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 the accounting equation, and define its components. The basic accounting equation is:
Assets = Liabilities + Owner's Equity
Assets are resources a business owns. Liabilities are creditorship claims on total assets.Owner's
equity is the ownership claim on total assets.
The expanded accounting equation is:
Assets Liabilities + Owner's Capital Owner's Drawings + Revenues
Expenses
Investments sby sowners s(assets sthe sowner sputs sinto sthe sbusiness) sare srecorded sin sa scategory
scalled sowner‘s scapital. sOwner‘s sdrawings sare sthe swithdrawal sof sassets sby sthe sowner sfor
spersonal suse. sRevenues sare sthe sgross sincrease sin sowner‘s sequity sfrom sbusiness sactivities sfor
sthe spurpose sof searning sincome. sExpenses sare sthe scosts sof sassets sconsumed sor sservices sused
sin s the s process s of s earning s revenue. s Owner‘s s equity s is s increased s by s an s owner‘s
s investments sand sby srevenues sfrom sbusiness soperations. sOwner‘s sequity sis sdecreased sby san
sowner‘s swithdrawals sof sassets sand sby sexpenses.
4. Analyze sthe seffects sof sbusiness stransactions son sthe saccounting sequation. sEach sbusiness
stransaction smust shave sa sdual seffect son sthe saccounting sequation. sFor sexample, sif san sindividual
sasset sincreases, sthere smust sbe sa scorresponding s(1) sdecrease sin sanother sasset, sor s(2) sincrease
sin sa sspecific sliability, sor s(3) sincrease sin sowner's sequity.
5. Describe sthe sfour sfinancial sstatements sand show sthey sare sprepared. sAn sincome sstatement
spresents sthe srevenues sand sexpenses, sand sresulting snet sincome sor snet s loss sfor sa s specific
speriod sof stime. sAn sowner's sequity sstatement ssummarizes sthe schanges sin sowner's sequity sfor sa
sspecific speriod sof stime. sA sbalance ssheet sreports sthe sassets, sliabilities, sand sowner's sequity sat sa
sspecific sdate. sA sstatement sof scash sflows ssummarizes sinformation sabout sthe scash sinflows
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 the accounting equation, and define its components. The basic accounting equation is:
Assets = Liabilities + Owner's Equity
Assets are resources a business owns. Liabilities are creditorship claims on total assets.Owner's
equity is the ownership claim on total assets.
The expanded accounting equation is:
Assets Liabilities + Owner's Capital Owner's Drawings + Revenues
Expenses
Investments sby sowners s(assets sthe sowner sputs sinto sthe sbusiness) sare srecorded sin sa scategory
scalled sowner‘s scapital. sOwner‘s sdrawings sare sthe swithdrawal sof sassets sby sthe sowner sfor
spersonal suse. sRevenues sare sthe sgross sincrease sin sowner‘s sequity sfrom sbusiness sactivities sfor
sthe spurpose sof searning sincome. sExpenses sare sthe scosts sof sassets sconsumed sor sservices sused
sin s the s process s of s earning s revenue. s Owner‘s s equity s is s increased s by s an s owner‘s
s investments sand sby srevenues sfrom sbusiness soperations. sOwner‘s sequity sis sdecreased sby san
sowner‘s swithdrawals sof sassets sand sby sexpenses.
4. Analyze sthe seffects sof sbusiness stransactions son sthe saccounting sequation. sEach sbusiness
stransaction smust shave sa sdual seffect son sthe saccounting sequation. sFor sexample, sif san sindividual
sasset sincreases, sthere smust sbe sa scorresponding s(1) sdecrease sin sanother sasset, sor s(2) sincrease
sin sa sspecific sliability, sor s(3) sincrease sin sowner's sequity.
5. Describe sthe sfour sfinancial sstatements sand show sthey sare sprepared. sAn sincome sstatement
spresents sthe srevenues sand sexpenses, sand sresulting snet sincome sor snet s loss sfor sa s specific
speriod sof stime. sAn sowner's sequity sstatement ssummarizes sthe schanges sin sowner's sequity sfor sa
sspecific speriod sof stime. sA sbalance ssheet sreports sthe sassets, sliabilities, sand sowner's sequity sat sa
sspecific sdate. sA sstatement sof scash sflows ssummarizes sinformation sabout sthe scash sinflows
