TEST BANK For Accounting Principles, 14th Edition by Jerry J. Weygandt, Paul D. Kimmel, Verified Chapters 1 - 27, Complete Newest Version

TESTBANK
Accounting Principles 14th Edition
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by Jerry J. Weygandt, Paul D. Kimmel Chapters
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n 1 - 27, Complete
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,TABLE OF CONTENTS n n




1 Accounting in Action
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2 The Recording Process
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3 Adjusting the Accounts
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4 Completing the Accounting Cycle
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5 Accounting for Merchandising Operations
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6 Inventories
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7 Accounting Information Systems
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8 Fraud, Internal Control, and Cash
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9 Accounting for Receivables
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10 Plant Assets, Natural Resources, and Intangible Assets
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11 Current Liabilities and Payroll Accounting
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12 Accounting for Partnerships
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13 Corporations: Organization and Capital Stock Transactions
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14 Corporations: Dividends, Retained Earnings, and Income
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Reporting
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,15 Long-Term Liabilities
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16 Investments
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17 Statement of Cash Flows
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18 Financial Analysis: The Big Picture
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19 Managerial Accounting
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20 Job Order Costing
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21 Process Costing
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22 Cost-Volume-Profit
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23 Incremental Analysis
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24 Budgetary Planning
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25 Budgetary Control and Responsibility Accounting
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26 Standard Costs and Balanced Scorecard
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27 Planning for Capital Investments
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, CHAPTER 1 n




ACCOUNTING IN ACTION n n




CHAPTER LEARNING OBJECTIVES n n




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




Assets are resources a business owns. Liabilities are creditorship claims on total assets.Owner's
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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 category called
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owner‘s capital. Owner‘s drawings are the withdrawal of assets by the owner for personal use. Revenues
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are the gross increase in owner‘s equity from business activities for the purpose of earning income.
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Expenses are the costs of assets consumed or services used in the process of earning revenue.
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nOwner‘s equity is increased by an owner‘s investments and by revenues from business operations.
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Owner‘s equity is 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 businesstransaction must
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have a dual effect on the accounting equation. For example, if an individual asset increases, there must
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be a corresponding (1) decrease in another asset, or (2) increase in a specific liability, or (3) increase in
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owner's equity.
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5. Describe the four financial statements and how they are prepared. An income statement presents the
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revenues and expenses, and resulting net income or net loss for a specific period of time. An owner's
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equity statement summarizes the changes in owner's equity for a specific period of time. A balance sheet
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reports the assets, liabilities, and owner's equity at a specific date. A statement of cash flows summarizes
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information about the cash inflows (receipts) and outflows (payments) for a specific period of time.
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