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+

Solution Manual for Accounting Principles 14th Edition by Jerry J.
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Weygandt, Paul D. Kimmel All Chapters
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Complete Guide A+ fg fg

, CHAPTER 1 fg




Accounting in Action fg fg




Learning Objectivesfg




1. Identify the activities and users associated with accounting.
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2. Explain the building blocks of accounting: ethics, principles, and
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assumptions.
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3. State the accounting equation, and define its components.
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4. Analyze the effects of business transactions on the accounting equation.
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5. Describe the four financial statements and how they are prepared.
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*6. Explain the career opportunities in accounting.
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*Note: All asterisked Questions, Brief Exercises, Exercises, and Problems relate to
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fgmaterial contained in the appendix to the chapter.
f g fg fg fg fg fg fg

, ANSWERS TO QUESTIONS fg fg




1. This is true. Virtually every organization and person in our society uses accounting
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information.
f g Businesses, investors, creditors, government agencies, and not-for-profit
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organizations must use accounting information to operate effectively.
fg fg fg f g fg fg fg fg

LO1 fgBT: fgC f g Difficulty: fgEasy fg TOT: fg2 fgmin. fg fgAACSB: fgNone fg fgAICPA fgFC: fgReporting


2. Accounting is the process of identifying, recording, and communicating the economic
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events of an organization to interested users of the information. The first activity of the
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accounting process is to
fg identify economic events that are relevant to a particular
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business. Once identified and measured,
fg the events are recorded to provide a history of
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the financial activities of the organization. Recording consists of keeping a chronological
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diary of these measured events in an orderly and systematic
f g f g f g manner. The f g f g f g f g fg f g f g f g fg


information is communicated through the preparation and distribution of accounting
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reports, the most common of which are called financial statements. A vital element in
f g fg fg fg fg fg fg fg fg fg fg fg fg fg


the communication process is the accountant’s ability and responsibility to analyze
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and interpret the reported information.
f g f g f g f g fg

LO1 fgBT: fgC f g Difficulty: fgEasy f g TOT: fg4 fgmin. f g AACSB: fgNone f g AICPA fgFC: fgReporting


3. (a) Internal users are those who plan, organize, and run the business and therefore are
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officers and other decision makers.
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(b) To assist management, managerial accounting provides internal reports. Examples include
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financial comparisons of operating alternatives, projections of income from new
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sales campaigns, and forecasts of cash needs for the next year.
fg f g fg fg fg fg fg fg fg fg fg

LO1 f g BT: fgC f g Difficulty: fgEasy f g TOT: fg2 fgmin. f g AACSB: fgNone fg fgAICPA fgFC: fgReporting


4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell owner-
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ship shares of a company.
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(b) Creditors use accounting information to evaluate the risks of granting credit or lending money.
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LO1 fgBT: fgC f g Difficulty: fgEasy f g TOT: fg2 fgmin. fg fgAACSB: fgNone f g AICPA fgFC: fgReporting


5. This is false. Bookkeeping usually involves only the recording of economic events and therefore
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isjust one part of the entire accounting process. Accounting, on the other hand, involves the
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entire process of identifying, recording, and communicating economic events.
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LO1 fgBT: fgC f g Difficulty: fgEasy f g TOT: fg2 fgmin. f g AACSB: fgNone fg fgAICPA fgFC: fgReporting


6. Benton Travel Agency should report the land at $90,000 on its December 31, 2022
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balance sheet.
fg This is true not only at the time the land is purchased, but also
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over the time the land is held. In determining which measurement principle to use
f g fg fg fg f g f g f g fg f g fg fg fg fg fg


(historical cost or fair value) companies weigh the
fg factual nature of cost figures versus
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the relevance of fair value. In general, companies use historical
fg fg cost. Only in situations
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where assets are actively traded do companies apply the fair value principle.
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LO2 f g BT: fgC f g Difficulty: fgEasy f g TOT: fg4 fgmin. fg fgAACSB: fgNone f g AICPA fgFC: fgReporting


7. The monetary unit assumption requires that only transaction data that can be expressed in
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terms of money be included in the accounting records. This assumption enables accounting
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to quantify (measure) economic events.
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LO2 f g BT: fgK f g Difficulty: fgEasy f g TOT: fg2 fgmin. fg fgAACSB: fgNone f g AICPA fgFC: fgReporting


8. The economic entity assumption requires that the activities of the entity be kept separate and
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f distinct from the activities of its owners and all other economic entities.
g fg fg fg fg fg fg fg fg fg fg fg

