,TESTBANK FOR for Accounting Principles 13th Edition by. Weygandt
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, CHAPTER 1
ACCOUNTING IN ACTION
SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S
TAXONOMY
Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT
True-False Statements
1. 1 K 9. 1 K 17. 2 K 25. 4 K 33. 1 K
2. 1 K 10. 1 K 18. 2 K 26. 4 K 34. 1 K
3. 1 C 11. 1 K 19. 2 K 27. 4 K 35. 2 K
4. 1 K 12. 2 K 20. 2 C 28. 5 C 36. 2 C
5. 1 K 13. 2 K 21. 3 K 29. 5 C 37. 2 K
6. 1 C 14. 2 K 22. 3 K 30. 6 C 38. 3 K
7. 1 K 15. 2 K 23. 3 K 31. 6 K 39. 4 K
8. 1 C 16. 2 K 24. 4 K 32. 6 K 40. 5 K
Multiple Choice Questions
41. 1 K 69. 2 C 97. 3 K 125. 5 K st
153. 1 K
42. 1 K 70. 2 K 98. 3 K 126. 5 C st
154. 1 K
43. 1 K 71. 2 K 99. 3 K 127. 5 AP 155. 2 K
44. 1 C 72. 2 C 100. 3 C 129. 5 AP st
156. 2 K
45. 1 K 73. 2 K 101. 3 K 129. 5 AP 157. 2 K
46. 1 K 74. 2 K 102. 3 C 130. 5 K st
158. 2 K
47. 1 K 75. 2 K 103. 3 AP 131. 5 C 159. 3 K
48. 1 K 76. 2 K 104. 3 AP 132. 5 K 160. 4 K
49. 1 C 77. 2 K 105. 3 AP 133. 5 K 161. 4 C
50. 1 C 78. 2 K 106. 3 AP 134. 5 AP 162. 5 C
51. 1 C 79. 2 C 107. 3 AP 135. 5 AP 163. 6 K
52. 1 C 80. 2 C 108. 3 C 136. 5 AN 164. 7 K
53. 1 C 81. 2 K 109. 3 AP 137. 5 AN 165. 7 K
54. 1 C 82. 2 K 110. 3 C 138. 5 AP 166. 7 K
a
55. 6 K 83. 2 C 111. 3 C 139. 5 AP 167. 7 K
a
56. 6 K 84. 2 K 112. 4 C 140. 5 AP 168. 7 K
a
57. 6 K 85. 2 K 113. 4 C 141. 5 AP 169. 7 K
a
58. 6 C 86. 2 K 114. 3 C 142. 5 AP 170. 7 K
59. 1 K 87. 2 K 115. 4 C 143. 5 AN 171. 7 K
60. 1 K 88. 3 K 116. 4 K 144. 5 AP 172. 7 K
61. 2 C 89. 3 K 117. 4 C 145. 5 AP 173. 7 K
62. 2 K 90. 3 K 118. 4 C 146. 5 AP 174. 7 K
63. 2 C 91. 3 C 119. 4 C 147. 5 AP 175. 7 K
64. 2 K 92. 3 K 120. 4 AN 148. 5 AN 176. 7 K
65. 2 K 93. 3 K 121. 4 C 149. 5 AN 177. 7 K
66. 2 C 94. 3 C 122. 5 C 150. 5 AN
67. 2 K 95. 3 K 123. 5 C 151. 5 AN
68. 2 K 96. 3 K 124. 5 K 152. 1 K
st
This question also appears in a self-test at the student companion website.
a
This question covers a topic in an appendix to the chapter.
