Test Bank for Financial Accounting using IFRS, 3rd Edition by Wong, Hanlon.pdf

Test Bank for Financial Accounting IFRS
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Edition 2nd Edition by Weygandt Kimmel
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and KiesoB




CHAPTER 1 ACCOUNTIN
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G IN ACTION
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CHAPTERBLEARNINGBOBJECTIVES

1. ExplainBwhatBaccountingBis.BAccountingBisBanBinformationBsystemBthatBidentifies,Brecords,Ban
dBcommunicatesBtheBeconomicBeventsBofBanBorganizationBtoBinterestedBusers.
2. IdentifyBtheBusersBandBusesBofBaccounting.BTheBmajorBusersBandBusesBofBaccountingBareBasBfoll
ows:B(a)BManagementBusesBaccountingBinformationBtoBplan,Borganize,BandBrunBtheBbusiness.
(b)BInvestorsB(owners)BdecideBwhetherBtoBbuy,Bhold,BorBsellBtheirBfinancialBinterestsBonBtheBbasi
sBofBaccountingBdata.B(c)BCreditorsB(suppliersBandBbankers)BevaluateBtheBrisksBofBgrantingBcredit
BorBlendingBmoneyBonBtheBbasis BofBaccountingBinformation.BOtherBgroupsBthatBuseBaccountingBi

nformationBareBtaxingBauthorities,BregulatoryBagencies,Bcustomers,BlaborBunions,BandBeconomic
Bplanners.



3. UnderstandBwhyBethicsBisBaBfundamentalBbusinessBconcept.BEthicsBareBtheBstandardsBofBconduc
tBbyBwhichBactionsBareBjudgedBasBrightBorBwrong.BEffectiveBfinancialBreportingBdependsBonBsou
ndBethicalBbehavior.
4. ExplainBaccountingBstandardsBandBtheBmeasurementBprinciples.BAccountingBisBbasedBonBstan
dards,BsuchBasBInternationalBFinancialBReportingBStandardsB(IFRS).BIFRSBgenerallyBusesBoneBofB
twoBmeasurementBprinciples,BtheBhistoricalBcostBprincipleBorBtheBfairBvalueBprinciple.BSelectionBo
fBwhichBprincipleBtoBfollowBgenerallyBrelatesBtoBtrade-
offsBbetweenBrelevanceBandBfaithfulBrepresentation.
5. ExplainBtheBmonetaryBunitBassumptionBandBtheBeconomicBentityBassumption.BTheBmonetaryB
unitBassumptionBrequiresBthatBcompaniesBincludeBinBtheBaccountingBrecordsBonlyBtransactionBdat
aBthatBcanBbeBexpressedBinBtermsBofBmoney.BTheBeconomicBentityBassumptionBrequiresBthatBtheB
activitiesBofBeachBeconomicBentityBbeBkeptBseparateBfromBtheBactivitiesBofBitsBownersBandBotherB
economicBentities.
6. StateBtheBaccountingBequation,BandBdefineBitsBcomponents.BTheBbasicBaccountingBequationBis:
BAssetsB=BLiabilitiesB+BEquity

,1B-B2 TestBBankBforBFinancialBAccounting:BIFRSBEdition,B2e




AssetsBareBresourcesBaBbusinessBowns.BLiabilitiesBareBcreditors'BclaimsBonBtotalBassets.BEquityBisBth
eBownershipBclaimBonBtotalBassets.
TheBexpandedBaccountingBequationBis:BAss
etsB=BLiabilitiesB+BShareBCapital—Ordinary
+BRevenuesB–BExpensesB–BDividends
ShareBcapital—
ordinaryBisBaffectedBwhenBtheBcompanyBissuesBnewBordinaryBsharesBinBexchangeBforBcash.B
RevenuesBareBincreasesBinBassetsBresultingBfromBincomeBearningBactivities.BExpensesBareBth
eBcostsBofBassetsBconsumedBorBservicesBusedBinBtheBprocessBofBearningBrevenue.BDividendsB
areBpaymentsBtheBcompanyBmakesBtoBitsBshareholders.
7. AnalyzeBtheBeffectsBofBbusinessBtransactionsBonBtheBaccountingBequation.BEachBbusinessBtran
sactionBmustBhaveBaBdualBeffectBonBtheBaccountingBequation.BForBexample,BifBanBindividualBasse
tBincreases,BthereBmustBbeBaBcorrespondingB(1)BdecreaseBinBanotherBasset,BorB(2)BincreaseBinBaBsp
ecificBliability,BorB(3)BincreaseBinBequity.
8. UnderstandBtheBfourBfinancialBstatementsBandBhowBtheyBareBprepared.BAnBincomeBstatementB
presentsBtheBrevenuesBandBexpenses,BandBresultingBnetBincomeBorBloss,BforBaBspecificBperiodBofBt
ime.BABretainedBearningsBstatementBsummarizesBtheBchangesBinBretainedBearningsBforBaBspecific
BperiodBofBtime.BABstatementBofBfinancialBpositionBreportsBtheBassets,Bliabilities,BandBequityBatBaB

