CHAPTER 1
Accounting in Action
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
A
Problems
B
Problems
1. Explain what
accounting is.
1, 2, 5
1
2. Identify the users and
uses of accounting.
3, 4
1
3. Understand why ethics
is a fundamental business
concept.
4. Explain generally accepted
accounting principles.
6
1
5. Explain the monetary
unit assumption and
the economic entity
assumption.
7, 8, 9, 10
6. State the accounting
equation, and define
its components.
11, 12, 13,
14
1, 2, 3,
4, 5, 8, 9
2
1A, 2A,
4A
1B, 2B,
4B
7. Analyze the effects of
business transactions on
the accounting equation.
15, 16,
17, 18
6, 7
3
1A, 2A,
4A, 5A
1B, 2B,
4B, 5B
8. Understand the four
financial statements
and how they are
prepared.
19, 20, 21
22
10, 11
4
2A, 3A,
4A, 5A
2B, 3B,
4B, 5B
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time Allotted
(min.)
1A
Analyze transactions and compute net income.
Moderate
40–50
2A
Analyze transactions and prepare income statement,
retained earnings statement, and balance sheet.
Moderate
50–60
3A
Prepare income statement, retained earnings statement,
and balance sheet.
Moderate
50–60
4A
Analyze transactions and prepare financial statements.
Moderate
40–50
5A
Determine financial statement amounts and prepare
retained earnings statement.
Moderate
40–50
1B
Analyze transactions and compute net income.
Moderate
40–50
2B
Analyze transactions and prepare income statement,
retained earnings statement, and balance sheet.
Moderate
50–60
3B
Prepare income statement, retained earnings statement,
and balance sheet.
Moderate
50–60
4B
Analyze transactions and prepare financial statements.
Moderate
40–50
5B
Determine financial statement amounts and prepare
retained earnings statement.
Moderate
40–50
WEYGANDT FINANCIAL ACCOUNTING 9E
CHAPTER 1
ACCOUNTING IN ACTION
Number
LO
BT
Difficulty
Time (min.)
BE1
6
AP
Simple
2–4
BE2
6
AP
Simple
3–5
BE3
6
AP
Moderate
4–6
BE4
6
AP
Moderate
4–6
BE5
6
K
Simple
2–4
BE6
7
C
Simple
2–4
BE7
7
C
Simple
2–4
BE8
6
C
Simple
2–4
BE9
6
C
Simple
1–2
BE10
8
AP
Simple
3–5
BE11
8
C
Simple
2–4
DI1
1, 2, 4
K
Simple
2–4
DI2
6
K
Simple
2–4
DI3
7
AP
Simple
6–8
DI4
8
AP
Moderate
8–10
EX1
1
C
Moderate
5–7
EX2
2
C
Simple
6–8
EX3
3
C
Moderate
6–8
EX4
4, 5
C
Moderate
6–8
EX5
6
C
Simple
4–6
EX6
6, 7
C
Simple
6–8
EX7
6, 7
C
Simple
4–6
EX8
7, 8
AP
Moderate
12–15
EX9
8
AP
Simple
12–15
EX10
7
AP
Moderate
8–10
EX11
6, 7, 8
AP
Moderate
6–8
EX12
8
AP
Simple
8–10
EX13
8
AN
Simple
8–10
EX14
8
AP
Simple
10–12
EX15
8
AP
Simple
6–8
EX16
8
AP
Moderate
6–8
EX17
8
AP
Moderate
8–10
ACCOUNTING IN ACTION (Continued)
Number
LO
BT
Difficulty
Time (min.)
P1A
6, 7
AP
Moderate
40–50
P2A
6–8
AP
Moderate
50–60
P3A
8
AP
Moderate
50–60
P4A
6–8
AP
Moderate
40–50
P5A
7, 8
AP
Moderate
40–50
P1B
6, 7
AP
Moderate
40–50
P2B
6–8
AP
Moderate
50–60
P3B
8
AP
Moderate
50–60
P4B
6–8
AP
Moderate
40–50
P5B
7, 8
AP
Moderate
40–50
BYP1
8
AN
Simple
10–15
BYP2
8
AN, E
Simple
10–15
BYP3
8
AN, E
Simple
10–15
BYP4
3–9
C, AN
Simple
15–20
BYP5
8
E
Moderate
15–20
BYP6
8
E
Simple
12–15
BYP7
3
E
Simple
10–12
BYP8
3
E
Moderate
15–20
BYP9
8
E
Moderate
15–20
BYP10
–
AP
Moderate
15–20
BYP11
–
C
Simple
10–15
BLOOM’S TAXONOMY TABLE
Copyright © 2014 John Wiley & Sons, Inc. Weygandt, Financial Accounting, 9/e, Solutions Manual (For Instructor Use Only) 1-5
Learning Objective
Knowledge
Comprehension
Application
Analysis
Synthesis
Evaluation
1. Explain what accounting is.
DI1-1
Q1-1
Q1-2
Q1-5
E1-1
2. Identify the users and uses of
accounting.
DI1-1
Q1-3
Q1-4
E1-2
3. Understand why ethics is a
fundamental business concept.
E1-3
4. Explain generally accepted
accounting principles.
DI1-1
Q1-6
E1-4
5. Explain the monetary unit
assumption and the economic
entity assumption.