,1-2 Test Bank for Accounting Principles, Thirteenth Edition
SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S
TAXONOMY
Brief Exercises
178. 1 C 181. 3 AP 184. 4 C 187. 5 AP
179. 3 K 182. 3 AP 185. 5 AP 188. 5 AP
180. 3 K 183. 3 C 186. 5 C
Exercises
189. 1,4 K 197. 3 C 205. 4 C 213. 5 AP 221. 5 AN
190. 3 AP 198. 3,4 C 206. 4 C 214. 5 AP 222. 5 C
191. 3 C 199. 3,4 C 207. 4 AP 215. 5 AP 223. 5 AP
192. 3 AP 200. 3,4 AP 208. 4 C 216. 5 AN 224. 5 AP
193. 3 C 201. 4 AP 209. 4 C 217. 5 AP 225. 5 AP
194. 3 AP 202. 4 AP 210. 4 C 218. 5 AP
195. 3 AN 203. 4 C 211. 4 AN 219. 5 C
196. 3 AN 204. 4 AN 212. 4 C 220. 5 AP
Completion Statements
226. 1 K 228. 1 K 230. 2 K 232. 2 K 234. 3 K
227. 1 K 229. 1 K 231. 2 K 233. 3 K 235. 5 K
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE
Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Learning Objective 1
1. TF 7. TF 34. TF 46. MC 52. MC 153. MC 228. C
2. TF 8. TF 41. MC 47. MC 53. MC 154. MC 229. C
3. TF 9. TF 42. MC 48. MC 54. MC 178. BE
4. TF 10. TF 43. MC 49. MC 59. MC 189. Ex
5. TF 11. TF 44. MC 50. MC 60. MC 226. C
6. TF 33. TF 45. MC 51. MC 152. MC 227. C
Learning Objective 2
12. TF 19. TF 63. MC 70. MC 77. MC 84. MC 158. MC
13. TF 20. TF 64. MC 71. MC 78. MC 85. MC 230. C
14. TF 35. TF 65. MC 72. MC 79. MC 86. MC 231. C
15. TF 36. TF 66. MC 73. MC 80. MC 87. MC 232. C
16. TF 37. TF 67. MC 74. MC 81. MC 155. MC
17. TF 61. MC 68. MC 75. MC 82. MC 156. MC
18. TF 62. MC 69. MC 76. MC 83. MC 157. MC
FOR INSTRUCTOR USE ONLY
,1-3 Accounting in Action
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE
Learning Objective 3
21. TF 91. MC 98. MC 105. MC 114. MC 190. Ex 197. Ex
22. TF 92. MC 99. MC 106. MC 159. MC 191. Ex 198. Ex
23. TF 93. MC 100. MC 107. MC 179. BE 192. Ex 199. Ex
38. TF 94. MC 101. MC 108. MC 180. BE 193. Ex 200. Ex
88. MC 95. MC 102. MC 109. MC 181. BE 194. Ex 233. C
89. MC 96. MC 103. MC 110. MC 182. BE 195. Ex 234. C
90. MC 97. MC 104. MC 111. MC 183. BE 196. Ex
Learning Objective 4
24. TF 112. MC 118. MC 161. MC 200. Ex 205. Ex 210. Ex
25. TF 113. MC 119. MC 184. BE 201. Ex 206. Ex 211. Ex
26. TF 115. MC 120. MC 189. Ex 202. Ex 207. Ex 212. Ex
27. TF 116. MC 121. MC 198. Ex 203. Ex 208. Ex
39. TF 117. MC 160. MC 199. Ex 204. Ex 209. Ex
Learning Objective 5
28. TF 127. MC 135. MC 143. MC 151. MC 215. Ex 223. Ex
29. TF 128. MC 136. MC 144. MC 162. MC 216. Ex 224. Ex
40. TF 129. MC 137. MC 145. MC 185. BE 217. Ex 225. Ex
122. MC 130. MC 138. MC 146. MC 186. BE 218. Ex 235. C
123. MC 131. MC 139. MC 147. MC 187. BE 219. Ex
124. MC 132. MC 140. MC 148. MC 188. BE 220. Ex
125. MC 133. MC 141. MC 149. MC 213. Ex 221. Ex
126. MC 134. MC 142. MC 150. MC 214. Ex 222. Ex
Learning Objective 6
a
30. TF a
32. TF a
56. MC a
58. MC
a
31. TF a
55. MC a
57. MC a
163. MC
Learning Objective 7
164. MC 166. MC 168. MC 170. MC 172. MC 174. MC 176. MC
165. MC 167. MC 169. MC 171. MC 173. MC 175. MC 177. MC
Note: TF = True-False BE = Brief Exercise C = Completion
MC = Multiple Choice Ex = Exercise
This chapter also contains one set of ten Matching questions and Short-Answer Essay questions.
A summary table of all learning outcomes, including AACSB, AICPA, and IMA professional
standards, is available on the Weygandt Accounting Principles 13e instructor web site.
