SOLUTION MANUAL Financial Accounting 11th Edition by Jerry J. Weygandt, Paul D. Kimmel Chapters 1 - 13 | Complete TABLE OF CONTENTS Chapter 1. Accounting in Action Chapter 2. The Recording Process Chapter 3. Adjusting the Accounts Chapter 4. Completing the Accounting Cycle Chapter 5. Accounting for Merchandising Operations Chapter 6. Inventories Chapter 7. Fraud, Internal Control and Cash Chapter 8. Accounting for Receivables Chapter 9. Plant Assets, Natural Resources and Intangible Assets Chapter 10. Liabilities Chapter 11. Corporations: Organisations, Stock Transactions and Stockholders’ Equity Chapter 12. Statement of Cash Flows Chapter 13. Financial Analysis: The Big Pictur e CHAPTER 1 Accounting in Action ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises Do It! Exercises A Problems 1. Identify the activities and users associated with accounting. 1, 2, 3, 4, 5 1 1, 2 2. Explain the building blocks of accounting: ethics, principles, and assumptions. 6, 7, 8, 9, 10 2 3, 4 3. State the accounting equation, and define its components. 11, 12, 13, 14. 22 1, 2, 3, 4, 5 3 5 4. Analyze the effects of business transactions on the accounting equation. 15, 16, 18 6, 7, 8, 9 4 6, 7, 8 1A, 2A, 4A, 5A 5. Describe the four financial statements and how they are prepared. 17, 19, 20, 21, 10, 11 5 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 2A, 3A, 4A, 5A ANSWERS TO QUESTIONS 1. True. Virtually every organization and person in our society uses accounting information. Businesses, investors, creditors, government agencies, and not -for-profit organizations must use accounting information to operate effectively. LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting 2. Accounting is the process of identifying, recording, and communicating the economic events of an organization to interested users of the information. The first activity of the accounting process is to identify economic events that are relevant to a particular business. Once identified and measured, the events are recorded to provide a history of the financial activities of the organization. Recording consists of keeping a chronological diary of these measured events in an orderly and systematic manner. The information is communicated through the preparation and distribution of accounting reports, the most common of which are called financial statements. A vital element in the communication process is the accountant’s ability and responsibility to analyze and interpret the reported information. LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting 3. (a) Internal users are those who plan, organize, and run the business and therefore are officers and other decision makers. (b) To assist management, accounting provides internal reports. Examples include financial comparisons of operating alternatives, projections of income fr om new sales campaigns, and forecasts of cash needs for the next year. LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting 4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell stock. (b) Creditors use accounting information to evaluate the risks of granting credit or lending money. LO 1, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting 5. False. Bookkeeping usually involves only the recording of economic events and therefore is just one part of the entire accounting process. Accounting, on the other hand, involves the entire process of identifying, recording, and communicating economic events. LO 1, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting, IMA: Reporting 6. Harper Travel Agency should report the land at $85,000 on its December 31, 2022 balance sheet. This is true not only at the time the land is purchased, but also over the time the land is held. In determining which measurement principle to use (historical cost or fair value) companies weigh the factual nature of cost figures versus the relevance of fair value. In general, companies use historical cost. Only in situations where assets are actively traded do companies apply the fair value principle. LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA: Reporting 7. The monetary unit assumption requires that only transaction data capable of being expressed in terms of money be included in the accounting records. This assumption enables accounting to quantify (measure) economic events. LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation IMA: Reporting