Q1-7
Q1-8
Q1-9
Q1–10
E1-4
6. State the accounting equation,
and define its components.
Q1–11
Q1–12
Q1–13
DI1-2
BE1-5
Q1–11
Q1–14
BE1-4
BE1-8
BE1-9
E1-5
E1-6
E1-7
BE1-1
BE1-2
BE1-3
E1–11
P1–1A
P1–2A
P1–4A
P1–1B
P1–2B
P1–4B
7. Analyze the effects of business
transactions on the accounting
equation.
Q1–15
Q1–16
Q1–17
Q1–18
BE1-6
BE1-7
E1-6
E1-7
DI1-3
E1-8
E1–10
E1–11
P1–1A
P1–2A
P1–4A
P1–5A
P1–1B
P1–2B
P1–4B
P1–5B
8. Understand the four financial
statements and how they are
prepared.
Q1-19
Q1–20
BE1-11
Q1–21
Q1–22
BE1-10
DI1-4
E1-8
E1-9
E1–11
E1–12
E1–14
E1–15
E1–16
E1–17
P1–2A
P1–3A
P1–4A
P1–5A
P1–2B
P1–3B
P1–4B
P1–5B
E1–13
Broadening Your Perspective
Real–World Focus
Considering
People, Planet,
and Profit
FASB Codification
Financial Reporting
Comparative Analysis
All About You
Comparative Analysis
Decision–Making Across
the Organization
Communication Activity
Ethics Case
ANSWERS TO QUESTIONS
1. Yes, this is correct. Virtually every organization and person in our society uses accounting
2. Accounting is the process of identifying, recording, and communicating the economic events of
an organization to interested users of the information. The first step of the accounting process is
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.
3. (a) Internal users are those who plan, organize, and run the business and therefore are officers
and other decision makers.
4. (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell stock.
5. No, this is incorrect. Bookkeeping usually involves only the recording of economic events and
6. Harper Travel Agency should report the land at $85,000 on its December 31, 2015 balance
Only in situations where assets are actively traded do companies apply the fair value principle.
7. The monetary unit assumption requires that only transaction data capable of being expressed in
quantify (measure) economic events.
8. The economic entity assumption requires that the activities of the entity be kept separate and
9. The three basic forms of business organizations are: (1) proprietorship, (2) partnership, and
(3) corporation.
Questions Chapter 1 (Continued)
10. One of the advantages would enjoy is that ownership of a corporation is represented by
enjoys an unlimited life.
12. (a) Assets are resources owned by a business. Liabilities are claims against assets—that is,,
expenses.
14. Yes, a business can enter into a transaction in which only the left side of the accounting equation
15. Business transactions are the economic events of the enterprise recorded by accountants
because they affect the basic equation.
affect the basic equation.
(b) Yes, supplies purchased on account is a business transaction as it affects the basic equation.
equation.
16. (a) Decrease assets and decrease stockholders’ equity.
(b) Increase assets and decrease assets.
(c) Increase assets and increase stockholders’ equity.
(d) Decrease assets and decrease liabilities.
17. (a) Income statement. (d) Balance sheet.
(c) Income statement. (f) Balance sheet.
18. No, this treatment is not proper. While the transaction does involve a receipt of cash, it does not
19. Yes. Net income does appear on the income statement—it is the result of subtracting expenses
Questions Chapter 1 (Continued)
20. (a) Ending stockholders’ equity balance ………………………………………………………. $198,000
(b) Ending stockholders’ equity balance ………………………………………………………. $198,000
Beginning stockholders’ equity balance ………………………………………………….. 158,000
21. (a) Total revenues ($30,000 + $70,000) ………………………………………………………. $100,000
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 1-1
(a) $78,000 – $50,000 = $28,000 (Stockholders’ Equity).
BRIEF EXERCISE 1-2
(a) $120,000 + $232,000 = $352,000 (Total assets).
BRIEF EXERCISE 1-3
(a) ($870,000 + $150,000) – ($500,000 – $80,000) = $600,000
(Stockholders’ equity).
BRIEF EXERCISE 1-4
Stockholders’ Equity
Assets
=
Liabilities
+
Common
Stock
+
Retained Earnings
Revenues
–
Expenses
–
Dividends
(a)
X
=
$90,000
+
$150,000
+
$450,000
–
$320,000
–
$40,000
X
=
$90,000
+
$240,000
X
=
$330,000
(b)
$57,000
=
X
+
$23,000
+
$50,000
–
$35,000
–
$7,000
$57,000
=
X
+
$31,000
X
=
$26,000 ($57,000 – $31,000)
(c)
$600,000
=
($600,000 x 2/3)
+
X (Stockholders’ equity)
$600,000
=
$400,000
+
X
X
=
$200,000
BRIEF EXERCISE 1-5
A (a) Accounts receivable A (d) Supplies
BRIEF EXERCISE 1-6
Assets
Liabilities
Stockholders’ Equity
(a)
+
+
NE
(b)
+
NE
+
(c)
–
NE
–
BRIEF EXERCISE 1-7
Assets
Liabilities
Stockholders’ Equity
(a)
+
NE
+
(b)
–
NE
–
(c)
NE
NE
NE
BRIEF EXERCISE 1-8
BRIEF EXERCISE 1-9