FOR INSTRUCTOR USE ONLY
,1-4 Test Bank for Accounting Principles, Thirteenth Edition
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.
Generally accepted accounting principles are a common set of standards used by
accountants.
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 + Owner's Equity
Assets are resources owned by a business. Liabilities are creditorship claims on total assets.
Owner's equity is the ownership claim on total assets.
The expanded accounting equation is:
Assets = Liabilities + Owner's Capital - Owner's Drawings + Revenues -
Expenses
Owner's Capital is assets the owner puts into the business. Owner's drawings are the Assets
the owner withdraws for personal use. Revenues are increases in assets resulting from
income-earning activities. Expenses are the costs of assets consumed of services used in the
process of earning revenue.
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 owner's equity.
5. Describe the four financial statements and how they are prepared. An income statement
presents the revenues and expenses, and resulting net income or net loss for a specific
period of time. An owner's equity statement summarizes the changes in owner's equity for a
specific period of time. A balance sheet reports the assets, liabilities, and owner's 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
6. Explain the career opportunities in accounting. Accounting offers many different jobs in
fields such as public and private accounting, governmental, and forensic accounting.
Accounting is a popular major because there are many different types of jobs, with unlimited
potential for career advancement.
FOR INSTRUCTOR USE ONLY
,1-5 Accounting in Action
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: None AICPA FC: 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: None AICPA FC: Measurement
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: None AICPA FC: Measurement
4.Management of a business enterprise is the major external user of information.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min AACSB: None AICPA FC: Measurement
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: None AICPA FC: Measurement
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: None AICPA FC: Measurement
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: None AICPA FC: Measurement
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: None AICPA FC: Measurement
9.The origins of accounting are attributed to Luca Pacioli, a famous mathematician.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
10.The study of accounting is not useful for a business career unless your career objective is to
become an accountant.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
11.A working knowledge of accounting is not relevant to a lawyer or an architect.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
12.A partnership must have more than one owner.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
13.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: None AICPA FC: Measurement
14.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: None AICPA FC: Measurement
FOR INSTRUCTOR USE ONLY
,1-6 Test Bank for Accounting Principles, Thirteenth Edition
15.Accountants rely on a fundamental business concept—ethical behavior—in reporting financial
information.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
16.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: None AICPA FC: Measurement
17.The Financial Accounting Standards Board is a part of the Securities and Exchange
Commission.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
18.The Securities and Exchange Commission oversees U.S. financial markets and accounting
standard-setting bodies.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
19.The cost and fair market value of an asset are the same at the time of acquisition and in all
subsequent periods.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
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: None AICPA FC: Measurement
21.In order to possess future service potential, an asset must have physical substance.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
22.Owners' claims to total business assets take precedence over the claims of creditors because
owners invest assets in the business and are liable for losses.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
23.The basic accounting equation states that Assets = Liabilities.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
24.Accountants record both internal and external transactions.
Ans: T LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
25.Internal transactions do not affect the basic accounting equation because they are economic
events that occur entirely within one company.
Ans: F LO4 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
26.The purchase of store equipment for cash reduces assets and owner's equity by an equal
amount.
Ans: F LO4 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
27.The purchase of office equipment on credit increases total assets and total liabilities.
Ans: T LO4 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
28.The primary purpose of the statement of cash flows is to provide information about the cash
receipts and cash payments of a company during a period.
Ans: T LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
FOR INSTRUCTOR USE ONLY
,1-7 Accounting in Action
29.Net income for the period is determined by subtracting total expenses and drawings from total
revenues.
Ans: F LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement, Reporting
a
30. The study of accounting will be useful only if a student is interested in working for a profit-
oriented business firm.
Ans: F LO6 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
a
31. Private accountants are accountants who are not employees of business enterprises.
Ans: F LO6 BT:K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
a
32. Expressing an opinion as to the fairness of the information presented in financial
statements is a service performed by CPAs.
Ans: T LO6 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
33.Identifying is the process of keeping a chronological diary of events measured in dollars and
cents.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
34.Management consulting includes examining the financial statements of companies and
expressing an opinion as to the fairness of their presentation.
Ans: F LO1 BT: K Difficulty; Easy TOT: .5 min. AACSB: None AICPA FC: Measurement, Reporting
35.Accountants do not have to worry about issues of ethics.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Ethics AICPA PC: Professional Demeanor AICPA FC: Measurement
36.At the time an asset is acquired, cost and fair value should be the same.
