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Solution Manual For Financial And Managerial Accounting 4th Edition by Jerry J Weygandt ||Complete A+ Guide
Solution Manual For Financial And Managerial Accounting 4th Edition by Jerry J Weygandt ||Complete A+ Guide
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FULL SOLUTION MANUAL FORFinancial And Managerial Accounting 4th Edition by Jerry J
Weygandt, Paul D Kimmel, Jill E Mitchel
CHAPTER 1 f
Accounting in Action f f
ASSIGNMENT CLASSIFICATION TABLE f f
Brief A
Learning Objectives
f Questions f Exercises Do It!
f Exercises Problems
1. Identify the activities and
f f f 1, 2, 3, 4, 5
f f f f 1 1, 2f
users associated with
f f f
accounting.
f
2. Explain the building blocks of 6, 7, 8, 9, 10
f f f f f f f f f 2 3, 4f
accounting:
f ethics, f
principles,and assumptions.
f f f
3. State the accounting
f f 11, 12, 13, 14.
f f f 1, 2, 3, 4, 5
f f f f 3 5
equation, and define its f f f 22
components.
f
4. Analyze the effects of f f f 15, 16, 18
f f 6, 7, 8, 9
f f f 4 6, 7, 8
f f 1A, 2A, 4A,
f f
business transactions on the
f f f f 5A
accounting equation.
f f
5. Describe the four financial f f f 17, 19, 20, 21,
f f f 10, 11 f 5 8, 9, 10, 11,
f f 2A, 3A, 4A,
f f f
statements and how they are f f f f 12, 13, 14, 15, 5A
f f f
prepared. 16, 17, 18
f f
© f2021 fJohn fWiley f& fSons, fInc. fAll frights freserved. fNo fpart fof fthis fpublication fmay fbe freproduced, fstored fin fa fretrieval fsystem, for ftransmitted,
fin fany fform for fby fany fmeans, felectronic, fmechanical, fphotocopying, frecording for fotherwise, fexcept fas fpermitted fby flaw. fAdvice fon fhow fto
fobtain fpermission fto freuse fthis f material fis f available fat f http://www.wiley.com/go/permissions.
, ANSWERS TO QUESTIONS f f
1. True. Virtually every organization and person in our society uses accounting information.
f f f f f f f f f f f
Businesses, investors, creditors, government agencies, and not-for-profit organizations must use
f f f f f f f f f f
accounting information to operate effectively.
f f f f f
LO f 1, f BT: f K, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
2. Accounting is the process of identifying, recording, and communicating the economic events of
f f f f f f f f f f f f
an organization to interested users of the information. The first activity of the accounting process is
f f f f f f f f f f f f f f f f
to identify economic events that are relevant to a particular business. Once identified and
f f f f f f f f f f f f f f
measured, the events are recorded to provide a history of the financial activities of the organization.
f f f f f f f f f f f f f f f f
Recording consists of keeping a chronological diary of these measured events in an orderly and
f f f f f f f f f f f f f f f
systematic manner. The information is communicated through the preparation and distribution of
f f f f f f f f f f f f
accounting reports, the most common of which are called financial statements. A vital
f f f f f f f f f f f f f
element in the communication process is the accountant’s ability and responsibility to analyze and
f f f f f f f f f f f f f f
interpret the reported information.
f f f f
LO f 1, f BT: f K, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
3. (a) Internal users are those who plan, organize, and run the business and therefore are officers and
f f f f f f f f f f f f f f f f
other decision makers.
f f f
(b) To assist management, accounting provides internal reports. Examples include financial
f f f f f f f f f
comparisons of operating alternatives, projections of income from new sales campaigns, and
f f f f f f f f f f f f
forecasts of cash needs for the next year.
f f f f f f f f
LO f 1, f BT: f K, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell stock.
f f f f f f f f f f f f f
(b) Creditors use accounting information to evaluate the risks of granting credit or lending money. f f f f f f f f f f f f f
LO f 1, f BT: f K, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
5. False. Bookkeeping usually involves only the recording of economic events and therefore is just
f f f f f f f f f f f f f
one part of the entire accounting process. Accounting, on the other hand, involves the entire
f f f f f f f f f f f f f f f
process of identifying, recording, and communicating economic events.
