Solution Manual for Accounting Principles 14th Edition by Jerry J. Weygandt,
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Paul D. Kimmel All Chapters
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Complete Guide A+ Q Q
, CHAPTER 1 Q
Accounting in Action Q Q
Learning Objectives
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1. Identify the activities and users associated with accounting.
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2. Explain the building blocks of accounting: ethics, principles, and
Q Q Q Q Q Q Q Q
assumptions.
Q
3. State the accounting equation, and define its components.
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4. Analyze the effects of business transactions on the accounting equation.
Q Q Q Q Q Q Q Q Q
5. Describe the four financial statements and how they are prepared.
Q Q Q Q Q Q Q Q Q
*6. Explain the career opportunities in accounting.
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*Note: All asterisked Questions, Brief Exercises, Exercises, and Problems relate to material contained
Q Q Q Q Q Q Q Q Q Q Q Q
Qin the appendix to the chapter.
Q Q Q Q Q
, ANSWERS TO QUESTIONS Q Q
1. This is true. Virtually every organization and person in our society uses accounting information.
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QBusinesses, investors, creditors, government agencies, and not-for-profit organizations must use accounting
Q Q Q Q Q Q Q Q Q Q
information to operate effectively.
Q Q Q Q
LO1 QBT: QC Q Difficulty: QEasy Q TOT: Q2 Qmin. Q QAACSB: QNone Q QAICPA QFC: QReporting
2. Accounting is the process of identifying, recording, and communicating the economic events of an
Q Q Q Q Q Q Q Q Q Q Q Q Q
Qorganization to interested users of the information. The first activity of the accounting process is to identify
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qeconomic events that are relevant to a particular business. Once identified and measured, the events are
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
recorded to provide a history of the financial activities of the organization. Recording consists of keeping a
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qchronological diary of these measured events in an orderly and systematic manner. The information is
Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qcommunicated through the preparation and distribution of accounting reports, the most common of which
Q Q Q Q Q Q Q Q Q Q Q Q Q
Qare called financial statements. A vital element in the communication process is the accountant’s ability
Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qand responsibility to analyze and interpret the reported information.
Q Q Q Q Q Q Q Q
LO1 QBT: QC Q Difficulty: QEasy Q TOT: Q4 Qmin. Q AACSB: QNone Q AICPA QFC: QReporting
3. (a) Internal users are those who plan, organize, and run the business and therefore are officers and other
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
decision makers.
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(b) To assist management, managerial accounting provides internal reports. Examples include financial
Q Q Q Q Q Q Q Q Q Q
comparisons of operating alternatives, projections of income from new sales campaigns, and forecasts
Q Q Q Q Q Q Q Q Q Q Q Q Q
of cash needs for the next year.
Q Q Q Q Q Q Q
LO1 Q BT: QC Q Difficulty: QEasy Q TOT: Q2 Qmin. Q AACSB: QNone Q QAICPA QFC: QReporting
4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell owner- ship shares of a
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company. Q
(b) Creditors use accounting information to evaluate the risks of granting credit or lending money.
Q Q Q Q Q Q Q Q Q Q Q Q Q
LO1 QBT: QC Q Difficulty: QEasy Q TOT: Q2 Qmin. Q QAACSB: QNone Q AICPA QFC: QReporting
5. This is false. Bookkeeping usually involves only the recording of economic events and therefore isjust one part of
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
the entire accounting process. Accounting, on the other hand, involves the entire process of identifying,
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
recording, and communicating economic events.
Q Q Q Q Q
LO1 QBT: QC Q Difficulty: QEasy Q TOT: Q2 Qmin. Q AACSB: QNone Q QAICPA QFC: QReporting
6. Benton Travel Agency should report the land at $90,000 on its December 31, 2022 balance
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q sheet. This Q
Qis true not only at the time the land is purchased, but also over the time the land
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q is held. In
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Q determining which measurement principle to use (historical cost or fair value) companies weigh
Q Q Q Q Q Q Q Q Q Q Q Q the factual
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Qnature of cost figures versus the relevance of fair value. In general, companies use historical
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q cost. Only in Q Q
situations where assets are actively traded do companies apply the fair value principle.
Q Q Q Q Q Q Q QQ Q Q Q Q Q
LO2 Q BT: QC Q Difficulty: QEasy Q TOT: Q4 Qmin. Q QAACSB: QNone Q AICPA QFC: QReporting
7. The monetary unit assumption requires that only transaction data that can be expressed in terms of money be
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qincluded in the accounting records. This assumption enables accounting to quantify (measure) economic events.
