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 l Assets
11 l Current l Liabilities l and l Payroll l Accounting
12 l Accounting l for l Partnerships
13 l Corporations: l Organization l and l Capital l Stock
l Transactions
14 l Corporations: l Dividends, l Retained l Earnings, l and l Income
,l Reporting
15 l Long-Term l Liabilities
16 l Investments
17 l Statement l of l Cash l Flows
18 l Financial l Analysis: l The l Big l Picture l
19 l Managerial l Accounting l
20 l Job l Order l Costing l
21 l Process l Costing l
22 l Cost-Volume-Profit l
23 l Incremental l Analysis l
24 l Budgetary l Planning
25 l Budgetary l Control l and l Responsibility l Accounting l
26 l Standard l Costs l and l Balanced l Scorecard l
27 l Planning l for l Capital l Investments l
, CHAPTER 1 l
ACCOUNTING lIN lACTION
CHAPTER lLEARNING lOBJECTIVES
1. Identify lthe lactivities land lusers lassociated lwith laccounting. lAccounting lis lan linformation lsystem
lthat lidentifies, lrecords, land lcommunicates lthe leconomic levents lof lan lorganization lto linterested
lusers. lThe lmajor lusers land luses lof laccounting lare las lfollows: l(a) lManagement luses laccounting
linformation lto lplan, lorganize, land lrun lthe lbusiness. l(b) lInvestors l(owners) ldecide lwhether lto lbuy,
lhold, lor lsell ltheir lfinancial linterests lon lthe lbasis lof laccounting ldata. l(c) lCreditors l(suppliers land
lbankers) levaluate lthe lrisks lof lgranting lcredit lor llending l money l on lthe lbasis lof laccounting
linformation. lOther lgroups lthat luse laccounting linformation lare ltaxing lauthorities, lregulatory
lagencies, lcustomers, land llabor lunions.
2. Explain lthe lbuilding lblocks lof laccounting: lethics, lprinciples, land lassumptions. lEthics lare lthe
lstandards lof lconduct lby lwhich lactions lare ljudged las lright lor lwrong. lEffective lfinancial lreporting
ldepends lon lsound lethical lbehavior.
Generally laccepted laccounting lprinciples lare la lcommon lset lof lstandards lused lby laccountants. lThe
lprimary laccounting lstandard-setting lbody lin lthe lUnited lStates lis lthe lFinancial lAccounting
lStandards lBoard.
3. State lthe laccounting lequation, land ldefine lits lcomponents. lThe lbasic l accounting lequation lis:
Assets l= lLiabilities l+ lOwner's lEquity
Assets l are l resources l a l business l owns. l Liabilities l are l creditorship l claims l on l total l assets.
lOwner's lequity lis lthe lownership lclaim lon ltotal lassets.
The lexpanded laccounting lequation lis:
Assets l lLiabilities l+ lOwner's lCapital l lOwner's lDrawings l+ lRevenues l
Expenses
Investments lby lowners l(assets lthe lowner lputs linto lthe lbusiness) lare lrecorded lin la lcategory lcalled
lowner‘s lcapital. lOwner‘s ldrawings lare lthe lwithdrawal lof lassets lby lthe lowner lfor lpersonal luse.
lRevenues lare lthe lgross lincrease lin lowner‘s lequity lfrom lbusiness lactivities lfor lthe lpurpose lof
learning lincome. lExpenses lare lthe lcosts lof lassets lconsumed lor lservices lused lin l the l process l of
l earning l revenue. l Owner‘s l equity l is l increased l by l an l owner‘s l investments land lby lrevenues
lfrom lbusiness loperations. lOwner‘s lequity lis ldecreased lby lan lowner‘s lwithdrawals lof lassets land
lby lexpenses.
4. Analyze lthe leffects lof lbusiness ltransactions lon lthe laccounting lequation. lEach lbusiness
ltransaction lmust lhave la ldual leffect lon lthe laccounting lequation. lFor lexample, lif lan lindividual lasset
lincreases, lthere lmust lbe la lcorresponding l(1) ldecrease lin lanother lasset, lor l(2) lincrease lin la
lspecific lliability, lor l(3) lincrease lin lowner's lequity.
