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 dby downers d(assets dthe downer dputs dinto dthe dbusiness) dare drecorded din da
dcategory dcalled downer‘s dcapital. dOwner‘s ddrawings dare dthe dwithdrawal dof dassets dby dthe
downer dfor dpersonal duse. dRevenues dare dthe dgross dincrease din downer‘s dequity dfrom dbusiness
dactivities dfor dthe dpurpose dof dearning dincome. dExpenses dare dthe dcosts dof dassets dconsumed
dor dservices dused din d the d process d of d earning d revenue. d Owner‘s d equity d is d increased d by
d an d owner‘s d investments dand dby drevenues dfrom dbusiness doperations. dOwner‘s dequity dis
ddecreased dby dan downer‘s dwithdrawals dof dassets dand dby dexpenses.
4. Analyze dthe deffects dof dbusiness dtransactions don dthe daccounting dequation. dEach dbusiness
dtransaction dmust dhave da ddual deffect don dthe daccounting dequation. dFor dexample, dif dan
dindividual dasset dincreases, dthere dmust dbe da dcorresponding d(1) ddecrease din danother dasset, dor
d(2) dincrease din da dspecific dliability, dor d(3) dincrease din downer's dequity.
5. Describe dthe dfour dfinancial dstatements dand dhow dthey dare dprepared. dAn dincome dstatement
dpresents dthe drevenues dand dexpenses, dand dresulting dnet dincome dor dnet d loss dfor da d specific
dperiod dof dtime. dAn downer's dequity dstatement dsummarizes dthe dchanges din downer's dequity dfor
da dspecific dperiod dof dtime. dA dbalance dsheet dreports dthe dassets, dliabilities, dand downer's dequity
dat da dspecific ddate. dA dstatement dof dcash dflows dsummarizes dinformation dabout dthe dcash
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 dby downers d(assets dthe downer dputs dinto dthe dbusiness) dare drecorded din da
dcategory dcalled downer‘s dcapital. dOwner‘s ddrawings dare dthe dwithdrawal dof dassets dby dthe
downer dfor dpersonal duse. dRevenues dare dthe dgross dincrease din downer‘s dequity dfrom dbusiness
dactivities dfor dthe dpurpose dof dearning dincome. dExpenses dare dthe dcosts dof dassets dconsumed
dor dservices dused din d the d process d of d earning d revenue. d Owner‘s d equity d is d increased d by
d an d owner‘s d investments dand dby drevenues dfrom dbusiness doperations. dOwner‘s dequity dis
ddecreased dby dan downer‘s dwithdrawals dof dassets dand dby dexpenses.
4. Analyze dthe deffects dof dbusiness dtransactions don dthe daccounting dequation. dEach dbusiness
dtransaction dmust dhave da ddual deffect don dthe daccounting dequation. dFor dexample, dif dan
dindividual dasset dincreases, dthere dmust dbe da dcorresponding d(1) ddecrease din danother dasset, dor
d(2) dincrease din da dspecific dliability, dor d(3) dincrease din downer's dequity.
5. Describe dthe dfour dfinancial dstatements dand dhow dthey dare dprepared. dAn dincome dstatement
dpresents dthe drevenues dand dexpenses, dand dresulting dnet dincome dor dnet d loss dfor da d specific
dperiod dof dtime. dAn downer's dequity dstatement dsummarizes dthe dchanges din downer's dequity dfor
da dspecific dperiod dof dtime. dA dbalance dsheet dreports dthe dassets, dliabilities, dand downer's dequity
dat da dspecific ddate. dA dstatement dof dcash dflows dsummarizes dinformation dabout dthe dcash