Q Q Q Q Q Q Q Q Q Q Q Q Q
LO2 Q BT: QK Q Difficulty: QEasy Q TOT: Q2 Qmin. Q QAACSB: QNone Q AICPA QFC: QReporting
8. The economic entity assumption requires that the activities of the entity be kept separate and
Q Q Q Q QQ Q Q Q Q Q Q Q Q Q Q distinct from the Q Q
activities of its owners and all other economic entities.
Q Q Q Q Q Q Q Q Q
LO2 QBT: QK Q Difficulty: QEasy Q TOT: Q2 Qmin. Q AACSB: QNone Q QAICPA QFC: QReporting
, Questions Chapter 1 (Continued)
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9. The three basic forms of business organizations are: (1) proprietorship, (2) partnership, and
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(3) corporation.
Q
LO2 Q BT: QK Q Difficulty: QEasy Q TOT:1 Qmin. Q AACSB: QNone Q QAICPA QFC: Q Reporting
10. One of the advantages Helen Rupp would enjoy is that ownership of a corporation is represented by
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qtransferable shares of stock. This would allow Helen to raise money easily by selling a part of her
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Q ownership in the company. Another advantage is that because holders of the shares (stockholders) enjoy
Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qlimited liability; they are not personally liable for the debts of the corporate entity. Also, because
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qownership can be transferred without dissolving the corporation, the corporation enjoys an unlimited life.
Q Q Q Q Q Q Q Q Q Q Q Q Q
LO2 Q BT: QK Q Difficulty: QEasy Q TOT: Q4 Qmin. Q QAACSB: QNone Q QAICPA QFC: QReporting
11. The basic accounting equation is Assets = Liabilities + Owner’s Equity.
Q Q Q Q Q Q Q Q Q Q
LO3 QBT: QK Q Difficulty: QEasy Q TOT: Q1 Qmin. Q QAACSB: QNone Q QAICPA QFC: QMeasurement
12. (a) Assets are resources owned by a business. Liabilities are creditor claims against assets. Put more simply,
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
liabilities are existing debts and obligations. Owner’s equity is the ownership claim on total assets.
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
(b) Owner’s equity is affected by owner’s investments, drawings, revenues, and expenses.
Q Q Q Q Q Q Q Q Q Q
LO3 QBT: QC Q Difficulty: QEasy Q TOT: Q2 Qmin. Q AACSB: QNone Q QAICPA QFC: QReporting
13. The liabilities are: (b) Accounts payable and (g) Salaries and wages payable.
Q Q Q Q Q Q Q Q Q Q Q
LO3 QBT: QC Q Difficulty: QEasy Q TOT: Q1 Qmin. Q AACSB: QNone Q QAICPA QFC: QReporting
14. Yes, a business can enter into a transaction in which only the left side of the accounting equation is
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qaffected. An example would be a transaction where an increase in one asset is offset by a decrease in another
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
asset. An increase in the Equipment account which is offset by a decrease inthe Cash account is a specific
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
example.
Q
LO4 QBT: QC Q Difficulty: QModerate Q TOT: Q3 Qmin. Q AACSB: QNone Q AICPA QFC: QReporting
15. Business transactions are the economic events of the enterprise recorded by accountantsbecause they
Q Q Q Q Q Q Q Q Q Q Q Q
Qaffect the basic accounting equation.
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(a) The death of the owner of the company is not a business transaction as it does not affect ofthe
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
components of the basic accounting equation.
Q Q Q Q Q Q
(b) Supplies purchased on account is a business transaction as it affects the basic accounting
Q Q Q Q Q Q Q Q Q Q Q Q Q
equation.Q
(c) An employee being fired is not a business transaction as it does not affect any of the
QQ Q QQ QQ QQ QQ Q QQ QQ QQ QQ QQ QQ Q Q QQ
components of the basic accounting equation.
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(d) A withdrawal of cash by the owner from the business is a business transaction as it affects the basic
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
accounting equation.
Q Q
LO4 QBT: QC Q Difficulty: QModerate Q TOT: Q4 Qmin. Q AACSB: QNone Q AICPA QFC: QReporting
16. (a) Decrease assets and decrease owner’s equity.Q Q Q Q Q
(b) Increase assets and decrease assets. Q Q Q Q
(c) Increase assets and increase owner’s equity.
Q Q Q Q Q
(d) Decrease assets and decrease liabilities. Q Q Q Q
LO4 QBT: QC Q Difficulty: QModerate Q TOT: Q3 Qmin. Q AACSB: QNone Q AICPA QFC: QReporting
Q Q Q Q Q Q Q Q Q QQ
Paul D. Kimmel All Chapters
Q Q Q Q Q Q
Complete Guide A+ Q Q
, CHAPTER 1 Q
Accounting in Action Q Q
Learning Objectives
Q
1. Identify the activities and users associated with accounting.
Q Q Q Q Q Q Q
2. Explain the building blocks of accounting: ethics, principles, and
Q Q Q Q Q Q Q Q
assumptions.