f f f f f f f f
LO f 1, f BT: f C, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
6. Harper Travel Agency should report the land at $85,000 on its December 31, 2022 balance sheet.
f f f f f f f f f f f f f f f
This is true not only at the time the land is purchased, but also over the time the land is held. In
f f f f f f f f f f f f f f f f f f f f f f
determining which measurement principle to use (historical cost or fair value) companies weigh the
f f f f f f f f f f f f f f
factual nature of cost figures versus the relevance of fair value. In general, companies use historical
f f f f f f f f f f f f f f f f
cost. Only in situations where assets are actively traded do companies apply the fair value
f f f f f f f f f f f f f f f
principle.
f
LO f 2, f BT: f C, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Measurement, f Analysis f and f Interpretation
f IMA: fReporting
7. The monetary unit assumption requires that only transaction data capable of being expressed in
f f f f f f f f f f f f f
terms of money be included in the accounting records. This assumption enables accounting to
f f f f f f f f f f f f f f
quantify (measure) economic events.
f f f f
LO f2, fBT: fK, fDifficulty: fEasy, fTOT: f2 fmin., fAACSB: fNone, fAICPA fFC: fMeasurement, fAnalysis fand fInterpretation f IMA:
fReporting
1-2 © 2021 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial & Managerial Accounting 4e, Solutions Manual (For Instructor Use Only)
,Questions Chapter 1 (Continued) f f f
8. The economic entity assumption requires that the activities of the entity be kept separate and
f f f f f f f f f f f f f f
distinct from the activities of its owners and all other economic entities.
f f f f f f f f f f f f
LO f2, fBT: fK, fDifficulty: fEasy, fTOT: f2 fmin., fAACSB: fNone, fAICPA fFC: fMeasurement, fAnalysis fand fInterpretation f IMA:
fReporting
9. The three basic forms of business organizations are (1) proprietorship, (2) partnership,
f f f f f f f f f f f
fand
(3) corporation.
f
LO f 2, f BT: f K, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
10. One of the advantages Juana would enjoy is that ownership of a corporation is represented by
f f f f f f f f f f f f f f f
transferable shares of stock. This would allow Juana to raise money easily by selling a part of her
f f f f f f f f f f f f f f f f f f
ownership in the company. Another advantage is that because holders of the shares (stockholders)
f f f f f f f f f f f f f f
enjoy limited liability, they are not personally liable for the debts of the corporate entity. Also,
f f f f f f f f f f f f f f f f
because ownership can be transferred without dissolving the corporation, the corporation enjoys an
f f f f f f f f f f f f f
unlimited life.
f f
LO f 2, f BT: f C, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
11. The basic accounting equation is Assets = Liabilities + Stockholders’ Equity.
f f f f f f f f f f
LO f 3, f BT: f K, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
12. (a) Assets are resources owned by a business. Liabilities are creditor claims against assets— that
ffff f f f f f f f f f f f f f
is, existing debts and obligations. Stockholders’ equity is the ownership claim on total assets.
f f f f f f f f f f f f f f
(b) Stockholders’ equity is affected by stockholders’ investments, dividends, revenues f f f f f f f f f
and f
expenses.
LO f 3, f BT: f K, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
13. The liabilities are (b) Accounts payable and (g) Salaries and Wages Payable.
f f f f f f f f f f f
LO f 3, f BT: f K, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
14. Yes, a business can enter into a transaction in which only the left side of the accounting equation is
f f f f f f f f f f f f f f f f f f
faffected. An example would be a transaction where an increase in one asset is offset
f f f f f f f f f f f f f f
fbya decrease in another asset. An increase in the Equipment account which is offset by a decrease
f f f f f f f f f f f f f f f f f
in the Cash account is a specific example.
f f f f f f f f
LO f 3, f BT: f C, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
15. Business transactions are the economic events of the enterprise recorded by accountants
f f f f f f f f f f f
because they affect the basic accounting equation.
