2A, 4A,
ss ss
business transactions on
ss ss ss 5A
the accounting equation.
ss ss ss
5. Describe the four financial ss ss ss 17, 19, 20, 21, 10, 11
ss ss ss ss 5 8, 9, 10, 11,
ss 2A, 3A, 4A,
ss ss ss ss
statements and how they are ss ss ss ss 12, 13, 14, 15, 5A
ss ss ss
prepared. 16, 17, 18 ss ss
© 2021 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law.
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
Advice on how to obtain permission to reuse this material is available at http://www.wiley.com/go/permissions.
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
, ANSWERS TO QUESTIONS ss ss
1. True. Virtually every organization and person in our society uses accounting information.
ss ss ss ss ss ss ss ss ss ss ss
Businesses, investors, creditors, government agencies, and not-for-profit organizations must
ss ss ss ss ss ss ss ss ss
use accounting information to operate effectively.
ss ss ss ss ss ss
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
2. Accounting is the process of identifying, recording, and communicating the economic events of
ss ss ss ss s s ss ss ss ss ss ss ss
an organization to interested users of the information. The first activity of the accounting
s s ss ss ss ss ss ss ss ss ss ss ss ss ss
process is to identify economic events that are relevant to a particular business. Once
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
identified and measured, the events are recorded to provide a history of the financial activities
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
of the organization. Recording consists of keeping a chronological diary of these measured
ss ss ss ss ss ss ss ss ss ss ss ss ss
events in an orderly and systematic manner. The information is communicated through the
ss ss ss ss ss ss ss ss ss ss ss ss ss
preparation and distribution of accounting reports, the most common of which are
ss ss ss s s s s s s s s s s s s s s s s s s
called financial statements. A vital element in the communication process is the
s s s s s s ss ss ss ss ss ss ss ss ss
accountant’s ability and responsibility to analyze and interpret the reported information.
ss ss ss ss ss ss ss ss ss ss ss
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
3. (a) Internal users are those who plan, organize, and run the business and therefore are
s s ss ss ss ss ss ss ss ss ss ss ss ss ss
officers and other decision makers.
ss ss ss ss ss
(b) To assist management, accounting provides internal reports. Examples include financial
ss ss ss ss ss ss ss ss ss
comparisons of operating alternatives, projections of income from new sales campaigns,
ss ss ss ss ss ss ss ss ss ss ss
and forecasts of cash needs for the next year.
s s ss ss ss ss ss ss ss ss
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell stock.
ss ss ss ss ss ss ss ss ss ss ss ss ss
(b) Creditors use accounting information to evaluate the risks of granting credit or lending money.
ss ss ss ss ss ss ss ss ss ss ss ss ss
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
5. False. Bookkeeping usually involves only the recording of economic events and therefore is
ss ss ss ss ss ss ss ss ss ss ss ss
just one part of the entire accounting process. Accounting, on the other hand, involves the
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
entire process of identifying, recording, and communicating economic events.
ss ss ss ss ss ss ss ss ss
LO 1, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss s s ss ss ss ss ss s s ss ss ss ss ss
6. Harper Travel Agency should report the land at $85,000 on its December 31, 2022 balance
ss ss ss ss ss ss ss ss ss ss ss ss s s ss
sheet. This is true not only at the time the land is purchased, but also over the time the land
s s ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
is held. In determining which measurement principle to use (historical cost or fair value)
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
companies weigh the factual nature of cost figures versus the relevance of fair value. In
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
general, companies use historical cost. Only in situations where assets are actively traded do
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
companies apply the fair value principle.
ss ss ss s s ss ss
LO s s 2, s s BT: C, Difficulty: Easy, TOT:
s s s s s s s s s s 2 s s min., s s AACSB: s s None, s s AICPA s s FC: s s Measurement, s s Analysis s s and
s s Interpretation IMA: Reporting s s ss
7. The monetary unit assumption requires that only transaction data capable of being expressed
ss ss ss ss ss ss ss ss ss ss ss ss
in terms of money be included in the accounting records. This assumption enables accounting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
to quantify (measure) economic events.
ss ss ss ss ss
LO s s 2, s s BT: K, Difficulty: Easy, TOT:
s s s s s s s s s s 2 s s min., s s AACSB: s s None, s s AICPA s s FC: s s Measurement, s s Analysis s s and
s s Interpretation IMA: Reporting s s ss
1-2 © ss2021 ssJohn ssWiley ss& ssSons, ssInc. ssAll ssrights ssreserved. s s s s Weygandt, ssFinancial ss& ssManagerial ssAccounting ss4e, ssSolutions ssManual s s s s (For
Instructor Use Only)
,Questions Chapter 1 (Continued) ss ss ss
8. The economic entity assumption requires that the activities of the entity be kept
s s s s s s s s s s s s s s s s s s s s s s s s
separate and distinct from the activities of its owners and all other economic entities.
