SOLUTION MANUAL IIll
Financial Accounting 11th Edition
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by Jerry J. Weygandt, Paul D. Kimmel
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IIll Chapters 1 - 13 | Complete
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,TABLE OF CONTENTS IIll IIll
Chapter 1. Accounting in Action
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Chapter 2. The Recording Process
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Chapter 3. Adjusting the Accounts
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Chapter 4. Completing the Accounting Cycle
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Chapter 5. Accounting for Merchandising Operations
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Chapter 6. Inventories
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Chapter 7. Fraud, Internal Control and Cash
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Chapter 8. Accounting for Receivables
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Chapter 9. Plant Assets, Natural Resources and Intangible Assets
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Chapter 10. Liabilities
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Chapter 11. Corporations: Organisations, Stock Transactions and Stockholders’
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Equity
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Chapter 12. Statement of Cash Flows
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Chapter 13. Financial Analysis: The Big Picture
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,CHAPTER 1
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Accounting in Action IIll IIll
ASSIGNMENT CLASSIFICATION TABLE Il IIll
Brief A
Learning Objectives IIll Questions IIll Exercises Do It!
IIll Exercises Problems
1. Identify the activities IIll IIll 1, 2, 3, 4, 5
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andusers associated with
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accounting.
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2. Explain the building blocks of 6, 7, 8, 9, 10
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accounting:
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principles,and assumptions.
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3. State the accounting IIll IIll 11, 12, 13, 14.
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equation, and define
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itscomponents.
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4. Analyze the effects of IIll IIll IIll 15, 16, 18IIll IIll 6, 7, 8, 9
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business transactions on
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theaccounting equation.
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5. Describe the four financial IIll IIll IIll
17, 19, 20, 21,
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statements and how they
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12, 13, 14, 15, 5A
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areprepared.
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16, 17, 18 IIll IIll
, ANSWERS TO QUESTIONS IIll IIll
1. True. Virtually every organization and person in our society uses accounting information. Businesses,
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investors, creditors, government agencies, and not-for-profit organizations must use accounting
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information to operate effectively.
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LO IIll 1, IIll BT: IIl l K, IIl l Difficulty: IIll Easy, IIl l TOT: IIll 2 min.,IIll IIll AACSB: IIl l None, AICPA FC: IIll IIll IIl l Reporting, IIl l IMA: IIl l Reporting
2. Accounting is the process of identifying, recording, and communicating the economic events of
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an organization to interested users of the information. The first activity of the accounting process is
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to identify economic events that are relevant to a particular business. Once identified and measured,
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the events are recorded to provide a history of the financial activities of the organization. Recording
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consists of keeping a chronological diary of these measured events in an orderly and systematic
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manner. The information is communicated through the preparation and distribution of accounting
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reports,
I I l l the most common of which are called financial statements. A vital
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element in the communication process is the accountant’s ability and responsibility to analyze and
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interpret the reported information.
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LO IIll 1, IIll BT: IIl l K, IIl l Difficulty: IIll Easy, IIl l TOT: IIll 2 min.,IIll IIll AACSB: IIl l None, AICPA FC: IIll IIll IIll Reporting, IIll IMA: IIll Reporting
3. (a) Internal users are those who plan, organize, and run the business and therefore are officers and
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other decision makers. IIll IIll IIll
(b) To assist management, accounting provides internal reports. Examples include financial
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comparisons of operating alternatives, projections of
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campaigns,and forecasts of cash needs for the next year.
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LO IIll 1, IIll BT: IIll K, IIl l Difficulty: IIll Easy, IIl l TOT: IIll 2 min., IIll IIll AACSB: IIl l None, AICPA FC: IIll IIll IIll Reporting, IIll IMA: IIll Reporting
4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell stock. IIll IIll IIll IIll IIll IIll IIll IIll IIll IIll IIll IIll IIll
(b) Creditors useaccounting information toevaluate the risks of granting creditor lending money. Il Il Il Il Il Il Il Il Il Il Il Il Il
LO IIll 1, IIl l BT: IIl l K, IIl l Difficulty: IIl l Easy, IIl l TOT: IIl l 2 min.,
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5. False. Bookkeeping usually involves only the recording of economic events and therefore is just one
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part of the entire accounting process. Accounting, on the other hand, involves the entire process of
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identifying, recording, and communicating economic events.
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LO IIll 1, IIll BT: IIl l C, I I l l Difficulty: IIll Easy, IIl l TOT: IIll 2 min., IIll IIl l AACSB: I I l l None, AICPA FC: Reporting, IIll IIll IIll IIll IMA: Reporting IIll
6. Harper Travel Agency should report the land at $85,000 on its December 31,
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sheet. This is true not only at the time the land is purchased, but also over the time the land is held.
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In determining which measurement principle to use (historical cost or fair value) companies weigh the
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factual nature of cost figures versus the relevance of fair value. In general, companies use historical
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cost. Only in situations where assets are actively traded do
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principle.
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7. The monetary unit assumption requires that only transaction data capable of being expressed in
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terms of money be included in the accounting records. This assumption enables accounting to
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quantify (measure) economic events.
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LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation
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