f f f f f f f
(a) No, the death of the president of the company is not a business transaction as it does
f f f f f f f f f f f f f f f f
notaffect the basic accounting equation.
f f f f f f
(b) Yes, supplies purchased on account is a business transaction as it affects the basic
f f f f f f f f f f f f f
accounting equation.f f
(c) No, an employee being fired is not a business transaction as it does not affect the
f f f f f f f f f f f f f f f
basicaccounting equation.
f f f
LO f 4, f BT: f C, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
16. (a) Decrease assets and decrease stockholders’ equity. f f f f f
(b) Increase assets and decrease assets. f f f f
(c) Increase assets and increase stockholders’ equity. f f f f f
(d) Decrease assets and decrease liabilities. f f f f
LO f 4, f BT: f C, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
© 2021 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial & Managerial Accounting 4e, Solutions Manual (For Instructor Use Only) 1-3
, Questions Chapter 1 (Continued)
f f f
17. (a) Income statement. f (d) Balance sheet. f
(b) Balance sheet. f (e) Balance sheet and retained earnings statement.
f f f f f
(c) Income statement. f (f) Balance sheet. f
LO f 5, f BT: f C, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
18. No, this treatment is not appropriate. While the transaction does involve a receipt of cash, it does
f f f f f f f f f f f f f f f f
not represent revenues. Revenues are the gross increase in stockholders’ equity resulting from
f f f f f f f f f f f f f
business activities entered into for the purpose of earning income. This transaction is simply an
f f f f f f f f f f f f f f f
additional investment made by one of the owners of the business.
f f f f f f f f f f f
LO f 4, f BT: f C, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
19. Yes. Net income does appear on the income statement—it is the result of subtracting expenses from
f f f f f f f f f f f f f f f
revenues. In addition, net income appears on the retained earnings statement—it is shown as an
f f f f f f f f f f f f f f f
addition to the beginning-of-period retained earnings. Indirectly, the net income of a companyis also
f f f f f f f f f f f f f f f
included on the balance sheet. It is included in the end-of-period retained earnings which appears
f f f f f f f f f f f f f f f
in the stockholders’ equity section of the balance sheet.
f f f f f f f f f
LO f 5, f BT: f C, f Difficulty: f Easy, f TOT: f 2 f min., f AACSB: f None, f AICPA f FC: f Reporting, f IMA: f Reporting
20. (a) Ending stockholders’ equity balance .................................................................................$198,000
f f f
Beginning stockholders’ equity balance ............................................................................158,000
f f f
Net income.......................................................................................................
f $ 40,000 f
(b) Ending stockholders’ equity balance .................................................................................$198,000
f f f
Beginning stockholders’ equity balance ............................................................................158,000
f f f
40,000
Deduct: Investment .............................................................................................. 16,000
f
Net income.......................................................................................................
f $ 24,000 f
LO f 5, f BT: f AN, f Difficulty: f Easy, f TOT: f 4 f min., f AACSB: f Analytic, f AICPA f FC: f Reporting, f IMA: f Reporting
21. (a) Total revenues ($30,000 + $70,000) ....................................................................... $100,000
f f f f
(b) Total expenses ($26,000 + $38,000)................................................................
f f f f $64,000
(c) Total revenues ....................................................................................................... $100,000
f
Total expenses ....................................................................................................... 64,000
f
Net income.......................................................................................................
f $ 36,000 f
LO f 5, f BT: f AP, f Difficulty: f Easy, f TOT: f 3 f min., f AACSB: f Analytic, f AICPA f FC: f Reporting, f IMA: f Reporting
22. Apple’s accounting equation (in millions) at September 29, 2018 was $365,725 = $258,578 +
f f f f f f f f f f f f f
$107,147
LO f 3, f BT: f AP, f Difficulty: f Easy, f TOT: f 4 f min., f AACSB: f Analytic, f AICPA f FC: f Reporting, f IMA: f Reporting
1-4 © 2021 John Wiley & Sons, Inc. All rights reserved. Weygandt, Financial & Managerial Accounting 4e, Solutions Manual (For Instructor Use Only)
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