specificBdate.BABstatementBofBcashBflowsBsummarizesBinformationBaboutBtheBcashBinflowsB(rece
ipts)BandBoutflowsB(payments)BforBaBspecificBperiodBofBtime.
a
9.BExplainBtheBcareerBopportunitiesBinBaccounting.BAccountingBoffersBmanyBdifferentBjobsBinBf
ieldsBsuchBasBpublicBandBprivateBaccounting,Bgovernment,BandBforensicBaccounting.BAccounti
ngBisBaBpopularBmajorBbecauseBthereBareBmanyBdifferentBtypesBofBjobs,BwithBunlimitedBpotenti
alBforBcareerBadvancement.


TRUE-FALSEBSTATEMENTS
1. OwnersBofBbusinessBfirmsBareBtheBonlyBpeopleBwhoBneedBaccountingBinformation.

Ans:BF LO1 BT:BK Difficulty:BEasy
TOT:B.5Bmin.B AACSB:BReflectiveBThinkingB AICPABBB:BCriticalBThinkingB AICPAB F
N:BReporting

2. TransactionsB thatB canB beB measuredB inB dollarsB andB centsB areB recordedB inB theB financialB i
nformationBsystem.

Ans:BTB LO1B BT:BKB Difficulty:BEasyB TOT:B.5BminB AACSB:BReflectiveBThinkingB AICPAB BB
:BCriticalBThinkingB AICPAB FN:BReporting




ForBInstructorBUseBOnly

, AccountingBinBAction 1B-B3



3. TheB hiringB ofB aB newB companyB presidentB isB anB economicB eventB recordedB byB theB financia
lBinformationBsystem.

Ans:BFB LO1B BT:BCB Difficulty:BEasyB TOT:B.5BminB AACSB:BReflectiveBThinkingB AICPAB BB:
BCritical BThinkingB AICPAB FN:BReporting




4. ManagementBofBaBbusinessBenterpriseBisBtheBmajorBexternalBuserBofBinformation.

Ans:BF LO2 BT:BK Difficulty:BEasy TOT:B.5BminB AACSB:BReflectiveBThinking
AICPABBB:BCriticalBThinkingB AICPAB FN:BReporting
5. AccountingBcommunicatesBfinancialBinformationBaboutBaBbusinessBenterpriseBtoBbothBinterna
lBandBexternalBusers.

Ans:BT LO2 BT:BK Difficulty:BEasy
TOT:B.5Bmin.B AACSB:BReflectiveBThinkingB AICPABBB:BCriticalBThinkingB AICPAB F
N:BReporting

6. AccountingBinformationBisBusedBonlyBbyBexternalBusersBwithBaBfinancialBinterestBinBaBbusines
sBenterprise.

Ans:BFB LO2B BT:BCB Difficulty:BEasyB TOT:B.5Bmin.B AACSB:BReflectiveBThinkingB AICPAB BB:
BCritical BThinkingB AICPAB FN:BReporting




7. FinancialB statementsB areB theB majorB meansB ofB communicatingB accountingB informationB to
BinterestedBparties.




Ans:BTB LO2B BT:BKB Difficulty:BEasyB TOT:B.5Bmin.BAACSB:BReflectiveBThinkingB AICPAB BB:
BCritical BThinkingB AICPAB FN:BReporting




8. BookkeepingB andB accountingB areB oneB andB theB sameB becauseB theB bookkeepingB functionB
includesBtheBaccountingBprocess.

Ans:BF LO2 BT:BC Difficulty:BEasy TOT:B.5Bmin. AACSB:BReflectiveBThinking
AICPABBB:BCriticalBThinkingB AICPAB FN:BReporting

9. TheBoriginsBofBaccountingBareBattributedBtoBLucaBPacioli,BaBfamousBmathematician.

Ans:BT LO2 BT:BK Difficulty:BEasy
TOT:B.5Bmin.B AACSB:BReflectiveBThinkingB AICPABBB:BCriticalBThinkingB AICPAB F
N:BReporting

, ForBInstructorBUseBOnly