Q
3. State the accounting equation, and define its components.
Q Q Q Q Q Q Q
4. Analyze the effects of business transactions on the accounting equation.
Q Q Q Q Q Q Q Q Q
5. Describe the four financial statements and how they are prepared.
Q Q Q Q Q Q Q Q Q
*6. Explain the career opportunities in accounting.
Q Q Q Q Q
*Note: All asterisked Questions, Brief Exercises, Exercises, and Problems relate to material contained
Q Q Q Q Q Q Q Q Q Q Q Q
Qin the appendix to the chapter.
Q Q Q Q Q
, ANSWERS TO QUESTIONS Q Q
1. This is true. Virtually every organization and person in our society uses accounting information.
Q Q Q Q Q Q Q Q Q Q Q Q Q
QBusinesses, investors, creditors, government agencies, and not-for-profit organizations must use accounting
Q Q Q Q Q Q Q Q Q Q
information to operate effectively.
Q Q Q Q
LO1 QBT: QC Q Difficulty: QEasy Q TOT: Q2 Qmin. Q QAACSB: QNone Q QAICPA QFC: QReporting
2. Accounting is the process of identifying, recording, and communicating the economic events of an
Q Q Q Q Q Q Q Q Q Q Q Q Q
Qorganization to interested users of the information. The first activity of the accounting process is to identify
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qeconomic events that are relevant to a particular business. Once identified and measured, the events are
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
recorded to provide a history of the financial activities of the organization. Recording consists of keeping a
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qchronological diary of these measured events in an orderly and systematic manner. The information is
Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qcommunicated through the preparation and distribution of accounting reports, the most common of which
Q Q Q Q Q Q Q Q Q Q Q Q Q
Qare called financial statements. A vital element in the communication process is the accountant’s ability
Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qand responsibility to analyze and interpret the reported information.
Q Q Q Q Q Q Q Q
LO1 QBT: QC Q Difficulty: QEasy Q TOT: Q4 Qmin. Q AACSB: QNone Q AICPA QFC: QReporting
3. (a) Internal users are those who plan, organize, and run the business and therefore are officers and other
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
decision makers.
Q Q
(b) To assist management, managerial accounting provides internal reports. Examples include financial
Q Q Q Q Q Q Q Q Q Q
comparisons of operating alternatives, projections of income from new sales campaigns, and forecasts
Q Q Q Q Q Q Q Q Q Q Q Q Q
of cash needs for the next year.
Q Q Q Q Q Q Q
LO1 Q BT: QC Q Difficulty: QEasy Q TOT: Q2 Qmin. Q AACSB: QNone Q QAICPA QFC: QReporting
4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell owner- ship shares of a
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
company. Q
(b) Creditors use accounting information to evaluate the risks of granting credit or lending money.
Q Q Q Q Q Q Q Q Q Q Q Q Q
LO1 QBT: QC Q Difficulty: QEasy Q TOT: Q2 Qmin. Q QAACSB: QNone Q AICPA QFC: QReporting
5. This is false. Bookkeeping usually involves only the recording of economic events and therefore isjust one part of
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
the entire accounting process. Accounting, on the other hand, involves the entire process of identifying,
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
recording, and communicating economic events.
Q Q Q Q Q
LO1 QBT: QC Q Difficulty: QEasy Q TOT: Q2 Qmin. Q AACSB: QNone Q QAICPA QFC: QReporting
6. Benton Travel Agency should report the land at $90,000 on its December 31, 2022 balance
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q sheet. This Q
Qis true not only at the time the land is purchased, but also over the time the land
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q is held. In
Q Q Q
Q determining which measurement principle to use (historical cost or fair value) companies weigh
Q Q Q Q Q Q Q Q Q Q Q Q the factual
Q Q
Qnature of cost figures versus the relevance of fair value. In general, companies use historical
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q cost. Only in Q Q
situations where assets are actively traded do companies apply the fair value principle.
Q Q Q Q Q Q Q QQ Q Q Q Q Q
LO2 Q BT: QC Q Difficulty: QEasy Q TOT: Q4 Qmin. Q QAACSB: QNone Q AICPA QFC: QReporting
7. The monetary unit assumption requires that only transaction data that can be expressed in terms of money be
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qincluded in the accounting records. This assumption enables accounting to quantify (measure) economic events.
