TESTBANK
Accounting Principles 14th Edition
by Jerry J. Weygandt, Paul D. Kimmel
Chapters 1 - 27, Complete
,TABLE OF CONTENTS
1 Accounting in Action
2 The Recording Process
3 Adjusting the Accounts
4 Completing the Accounting Cycle
5 Accounting for Merchandising Operations
6 Inventories
7 Accounting Information Systems
8 Fraud, Internal Control, and Cash
9 Accounting for Receivables
10 Plant Assets, Natural Resources, and Intangible Assets
11 Current Liabilities and Payroll Accounting
12 Accounting for Partnerships
13 Corporations: Organization and Capital Stock
Transactions
14 Corporations: Dividends, Retained Earnings, and Income
,Reporting
15 Long-Term Liabilities
16 Investments
17 Statement of Cash Flows
18 Financial Analysis: The Big Picture
19 Managerial Accounting
20 Job Order Costing
21 Process Costing
22 Cost-Volume-Profit
23 Incremental Analysis
24 Budgetary Planning
25 Budgetary Control and Responsibility Accounting
26 Standard Costs and Balanced Scorecard
27 Planning for Capital Investments
, CHAPTER 1
ACCOUNTING IN ACTION
CHAPTER LEARNING OBJECTIVES
1. Identify the activities and users associated with accounting. Accounting is an information system
that identifies, records, and communicates the economic events of an organization to interested
users. The major users and uses of accounting are as follows: (a) Management uses accounting
information to plan, organize, and run the business. (b) Investors (owners) decide whether to buy,
hold, or sell their financial interests on the basis of accounting data. (c) Creditors (suppliers and
bankers) evaluate the risks of granting credit or lending money on the basis of accounting
information. Other groups that use accounting information are taxing authorities, regulatory agencies,
customers, and labor unions.
2. Explain the building blocks of accounting: ethics, principles, and assumptions. Ethics are the
standards of conduct by which actions are judged as right or wrong. Effective financial reporting
depends on sound ethical behavior.
Generally accepted accounting principles are a common set of standards used by accountants. The
primary accounting standard-setting body in the United States is the Financial Accounting Standards
Board.
3. State ithe iaccounting iequation, iand idefine iits icomponents. iThe ibasic i accounting iequation iis:
Assets i= iLiabilities i+ iOwner's iEquity
Assets i are i resources i a i business i owns. i Liabilities i are i creditorship i claims i on i total
i assets.iOwner's iequity iis ithe iownership iclaim ion itotal iassets.
The iexpanded iaccounting iequation iis:
Assets i iLiabilities i+ iOwner's iCapital i iOwner's iDrawings i+ iRevenues i
Expenses
Investments iby iowners i(assets ithe iowner iputs iinto ithe ibusiness) iare irecorded iin ia icategory icalled
iowner‘s icapital. iOwner‘s idrawings iare ithe iwithdrawal iof iassets iby ithe iowner ifor ipersonal iuse.
iRevenues iare ithe igross iincrease iin iowner‘s iequity ifrom ibusiness iactivities ifor ithe ipurpose iof
iearning iincome. iExpenses iare ithe icosts iof iassets iconsumed ior iservices iused iin i the i process i of
i earning i revenue. i Owner‘s i equity i is i increased i by i an i owner‘s i investments iand iby irevenues
ifrom ibusiness ioperations. iOwner‘s iequity iis idecreased iby ian iowner‘s iwithdrawals iof iassets iand
iby iexpenses.
4. Analyze ithe ieffects iof ibusiness itransactions ion ithe iaccounting iequation. iEach
ibusiness itransaction imust ihave ia idual ieffect ion ithe iaccounting iequation. iFor iexample, iif ian
iindividual iasset iincreases, ithere imust ibe ia icorresponding i(1) idecrease iin ianother iasset, ior i(2)
iincrease iin ia ispecific iliability, ior i(3) iincrease iin iowner's iequity.
