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Test Bank for Accounting Principles 14th Edition by Jerry J Weygandt Paul D Kimmel A+
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Solution Manual For Accounting Principles 14th Edition by Jerry J. Weygandt, Paul D. Kimmel 2024.
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Test Bank for Accounting Principles 14th Edition ( Jerry J. Weygandt, Paul D. Kimmel, 2020), Chapter 1-27 | Complete Guide A+
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TEST BANK For Accounting Principles, 14th Edition by Jerry J. Weygandt, Paul D. Kimmel, All 1-27 Chapters Covered ,Latest Edition, ISBN:9781119707110
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Created By: A SolutionTest Bank for Accounting Principles 14th Edition by Jerry J
Weygandt Paul D Kimmel A+
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:
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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:
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.
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a6. Explain the career opportunities in accounting. Accounting offers many different jobs in
fields such as public and private accounting, governmental, and forensic accounting. Accounting
is a popular major because there are many different types of jobs, with unlimited potential for
career advancement.
TRUE-FALSE STATEMENTS
1. Owners of business firms are the only people who need accounting information.
Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Governance
Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
2. Transactions that can be measured in dollars and cents are recorded in the financial
information system.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Governance
Perspective, AICPA FC: Measurement Analysis and Interpretation, AICPA PC: None, IMA:
Reporting
3. The hiring of a new company president is an economic event recorded by the financial
information system.
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Ans: F, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Governance
Perspective, AICPA FC: Measurement Analysis and Interpretation, AICPA PC: None, IMA:
Reporting
4. Management of a business enterprise is the major external user of information.
Ans: F, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Governance
Perspective, AICPA FC: Measurement Analysis and Interpretation, AICPA PC: None, IMA:
Reporting
5. Accounting communicates financial information about a business enterprise to both
internal and external users.
Ans: T, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Governance
Perspective, AICPA FC: Measurement Analysis and Interpretation, AICPA PC: None, IMA:
Reporting
6. Accounting information is used only by external users with a financial interest in a
business enterprise.
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