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 fby fowners f(assets fthe fowner fputs finto fthe fbusiness) fare frecorded fin fa fcategory
fcalled fowner‘s fcapital. fOwner‘s fdrawings fare fthe fwithdrawal fof fassets fby fthe fowner ffor
fpersonal fuse. fRevenues fare fthe fgross fincrease fin fowner‘s fequity ffrom fbusiness factivities ffor fthe
fpurpose fof fearning fincome. fExpenses fare fthe fcosts fof fassets fconsumed for fservices fused fin f the
f process f of f earning f revenue. f Owner‘s f equity f is f increased f by f an f owner‘s f investments fand
fby frevenues ffrom fbusiness foperations. fOwner‘s fequity fis fdecreased fby fan fowner‘s fwithdrawals
fof fassets fand fby fexpenses.
4. Analyze fthe feffects fof fbusiness ftransactions fon fthe faccounting fequation. fEach fbusiness
ftransaction fmust fhave fa fdual feffect fon fthe faccounting fequation. fFor fexample, fif fan findividual
fasset fincreases, fthere fmust fbe fa fcorresponding f(1) fdecrease fin fanother fasset, for f(2) fincrease fin
fa fspecific fliability, for f(3) fincrease fin fowner's fequity.
5. Describe fthe ffour ffinancial fstatements fand fhow fthey fare fprepared. fAn fincome fstatement
fpresents fthe frevenues fand fexpenses, fand fresulting fnet fincome for fnet f loss ffor fa f specific
fperiod fof ftime. fAn fowner's fequity fstatement fsummarizes fthe fchanges fin fowner's fequity ffor fa
fspecific fperiod fof ftime. fA fbalance fsheet freports fthe fassets, fliabilities, fand fowner's fequity fat fa
fspecific fdate. fA fstatement fof fcash fflows fsummarizes finformation fabout fthe fcash finflows
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 fby fowners f(assets fthe fowner fputs finto fthe fbusiness) fare frecorded fin fa fcategory
fcalled fowner‘s fcapital. fOwner‘s fdrawings fare fthe fwithdrawal fof fassets fby fthe fowner ffor
fpersonal fuse. fRevenues fare fthe fgross fincrease fin fowner‘s fequity ffrom fbusiness factivities ffor fthe
fpurpose fof fearning fincome. fExpenses fare fthe fcosts fof fassets fconsumed for fservices fused fin f the
f process f of f earning f revenue. f Owner‘s f equity f is f increased f by f an f owner‘s f investments fand
fby frevenues ffrom fbusiness foperations. fOwner‘s fequity fis fdecreased fby fan fowner‘s fwithdrawals
fof fassets fand fby fexpenses.
4. Analyze fthe feffects fof fbusiness ftransactions fon fthe faccounting fequation. fEach fbusiness
ftransaction fmust fhave fa fdual feffect fon fthe faccounting fequation. fFor fexample, fif fan findividual
fasset fincreases, fthere fmust fbe fa fcorresponding f(1) fdecrease fin fanother fasset, for f(2) fincrease fin
fa fspecific fliability, for f(3) fincrease fin fowner's fequity.
5. Describe fthe ffour ffinancial fstatements fand fhow fthey fare fprepared. fAn fincome fstatement
fpresents fthe frevenues fand fexpenses, fand fresulting fnet fincome for fnet f loss ffor fa f specific
fperiod fof ftime. fAn fowner's fequity fstatement fsummarizes fthe fchanges fin fowner's fequity ffor fa
fspecific fperiod fof ftime. fA fbalance fsheet freports fthe fassets, fliabilities, fand fowner's fequity fat fa
fspecific fdate. fA fstatement fof fcash fflows fsummarizes finformation fabout fthe fcash finflows