5. Describe ithe ifour ifinancial istatements iand ihow ithey iare iprepared. iAn iincome istatement
ipresents ithe irevenues iand iexpenses, iand iresulting inet iincome ior inet i loss ifor ia i specific iperiod
iof itime. iAn iowner's iequity istatement isummarizes ithe ichanges iin iowner's iequity ifor ia ispecific
iperiod iof itime. iA ibalance isheet ireports ithe iassets, iliabilities, iand iowner's iequity iat ia ispecific
idate. iA istatement iof icash iflows isummarizes iinformation iabout ithe icash iinflows i(receipts) iand
Accounting Principles 14th Edition
by Jerry J. Weygandt, Paul D. Kimmel
Chapters 1 - 27, Complete
,TABLE OF CONTENTS
1 Accounting in Action
2 The Recording Process
3 Adjusting the Accounts
4 Completing the Accounting Cycle
5 Accounting for Merchandising Operations
6 Inventories
7 Accounting Information Systems
8 Fraud, Internal Control, and Cash
9 Accounting for Receivables
10 Plant Assets, Natural Resources, and Intangible Assets
11 Current Liabilities and Payroll Accounting
12 Accounting for Partnerships
13 Corporations: Organization and Capital Stock
Transactions
14 Corporations: Dividends, Retained Earnings, and Income
,Reporting
15 Long-Term Liabilities
16 Investments
17 Statement of Cash Flows
18 Financial Analysis: The Big Picture
19 Managerial Accounting
20 Job Order Costing
21 Process Costing
22 Cost-Volume-Profit
23 Incremental Analysis
24 Budgetary Planning
25 Budgetary Control and Responsibility Accounting
26 Standard Costs and Balanced Scorecard
27 Planning for Capital Investments
, CHAPTER 1
ACCOUNTING IN ACTION
CHAPTER LEARNING OBJECTIVES
1. Identify the activities and users associated with accounting. Accounting is an information system
that identifies, records, and communicates the economic events of an organization to interested
users. The major users and uses of accounting are as follows: (a) Management uses accounting
information to plan, organize, and run the business. (b) Investors (owners) decide whether to buy,
hold, or sell their financial interests on the basis of accounting data. (c) Creditors (suppliers and
bankers) evaluate the risks of granting credit or lending money on the basis of accounting
information. Other groups that use accounting information are taxing authorities, regulatory agencies,
customers, and labor unions.
2. Explain the building blocks of accounting: ethics, principles, and assumptions. Ethics are the
standards of conduct by which actions are judged as right or wrong. Effective financial reporting
depends on sound ethical behavior.
Generally accepted accounting principles are a common set of standards used by accountants. The
primary accounting standard-setting body in the United States is the Financial Accounting Standards
Board.
3. State ithe iaccounting iequation, iand idefine iits icomponents. iThe ibasic i accounting iequation iis:
Assets i= iLiabilities i+ iOwner's iEquity
Assets i are i resources i a i business i owns. i Liabilities i are i creditorship i claims i on i total
i assets.iOwner's iequity iis ithe iownership iclaim ion itotal iassets.
The iexpanded iaccounting iequation iis:
Assets i iLiabilities i+ iOwner's iCapital i iOwner's iDrawings i+ iRevenues i
Expenses
Investments iby iowners i(assets ithe iowner iputs iinto ithe ibusiness) iare irecorded iin ia icategory icalled
iowner‘s icapital. iOwner‘s idrawings iare ithe iwithdrawal iof iassets iby ithe iowner ifor ipersonal iuse.
iRevenues iare ithe igross iincrease iin iowner‘s iequity ifrom ibusiness iactivities ifor ithe ipurpose iof
iearning iincome. iExpenses iare ithe icosts iof iassets iconsumed ior iservices iused iin i the i process i of
i earning i revenue. i Owner‘s i equity i is i increased i by i an i owner‘s i investments iand iby irevenues
ifrom ibusiness ioperations. iOwner‘s iequity iis idecreased iby ian iowner‘s iwithdrawals iof iassets iand
iby iexpenses.
4. Analyze ithe ieffects iof ibusiness itransactions ion ithe iaccounting iequation. iEach
ibusiness itransaction imust ihave ia idual ieffect ion ithe iaccounting iequation. iFor iexample, iif ian
iindividual iasset iincreases, ithere imust ibe ia icorresponding i(1) idecrease iin ianother iasset, ior i(2)
iincrease iin ia ispecific iliability, ior i(3) iincrease iin iowner's iequity.
5. Describe ithe ifour ifinancial istatements iand ihow ithey iare iprepared. iAn iincome istatement
ipresents ithe irevenues iand iexpenses, iand iresulting inet iincome ior inet i loss ifor ia i specific iperiod
iof itime. iAn iowner's iequity istatement isummarizes ithe ichanges iin iowner's iequity ifor ia ispecific
iperiod iof itime. iA ibalance isheet ireports ithe iassets, iliabilities, iand iowner's iequity iat ia ispecific
idate. iA istatement iof icash iflows isummarizes iinformation iabout ithe icash iinflows i(receipts) iand
