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Solution Manual For Financial Accounting 11th Edition by Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso / Latest & Updated Version 2024 A+ Solutio Manual For Financial Accounting 11th Edition by Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso CHAPTER 1 Accounting in Action ASSIGNMENT C...

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  • May 8, 2024
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Solutio Manual For Financial Accounting
11th Edition by Jerry J. Weygandt, Paul D.
Kimmel, Donald E. Kieso

CHAPTER 1
Accounting in Action

ASSIGNMENT CLASSIFICATION TABLE

Brief A
Learning Objectives Questions Exercises Do It! Exercises Problems

1. Identify the activities and 1, 2, 3, 4, 5 1 1, 2
users associated with
accounting.

2. Explain the building blocks of 6, 7, 8, 9, 10 2 3, 4
accounting: ethics, principles,
and assumptions.

3. State the accounting 11, 12, 13, 14. 1, 2, 3, 4, 5 3 5
equation, and define its 22
components.

4. Analyze the effects of 15, 16, 18 6, 7, 8, 9 4 6, 7, 8 1A, 2A, 4A,
business transactions on the 5A
accounting equation.

5. Describe the four financial 17, 19, 20, 21, 10, 11 5 8, 9, 10, 11, 2A, 3A, 4A,
statements and how they are 12, 13, 14, 15, 5A
prepared. 16, 17, 18




© 2020 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted,
in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law. Advice on how to
obtain permission to reuse this material is available at http://www.wiley.com/go/permissions.

, ANSWERS TO QUESTIONS

1. True. Virtually every organization and person in our society uses accounting information.
Businesses, investors, creditors, government agencies, and not-for-profit organizations must use
accounting information to operate effectively.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

2. Accounting is the process of identifying, recording, and communicating the economic events of
an organization to interested users of the information. The first activity of the accounting process
is to identify economic events that are relevant to a particular business. Once identified and
measured, the events are recorded to provide a history of the financial activities of the
organization. Recording consists of keeping a chronological diary of these measured events in an
orderly and systematic manner. The information is communicated through the preparation and
distribution of accounting reports, the most common of which are called financial statements.
A vital element in the communication process is the accountant’s ability and responsibility to
analyze and interpret the reported information.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

3. (a) Internal users are those who plan, organize, and run the business and therefore are officers
and other decision makers.
(b) To assist management, accounting provides internal reports. Examples include financial
comparisons of operating alternatives, projections of income from new sales campaigns,
and forecasts of cash needs for the next year.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell stock.
(b) Creditors use accounting information to evaluate the risks of granting credit or lending money.
LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

5. False. Bookkeeping usually involves only the recording of economic events and therefore is just
one part of the entire accounting process. Accounting, on the other hand, involves the entire
process of identifying, recording, and communicating economic events.
LO 1, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

6. Harper Travel Agency should report the land at $85,000 on its December 31, 2022 balance
sheet. This is true not only at the time the land is purchased, but also over the time the land is
held. In determining which measurement principle to use (historical cost or fair value) companies
weigh the factual nature of cost figures versus the relevance of fair value. In general, companies
use historical cost. Only in situations where assets are actively traded do companies apply the
fair value principle.
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:
Reporting

7. The monetary unit assumption requires that only transaction data capable of being expressed in
terms of money be included in the accounting records. This assumption enables accounting to
quantify (measure) economic events.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:
Reporting




1-2 © 2020 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 11e, Solutions Manual (For Instructor Use Only)

,Questions Chapter 1 (Continued)

8. The economic entity assumption requires that the activities of the entity be kept separate and
distinct from the activities of its owners and all other economic entities.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA:
Reporting

9. The three basic forms of business organizations are (1) proprietorship, (2) partnership, and
(3) corporation.
LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

10. One of the advantages Juana would enjoy is that ownership of a corporation is represented by
transferable shares of stock. This would allow Juana to raise money easily by selling a part of her
ownership in the company. Another advantage is that because holders of the shares
(stockholders) enjoy limited liability, they are not personally liable for the debts of the corporate
entity. Also, because ownership can be transferred without dissolving the corporation, the corporation
enjoys an unlimited life.
LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

11. The basic accounting equation is Assets = Liabilities + Stockholders’ Equity.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

12. (a) Assets are resources owned by a business. Liabilities are creditor claims against assets—
that is, existing debts and obligations. Stockholders’ equity is the ownership claim on total
assets.
(b) Stockholders’ equity is affected by stockholders’ investments, dividends, revenues, and
expenses.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

13. The liabilities are (b) Accounts payable and (g) Salaries and Wages Payable.
LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

14. Yes, a business can enter into a transaction in which only the left side of the accounting equation
is affected. An example would be a transaction where an increase in one asset is offset by
a decrease in another asset. An increase in the Equipment account which is offset by a decrease
in the Cash account is a specific example.
LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

15. Business transactions are the economic events of the enterprise recorded by accountants
because they affect the basic accounting equation.
(a) No, the death of the president of the company is not a business transaction as it does not
affect the basic accounting equation.
(b) Yes, supplies purchased on account is a business transaction as it affects the basic
accounting equation.
(c) No, an employee being fired is not a business transaction as it does not affect the basic
accounting equation.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

16. (a) Decrease assets and decrease stockholders’ equity.
(b) Increase assets and decrease assets.
(c) Increase assets and increase stockholders’ equity.
(d) Decrease assets and decrease liabilities.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting


© 2020 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 11e, Solutions Manual (For Instructor Use Only) 1-3

, Questions Chapter 1 (Continued)

17. (a) Income statement. (d) Balance sheet.
(b) Balance sheet. (e) Balance sheet and retained earnings statement.
(c) Income statement. (f) Balance sheet.
LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

18. No, this treatment is not appropriate. While the transaction does involve a receipt of cash, it does
not represent revenues. Revenues are the gross increase in stockholders’ equity resulting from
business activities entered into for the purpose of earning income. This transaction is simply an
additional investment made by one of the owners of the business.
LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

19. Yes. Net income does appear on the income statement—it is the result of subtracting expenses
from revenues. In addition, net income appears on the retained earnings statement—it is shown
as an addition to the beginning-of-period retained earnings. Indirectly, the net income of a company
is also included on the balance sheet. It is included in the end-of-period retained earnings which
appears in the stockholders’ equity section of the balance sheet.
LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting

20. (a) Ending stockholders’ equity balance ................................................................ $198,000
Beginning stockholders’ equity balance............................................................ 158,000
Net income....................................................................................................... $ 40,000

(b) Ending stockholders’ equity balance ................................................................ $198,000
Beginning stockholders’ equity balance............................................................ 158,000
40,000
Deduct: Investment ......................................................................................... 16,000
Net income....................................................................................................... $ 24,000
LO 5, BT: AN, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting

21. (a) Total revenues ($30,000 + $70,000) ................................................................ $100,000

(b) Total expenses ($26,000 + $38,000) ................................................................ $64,000

(c) Total revenues ................................................................................................. $100,000
Total expenses................................................................................................. 64,000
Net income....................................................................................................... $ 36,000
LO 5, BT: AP, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting

22. Apple’s accounting equation (in millions) at September 29, 2018 was $365,725 = $258,578 +
$107,147
LO 3, BT: AP, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting, IMA: Reporting




1-4 © 2020 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial Accounting 11e, Solutions Manual (For Instructor Use Only)

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