100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
Previously searched by you
TEST BANK for Financial Accounting with International Financial Reporting Standards (IFRS) 4th Edition by Jerry Weygandt & Paul Kimmel | Complete 15 ChaptersR542,54
Add to cart
TEST BANK for Financial Accounting with International Financial Reporting Standards (IFRS) 4th Edition by Jerry Weygandt & Paul Kimmel | Complete 15 Chapters
103 views 3 purchases
Course
Financial Accounting with International Financial
Institution
Financial Accounting With International Financial
Book
Financial Accounting with International Financial Reporting Standards
TEST BANK for Financial Accounting with International Financial Reporting Standards (IFRS) 4th Edition by Jerry Weygandt & Paul Kimmel. ISBN: (Complete 15 Chapters).
test bank for financial accounting with internatio
test bank
Connected book
Book Title:
Author(s):
Edition:
ISBN:
Edition:
More summaries for
FAC2601 Assignment 4 Semester 2 2024
FAC2601 Assessment 3 Semester 2 2024
Accounting Categories (Debit and Credit Balances) - Financial Accounting (FAC)
All for this textbook (33)
Written for
Financial Accounting with International Financial
Financial Accounting with International Financial
Seller
Follow
AcademiContent
Reviews received
Content preview
, 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.
Accounting is based on standards, such as International Financial Reporting Standards
(IFRS). IFRS generally uses one of two measurement principles, historical cost or fair value
principle. Two main assumptions are the monetary unit assumption and the economic entity
assumption. The monetary unit assumption requires that companies include in the accounting
records only transaction data that can be expressed in terms of money. The economic entity
assumption requires that the activities of each economic entity be kept separate from the
activities of its owner(s) and other economic entities.
3. State the accounting equation, and define its components. The basic accounting
equation is:
Assets = Liabilities + Equity
Assets are resources a business owns. Liabilities are creditors' claims on total assets. Equity
is the ownership claim on total assets.
The expanded accounting equation is:
Assets = Liabilities + Share Capital—Ordinary
+ Revenues – Expenses – Dividends
Share capital—ordinary is affected when the company issues new ordinary shares in
exchange for cash. Revenues are the gross increase in equity resulting 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. Dividends are payments the company
makes to its shareholders.
,1-2 Test Bank for Financial Accounting: IFRS Edition, 4e
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 equity.
5. Describe the five financial statements and how they are prepared. An income statement
presents the revenues and expenses, and resulting net income or loss, for a specific period of
time. A retained earnings statement summarizes the changes in retained earnings for a
specific period of time. A statement of financial position reports the assets, liabilities, and
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. A comprehensive
income statement adds or subtracts any other comprehensive income to net income to arrive
at comprehensive Income.
a
6. Explain the career opportunities in accounting. Accounting offers many different jobs in
fields such as public and private accounting, government, 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 LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
2. Transactions that can be measured in dollars and cents are recorded in the financial
information system.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
3. The hiring of a new company president is an economic event recorded by the financial
information system.
Ans: F LO1 BT: C Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
4. Management of a business enterprise is the major external user of information.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
5. Accounting communicates financial information about a business enterprise to both
internal and external users.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
6. Accounting information is used only by external users with a financial interest in a
business enterprise.
Ans: F LO1 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
7. Financial statements are the major means of communicating accounting information to
interested parties.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
8. Bookkeeping and accounting are one and the same because the bookkeeping function
includes the accounting process.
Ans: F LO1 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
9. The origins of accounting are attributed to Luca Pacioli, a famous mathematician.
, Accounting in Action 1-3
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
10. The State Administration of Taxation in the People's Republic of China is an example of
an internal user of accounting information.
Ans: F LO1 BT: C Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
11. The German Confederation of Trade Unions is an example of an external user of
accounting information.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
12. Accountants rely on a fundamental business concept—ethical behavior—in reporting
financial information.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
13. The primary accounting standard-setting body in the United States is the International
Accounting Standards Board.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
14. The Financial Accounting Standards Board is a part of the International Accounting
Standards Board.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
15. The two primary accounting standard-setting bodies are the International Accounting
Standards Board and the Financial Accounting Standards Board.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
16. Most companies in the United States follow standards issued by the IASB.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
17. International Financial Reporting Standards are determined by the IASB.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
18. The process of reducing the differences between Generally Accepted Accounting
Principles and International Financial Reporting Standards is known as convergence.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
19. IFRS follows one measurement principle known as the historical cost principle.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
20. Even though a partnership is not a separate legal entity, for accounting purposes the
partnership affairs should be kept separate from the personal activities of the owners.
Ans: T LO2 BT: C Difficulty; Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
21. The economic entity assumption requires that the activities of an entity be kept separate
and distinct from the activities of its owner and all other economic entities.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
22. The monetary unit assumption states that transactions that can be measured in terms of
money should be recorded in the accounting records.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
23. In order to possess future service potential, an asset must have physical substance.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Reporting
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller AcademiContent. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R542,54. You're not tied to anything after your purchase.