LO2 fgBT: fgK f g Difficulty: fgEasy f g TOT: fg2 fgmin. f g AACSB: fgNone fg fgAICPA fgFC: fgReporting

, Questions Chapter 1 (Continued) fg fg fg




9. The three basic forms of business organizations are: (1) proprietorship, (2)
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partnership, and
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(3) corporation.
f g

LO2 f g BT: fgK f g Difficulty: fgEasy f g TOT:1 fgmin. f g AACSB: fgNone fg fgAICPA fgFC: fgReporting


10. One of the advantages Helen Rupp would enjoy is that ownership of a corporation is
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represented by transferable shares of stock. This would allow Helen to raise money
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fgeasily by selling a part of her ownership in the company. Another advantage is that
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fgbecause holders of the shares (stockholders)
fg enjoy limited liability; they are not fg fg fg fg f g f g fg f g fg f g


personally liable for the debts of the corporate entity. Also,
fg fg because ownership can f g f g fg f g f g fg fg f g f g fg f g


fgbe transferred without dissolving the corporation, the corporation enjoys an unlimited
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life.
fg

LO2 f g BT: fgK f g Difficulty: fgEasy f g TOT: fg4 fgmin. fg fgAACSB: fgNone fg fgAICPA fgFC: fgReporting


11. The basic accounting equation is Assets = Liabilities + Owner’s Equity.
fg fg fg fg fg fg fg fg fg fg

LO3 fgBT: fgK f g Difficulty: fgEasy f g TOT: fg1 fgmin. fg fgAACSB: fgNone fg fgAICPA fgFC: fgMeasurement


12. (a) Assets are resources owned by a business. Liabilities are creditor claims against assets. Put
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more simply, liabilities are existing debts and obligations. Owner’s equity is the
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ownership claim on
fg total assets. f g fg f g fg


(b) Owner’s equity is affected by owner’s investments, drawings, revenues, and expenses.
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LO3 fgBT: fgC f g Difficulty: fgEasy f g TOT: fg2 fgmin. f g AACSB: fgNone fg fgAICPA fgFC: fgReporting


13. The liabilities are: (b) Accounts payable and (g) Salaries and wages payable.
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LO3 fgBT: fgC f g Difficulty: fgEasy f g TOT: fg1 fgmin. f g AACSB: fgNone fg fgAICPA fgFC: fgReporting


14. Yes, a business can enter into a transaction in which only the left side of the accounting
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equation is affected. An example would be a transaction where an increase in one asset is
fg f g f g fg fg fg fg fg fg fg fg fg fg fg fg fg


offset by a decrease in another asset. An increase in the Equipment account which is offset by
fg fg fg fg fg f g fg fg fg fg fg fg fg fg fg fg fg


a decrease inthe Cash account is a specific example.
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LO4 fgBT: fgC f g Difficulty: fgModerate f g TOT: fg3 fgmin. f g AACSB: fgNone f g AICPA fgFC: fgReporting


15. Business transactions are the economic events of the enterprise recorded by
fg fg fg fg fg fg fg fg fg fg


accountantsbecause
fg they affect the basic accounting equation. f g fg fg fg fg fg



(a) The death of the owner of the company is not a business transaction as it does not
fg fg fg fg fg fg fg fg fg fg fg fg fg fg fg fg


affect ofthe components of the basic accounting equation.
fg fg f g fg fg fg fg fg


(b) Supplies purchased on account is a business transaction as it affects the basic
fg fg fg fg fg fg fg fg fg fg fg fg


accounting equation.
fg f g


(c) An employee being fired is not a business transaction as it does not affect
fg fg f g fg fg fg fg fg fg fg fg f g fg fg fg fg fg fg fg fg fg fg fg fg


any of the components of the basic accounting equation.
fg f g fg f g f g fg fg fg fg fg


(d) A withdrawal of cash by the owner from the business is a business transaction as it affects
fg fg fg fg fg fg fg fg fg fg fg fg fg fg fg fg


the basic accounting equation.
fg f g fg fg

LO4 fgBT: fgC f g Difficulty: fgModerate f g TOT: fg4 fgmin. f g AACSB: fgNone f g AICPA fgFC: fgReporting


16. (a) Decrease assets and decrease owner’s fg fg fg fg


(b) equity. assets and decrease assets.
Increase
fg fg fg fg fg


(c) Increase assets and increase owner’s equity.
fg fg fg fg fg


(d) Decrease assets and decrease liabilities. fg fg fg fg

LO4 fgBT: fgC f g Difficulty: fgModerate f g TOT: fg3 fgmin. f g AACSB: fgNone f g AICPA fgFC: fgReporting