5. Describe lthe lfour lfinancial lstatements land lhow lthey lare lprepared. lAn lincome lstatement
lpresents lthe lrevenues land lexpenses, land lresulting lnet lincome lor lnet l loss lfor la l specific lperiod
lof ltime. lAn lowner's lequity lstatement lsummarizes lthe lchanges lin lowner's lequity lfor la lspecific
lperiod lof ltime. lA lbalance lsheet lreports lthe lassets, lliabilities, land lowner's lequity lat la lspecific
ldate. lA lstatement lof lcash lflows lsummarizes linformation labout lthe lcash linflows l(receipts) land
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 l Assets
11 l Current l Liabilities l and l Payroll l Accounting
12 l Accounting l for l Partnerships
13 l Corporations: l Organization l and l Capital l Stock
l Transactions
14 l Corporations: l Dividends, l Retained l Earnings, l and l Income
,l Reporting
15 l Long-Term l Liabilities
16 l Investments
17 l Statement l of l Cash l Flows
18 l Financial l Analysis: l The l Big l Picture l
19 l Managerial l Accounting l
20 l Job l Order l Costing l
21 l Process l Costing l
22 l Cost-Volume-Profit l
23 l Incremental l Analysis l
24 l Budgetary l Planning
25 l Budgetary l Control l and l Responsibility l Accounting l
26 l Standard l Costs l and l Balanced l Scorecard l
27 l Planning l for l Capital l Investments l
, CHAPTER 1 l
ACCOUNTING lIN lACTION
CHAPTER lLEARNING lOBJECTIVES
1. Identify lthe lactivities land lusers lassociated lwith laccounting. lAccounting lis lan linformation lsystem
lthat lidentifies, lrecords, land lcommunicates lthe leconomic levents lof lan lorganization lto linterested
lusers. lThe lmajor lusers land luses lof laccounting lare las lfollows: l(a) lManagement luses laccounting
linformation lto lplan, lorganize, land lrun lthe lbusiness. l(b) lInvestors l(owners) ldecide lwhether lto lbuy,
lhold, lor lsell ltheir lfinancial linterests lon lthe lbasis lof laccounting ldata. l(c) lCreditors l(suppliers land
lbankers) levaluate lthe lrisks lof lgranting lcredit lor llending l money l on lthe lbasis lof laccounting
linformation. lOther lgroups lthat luse laccounting linformation lare ltaxing lauthorities, lregulatory
lagencies, lcustomers, land llabor lunions.
2. Explain lthe lbuilding lblocks lof laccounting: lethics, lprinciples, land lassumptions. lEthics lare lthe
lstandards lof lconduct lby lwhich lactions lare ljudged las lright lor lwrong. lEffective lfinancial lreporting
ldepends lon lsound lethical lbehavior.
Generally laccepted laccounting lprinciples lare la lcommon lset lof lstandards lused lby laccountants. lThe
lprimary laccounting lstandard-setting lbody lin lthe lUnited lStates lis lthe lFinancial lAccounting
lStandards lBoard.
3. State lthe laccounting lequation, land ldefine lits lcomponents. lThe lbasic l accounting lequation lis:
Assets l= lLiabilities l+ lOwner's lEquity
Assets l are l resources l a l business l owns. l Liabilities l are l creditorship l claims l on l total l assets.
lOwner's lequity lis lthe lownership lclaim lon ltotal lassets.
The lexpanded laccounting lequation lis:
Assets l lLiabilities l+ lOwner's lCapital l lOwner's lDrawings l+ lRevenues l
Expenses
Investments lby lowners l(assets lthe lowner lputs linto lthe lbusiness) lare lrecorded lin la lcategory lcalled
lowner‘s lcapital. lOwner‘s ldrawings lare lthe lwithdrawal lof lassets lby lthe lowner lfor lpersonal luse.
lRevenues lare lthe lgross lincrease lin lowner‘s lequity lfrom lbusiness lactivities lfor lthe lpurpose lof
learning lincome. lExpenses lare lthe lcosts lof lassets lconsumed lor lservices lused lin l the l process l of
l earning l revenue. l Owner‘s l equity l is l increased l by l an l owner‘s l investments land lby lrevenues
lfrom lbusiness loperations. lOwner‘s lequity lis ldecreased lby lan lowner‘s lwithdrawals lof lassets land
lby lexpenses.
4. Analyze lthe leffects lof lbusiness ltransactions lon lthe laccounting lequation. lEach lbusiness
ltransaction lmust lhave la ldual leffect lon lthe laccounting lequation. lFor lexample, lif lan lindividual lasset
lincreases, lthere lmust lbe la lcorresponding l(1) ldecrease lin lanother lasset, lor l(2) lincrease lin la
lspecific lliability, lor l(3) lincrease lin lowner's lequity.
5. Describe lthe lfour lfinancial lstatements land lhow lthey lare lprepared. lAn lincome lstatement
lpresents lthe lrevenues land lexpenses, land lresulting lnet lincome lor lnet l loss lfor la l specific lperiod
lof ltime. lAn lowner's lequity lstatement lsummarizes lthe lchanges lin lowner's lequity lfor la lspecific
lperiod lof ltime. lA lbalance lsheet lreports lthe lassets, lliabilities, land lowner's lequity lat la lspecific
ldate. lA lstatement lof lcash lflows lsummarizes linformation labout lthe lcash linflows l(receipts) land
