FULL SOLUTION MANUAL FOR
Financial And Managerial Accounting 4th Edition by Jerry J
Weygandt, Paul D Kimmel, Jill E Mitchel
CHAPTER 1 RT
Accounting in Action RT RT
ASSIGNMENT CLASSIFICATION TABLE RT RT
Brief Exe RT A
Learning Objectives RT Questions rcises Do It!
RT Exercises Problems
1. 1, 2, 3, 4, 5
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Identify the activities a RT RT RT
ndusers associated with
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accounting.
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2. Explain the building blocks of 6, 7, 8, 9, 10
RT RT RT RT RT RT RT RT RT RT 2 3, 4RT
accounting: ethics, principles RT RT
,and assumptions.
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3. 11, 12, 13, 14. 1, 2, 3, 4, 5
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State the accounting RT RT RT 22
equation, and define it RT RT RT
scomponents.
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4. 15, 16, 18
RT RT 6, 7, 8, 9
RT RT RT 4 6, 7, 8
RT RT 1A, 2A, 4A,
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Analyze the effects of busi RT RT RT RT 5A
ness transactions on theac
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counting equation. RT
5. 17, 19, 20, 21, 10, 11
RT RT RT RT 5 8, 9, 10, 11, 2A, 3A, 4A,
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Describe the four financial RT RT RT RT 12, 13, 14, 15, 5A
RT RT RT
statements and how they ar RT RT RT RT 16, 17, 18
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eprepared.
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obtain permission to reuse this material is available at http://www.wiley.com/go/permissi
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ons.
, © 2021 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or
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transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law. A
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dvice on how to
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, ANSWERS TO QUESTIONS RT RT
1. True. Virtually every organization and person in our society uses accounting information. Busin
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esses, investors, creditors, government agencies, and not-for-
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profit organizations must use accounting information to operate effectively.
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LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
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2. Accounting is the process of identifying, recording, and communicating the economic events
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of an organization to interested users of the information. The first activity of the accounting pro
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cess is to identify economic events that are relevant to a particular business. Once identified a
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nd measured, the events are recorded to provide a history of the financial activities of the org
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anization. Recording consists of keeping a chronological diary of these measured events in an
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orderly and systematic manner. The information is communicated through the preparation and
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distribution of accounting reports, the most common of which are called financial state
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ments.A vital element in the communication process is the accountant’s ability and responsibilit
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y to analyze and interpret the reported information.
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LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
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3. (a) Internal users are those who plan, organize, and run the business and therefore are officer
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s and other decision makers.
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(b) To assist management, accounting provides internal reports. Examples include financial c
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omparisons of operating alternatives, projections of income from new sales campaigns,
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and forecasts of cash needs for the next year.
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LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
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4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell stock.
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(b) Creditors use accounting information to evaluate the risks of granting credit or lending money.
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LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
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5. False. Bookkeeping usually involves only the recording of economic events and therefore is ju
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st one part of the entire accounting process. Accounting, on the other hand, involves the entire
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process of identifying, recording, and communicating economic events.
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LO 1, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting
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6. Harper Travel Agency should report the land at $85,000 on its December 31, 2022 balance
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sheet. This is true not only at the time the land is purchased, but also over the time the land i
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s held. In determining which measurement principle to use (historical cost or fair value) compa
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nies weigh the factual nature of cost figures versus the relevance of fair value. In general, com
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panies use historical cost. Only in situations where assets are actively traded do companies a
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pply the fair value principle.
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LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation
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IMA: Reporting
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7. The monetary unit assumption requires that only transaction data capable of being expressed i
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n terms of money be included in the accounting records. This assumption enables accounting
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to 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 IMA:
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T
Reporting
obtain permission to reuse this material is available at http://www.wiley.com/go/permissi
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ons.
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