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 aby aowners a(assets athe aowner aputs ainto athe abusiness) aare arecorded ain aa acategory
acalled aowner‘s acapital. aOwner‘s adrawings aare athe awithdrawal aof aassets aby athe aowner afor
apersonal ause. aRevenues aare athe agross aincrease ain aowner‘s aequity afrom abusiness aactivities afor
athe apurpose aof aearning aincome. aExpenses aare athe acosts aof aassets aconsumed aor aservices aused
ain a the a process a of a earning a revenue. a Owner‘s a equity a is a increased a by a an a owner‘s
a investments aand aby arevenues afrom abusiness aoperations. aOwner‘s aequity ais adecreased aby aan
aowner‘s awithdrawals aof aassets aand aby aexpenses.
4. Analyze athe aeffects aof abusiness atransactions aon athe aaccounting aequation. aEach abusiness
atransaction amust ahave aa adual aeffect aon athe aaccounting aequation. aFor aexample, aif aan
aindividual aasset aincreases, athere amust abe aa acorresponding a(1) adecrease ain aanother aasset, aor
a(2) aincrease ain aa aspecific aliability, aor a(3) aincrease ain aowner's aequity.
5. Describe athe afour afinancial astatements aand ahow athey aare aprepared. aAn aincome astatement
apresents athe arevenues aand aexpenses, aand aresulting anet aincome aor anet a loss afor aa a specific
aperiod aof atime. aAn aowner's aequity astatement asummarizes athe achanges ain aowner's aequity afor
aa aspecific aperiod aof atime. aA abalance asheet areports athe aassets, aliabilities, aand aowner's aequity
aat aa aspecific adate. aA astatement aof acash aflows asummarizes ainformation aabout athe acash
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 aby aowners a(assets athe aowner aputs ainto athe abusiness) aare arecorded ain aa acategory
acalled aowner‘s acapital. aOwner‘s adrawings aare athe awithdrawal aof aassets aby athe aowner afor
apersonal ause. aRevenues aare athe agross aincrease ain aowner‘s aequity afrom abusiness aactivities afor
athe apurpose aof aearning aincome. aExpenses aare athe acosts aof aassets aconsumed aor aservices aused
ain a the a process a of a earning a revenue. a Owner‘s a equity a is a increased a by a an a owner‘s
a investments aand aby arevenues afrom abusiness aoperations. aOwner‘s aequity ais adecreased aby aan
aowner‘s awithdrawals aof aassets aand aby aexpenses.
4. Analyze athe aeffects aof abusiness atransactions aon athe aaccounting aequation. aEach abusiness
atransaction amust ahave aa adual aeffect aon athe aaccounting aequation. aFor aexample, aif aan
aindividual aasset aincreases, athere amust abe aa acorresponding a(1) adecrease ain aanother aasset, aor
a(2) aincrease ain aa aspecific aliability, aor a(3) aincrease ain aowner's aequity.
5. Describe athe afour afinancial astatements aand ahow athey aare aprepared. aAn aincome astatement
apresents athe arevenues aand aexpenses, aand aresulting anet aincome aor anet a loss afor aa a specific
aperiod aof atime. aAn aowner's aequity astatement asummarizes athe achanges ain aowner's aequity afor
aa aspecific aperiod aof atime. aA abalance asheet areports athe aassets, aliabilities, aand aowner's aequity
aat aa aspecific adate. aA astatement aof acash aflows asummarizes ainformation aabout athe acash