s s s s ss ss ss ss ss ss ss ss ss ss ss ss
LO s s 2, s s BT: K, Difficulty: Easy, TOT:
s s s s s s s s s s 2 s s min., s s AACSB: s s None, s s AICPA s s FC: s s Measurement, s s Analysis s s and
s s Interpretation IMA: Reporting s s ss
9. The three basic forms of
s s s s s s s s s s business s s organizations are s s s s (1) proprietorship,
s s s s (2)
partnership, and
s s s s
(3) corporation.
ss
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
10. One of the advantages Juana would enjoy is that ownership of a corporation is represented by
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
transferable shares of stock. This would allow Juana to raise money easily by selling a part of
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
her ownership in the company. Another advantage is that because holders of the shares
ss ss ss ss ss ss ss ss ss ss ss ss ss ss
(stockholders) enjoy limited liability, they are not personally liable for the debts of the corporate
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
entity. Also, because ownership can be transferred without dissolving the corporation, the
ss ss ss ss ss ss ss ss ss ss ss ss
corporation enjoys an unlimited life.
ss ss ss ss ss
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss s s ss ss ss ss ss s s ss ss ss ss ss
11. The basic accounting equation is Assets = Liabilities + Stockholders’ Equity.
ss ss ss ss ss ss ss ss ss ss
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
12. (a) Assets are resources owned by a business. Liabilities are creditor claims against
s s ss ss ss ss ss ss ss ss s s ss ss
assets— that is, existing debts and obligations. Stockholders’ equity is the ownership claim
ss ss ss ss ss ss ss ss ss ss ss ss ss
on total assets. ss ss ss
(b) Stockholders’ equity is affected by stockholders’ investments, dividen s s s s s s s s s s s s s s
revenues, and s s s s
expenses.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
13. The liabilities are (b) Accounts payable and (g) Salaries and Wages Payable.
ss ss ss ss ss ss ss ss ss ss ss
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
14. Yes, a business can enter into a transaction in which only the left side of the accounting
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
equation is affected. An example would be a transaction where an increase in
ss ss s s s s s s s s s s s s s s s s s s s s s s
one asset is offset by a decrease in another asset. An increase in the Equipment
s s s s s s s s s s ss ss ss ss ss ss ss ss ss ss
account which is offset by a decrease in the Cash account is a specific example.
ss ss ss ss ss ss ss ss ss ss ss ss ss ss ss
LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss s s ss ss ss ss ss s s ss ss ss ss ss
15. Business transactions are the economic events of the enterprise recorded
s s s s s s s s s s s s s s s s s s
s by accountants because they affect the basic accounting equation.
s s s ss ss ss ss ss ss ss
(a) No, the death of the president of the company is not a business transaction as it
ss ss ss s s ss ss ss ss ss ss ss ss ss ss ss
does not affect the basic accounting equation.
ss ss ss ss ss ss ss
(b) Yes, supplies purchased on account is a business transaction as it
s s s s s s s s s s s s s s s s s s s s
affects the basic accounting equation.
s s s s s s ss ss
(c) No, an employee being fired is not a business transaction as it does not
s s s s s s s s s s s s s s s s s s s s s s s s s s
affect the basic accounting equation.
s s s s s s ss ss
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss s s ss ss ss ss ss s s ss ss ss ss ss
16. (a) Decrease assets and decrease stockholders’ equity. ss ss ss ss ss
(b) Increase assets and decrease assets. ss ss ss ss
(c) Increase assets and increase stockholders’ equity. ss ss ss ss ss
(d) Decrease assets and decrease liabilities. ss ss ss ss
© ss2021 ssJohn ssWiley ss& ssSons, ssInc. ssAll ssrights ssreserved. s s s s Weygandt, ssFinancial ss& ssManagerial ssAccounting ss4e, ssSolutions ssManual s s s s (For 1-3
Instructor Use Only)
, Questions Chapter 1 (Continued)
ss ss ss
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
ss ss ss s s ss ss ss ss ss s s ss ss ss ss ss
1-4 © ss2021 ssJohn ssWiley ss& ssSons, ssInc. ssAll ssrights ssreserved. s s s s Weygandt, ssFinancial ss& ssManagerial ssAccounting ss4e, ssSolutions ssManual s s s s (For
Instructor Use Only)
