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 by owners (assets the owner puts into the business) are recorded in a category called
owner‘s capital. Owner‘s drawings are the withdrawal of assets by the owner for personal use.
Revenues are the gross increase in owner‘s equity from business activities for the purpose of earning
income. Expenses are the costs of assets consumed or services used in the process of earning
revenue. Owner‘s equity is increased by an owner‘s investments and by revenues from business
operations. Owner‘s equity is decreased by an owner‘s withdrawals of assets and by expenses.
4. Analyze the effects of business transactions on the accounting equation. Each business transaction
must have a dual effect on the accounting equation. For example, if an individual asset increases,
there must be a corresponding (1) decrease in another asset, or (2) increase in a specific liability, or
(3) increase in owner's equity.
5. Describe the four financial statements and how they are prepared. An income statement presents
the revenues and expenses, and resulting net income or net loss for a specific period of time. An
owner's equity statement summarizes the changes in owner's equity for a specific period of time. A
balance sheet reports the assets, liabilities, and owner's equity at a specific date. A statement of cash
flows summarizes information about the cash inflows (receipts) and outflows (payments) for a specific
period of time.
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 by owners (assets the owner puts into the business) are recorded in a category called
owner‘s capital. Owner‘s drawings are the withdrawal of assets by the owner for personal use.
Revenues are the gross increase in owner‘s equity from business activities for the purpose of earning
income. Expenses are the costs of assets consumed or services used in the process of earning
revenue. Owner‘s equity is increased by an owner‘s investments and by revenues from business
operations. Owner‘s equity is decreased by an owner‘s withdrawals of assets and by expenses.
4. Analyze the effects of business transactions on the accounting equation. Each business transaction
must have a dual effect on the accounting equation. For example, if an individual asset increases,
there must be a corresponding (1) decrease in another asset, or (2) increase in a specific liability, or
(3) increase in owner's equity.
5. Describe the four financial statements and how they are prepared. An income statement presents
the revenues and expenses, and resulting net income or net loss for a specific period of time. An
owner's equity statement summarizes the changes in owner's equity for a specific period of time. A
balance sheet reports the assets, liabilities, and owner's equity at a specific date. A statement of cash
flows summarizes information about the cash inflows (receipts) and outflows (payments) for a specific
period of time.