Q Q Q Q Q Q Q Q Q Q Q Q Q
LO2 Q BT: QK Q Difficulty: QEasy Q TOT: Q2 Qmin. Q QAACSB: QNone Q AICPA QFC: QReporting
8. The economic entity assumption requires that the activities of the entity be kept separate and
Q Q Q Q QQ Q Q Q Q Q Q Q Q Q Q distinct from the Q Q
activities of its owners and all other economic entities.
Q Q Q Q Q Q Q Q Q
LO2 QBT: QK Q Difficulty: QEasy Q TOT: Q2 Qmin. Q AACSB: QNone Q QAICPA QFC: QReporting
, Questions Chapter 1 (Continued)
Q Q Q
9. The three basic forms of business organizations are: (1) proprietorship, (2) partnership, and
Q Q Q QQ Q Q Q Q Q Q Q Q
(3) corporation.
Q
LO2 Q BT: QK Q Difficulty: QEasy Q TOT:1 Qmin. Q AACSB: QNone Q QAICPA QFC: Q Reporting
10. One of the advantages Helen Rupp would enjoy is that ownership of a corporation is represented by
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qtransferable shares of stock. This would allow Helen to raise money easily by selling a part of her
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Q ownership in the company. Another advantage is that because holders of the shares (stockholders) enjoy
Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qlimited liability; they are not personally liable for the debts of the corporate entity. Also, because
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qownership can be transferred without dissolving the corporation, the corporation enjoys an unlimited life.
Q Q Q Q Q Q Q Q Q Q Q Q Q
LO2 Q BT: QK Q Difficulty: QEasy Q TOT: Q4 Qmin. Q QAACSB: QNone Q QAICPA QFC: QReporting
11. The basic accounting equation is Assets = Liabilities + Owner’s Equity.
Q Q Q Q Q Q Q Q Q Q
LO3 QBT: QK Q Difficulty: QEasy Q TOT: Q1 Qmin. Q QAACSB: QNone Q QAICPA QFC: QMeasurement
12. (a) Assets are resources owned by a business. Liabilities are creditor claims against assets. Put more simply,
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
liabilities are existing debts and obligations. Owner’s equity is the ownership claim on total assets.
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
(b) Owner’s equity is affected by owner’s investments, drawings, revenues, and expenses.
Q Q Q Q Q Q Q Q Q Q
LO3 QBT: QC Q Difficulty: QEasy Q TOT: Q2 Qmin. Q AACSB: QNone Q QAICPA QFC: QReporting
13. The liabilities are: (b) Accounts payable and (g) Salaries and wages payable.
Q Q Q Q Q Q Q Q Q Q Q
LO3 QBT: QC Q Difficulty: QEasy Q TOT: Q1 Qmin. Q AACSB: QNone Q QAICPA QFC: QReporting
14. Yes, a business can enter into a transaction in which only the left side of the accounting equation is
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
Qaffected. An example would be a transaction where an increase in one asset is offset by a decrease in another
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
asset. An increase in the Equipment account which is offset by a decrease inthe Cash account is a specific
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
example.
Q
LO4 QBT: QC Q Difficulty: QModerate Q TOT: Q3 Qmin. Q AACSB: QNone Q AICPA QFC: QReporting
15. Business transactions are the economic events of the enterprise recorded by accountantsbecause they
Q Q Q Q Q Q Q Q Q Q Q Q
Qaffect the basic accounting equation.
Q Q Q Q
(a) The death of the owner of the company is not a business transaction as it does not affect ofthe
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
components of the basic accounting equation.
Q Q Q Q Q Q
(b) Supplies purchased on account is a business transaction as it affects the basic accounting
Q Q Q Q Q Q Q Q Q Q Q Q Q
equation.Q
(c) An employee being fired is not a business transaction as it does not affect any of the
QQ Q QQ QQ QQ QQ Q QQ QQ QQ QQ QQ QQ Q Q QQ
components of the basic accounting equation.
Q Q Q Q Q Q
(d) A withdrawal of cash by the owner from the business is a business transaction as it affects the basic
Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q
accounting equation.
Q Q
LO4 QBT: QC Q Difficulty: QModerate Q TOT: Q4 Qmin. Q AACSB: QNone Q AICPA QFC: QReporting
16. (a) Decrease assets and decrease owner’s equity.Q Q Q Q Q
(b) Increase assets and decrease assets. Q Q Q Q
(c) Increase assets and increase owner’s equity.
Q Q Q Q Q
(d) Decrease assets and decrease liabilities. Q Q Q Q
LO4 QBT: QC Q Difficulty: QModerate Q TOT: Q3 Qmin. Q AACSB: QNone Q AICPA QFC: QReporting