Ans: T LO2 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
37.The monetary unit assumption requires that all dollar amounts be rounded to the nearest
dollar.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
38.The basic accounting equation is in balance when the creditor and ownership claims against
the business equal the assets.
Ans: T LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
39.External transactions involve economic events between the company and some other
enterprise or party.
Ans: T LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
40.In the owner's equity statement, revenues are listed first, followed by expenses, and net
income (or net loss).
Ans: F LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
Answers to True-False Statements
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
1. F 7. T 13. T 19. F 25. F a
31. F 37. F
2. T 8. F 14. T 20. T 26. F a
32. T 38. T
3. F 9. T 15. T 21. F 27. T 33. F 39. T
4. F 10. F 16. F 22. F 28. T 34. F 40. F
5. T 11. F 17. F 23. F 29. F 35. F
FOR INSTRUCTOR USE ONLY
, 1-8 Test Bank for Accounting Principles, Thirteenth Edition
6. F 12. T 18. T 24. T a
30. F 36. T
MULTIPLE CHOICE QUESTIONS
41.Accountants refer to an economic event as a
a. purchase.
b. sale.
c. transaction.
d. change in ownership.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
42.The starting point of the accounting process is
a. communicating information to users.
b. identifying economic events.
c. recording economic events.
d. None of these answers are correct.
Ans: b LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
43.Communication of economic events is the part of the accounting process that involves
a. identifying economic events.
b. quantifying transactions into dollars and cents.
c. preparing accounting reports.
d. recording and classifying information.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
44.Which of the following events cannot be quantified into dollars and cents and recorded as an
accounting transaction?
a. The appointment of a new CPA firm to perform an audit.
b. The purchase of a new computer.
c. The sale of store equipment.
d. Payment of income taxes.
Ans: a LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
45.Interpretation of reported information involves each of the following except
a. limitations of reported data.
b. meaning of reported data.
c. uses of reported data.
d. All of these choices are correct.
Ans: d LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
46.The accounting process involves all of the following except
a. identifying economic transactions that are relevant to the business.
b. communicating financial information to users by preparing financial reports.
c. recording nonquantifiable economic events.
d. analyzing and interpreting financial reports.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
47.The accounting process is correctly sequenced as
a. identification, communication, recording.
b. recording, communication, identification.
c. identification, recording, communication.
d. communication, recording, identification.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
FOR INSTRUCTOR USE ONLY
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
, CHAPTER 1
ACCOUNTING IN ACTION
SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S
TAXONOMY
Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT
True-False Statements
1. 1 K 9. 1 K 17. 2 K 25. 4 K 33. 1 K
2. 1 K 10. 1 K 18. 2 K 26. 4 K 34. 1 K
3. 1 C 11. 1 K 19. 2 K 27. 4 K 35. 2 K
4. 1 K 12. 2 K 20. 2 C 28. 5 C 36. 2 C
5. 1 K 13. 2 K 21. 3 K 29. 5 C 37. 2 K
6. 1 C 14. 2 K 22. 3 K 30. 6 C 38. 3 K
7. 1 K 15. 2 K 23. 3 K 31. 6 K 39. 4 K
8. 1 C 16. 2 K 24. 4 K 32. 6 K 40. 5 K
Multiple Choice Questions
41. 1 K 69. 2 C 97. 3 K 125. 5 K st
153. 1 K
42. 1 K 70. 2 K 98. 3 K 126. 5 C st
154. 1 K
43. 1 K 71. 2 K 99. 3 K 127. 5 AP 155. 2 K
44. 1 C 72. 2 C 100. 3 C 129. 5 AP st
156. 2 K
45. 1 K 73. 2 K 101. 3 K 129. 5 AP 157. 2 K
46. 1 K 74. 2 K 102. 3 C 130. 5 K st
158. 2 K
47. 1 K 75. 2 K 103. 3 AP 131. 5 C 159. 3 K
48. 1 K 76. 2 K 104. 3 AP 132. 5 K 160. 4 K
49. 1 C 77. 2 K 105. 3 AP 133. 5 K 161. 4 C
50. 1 C 78. 2 K 106. 3 AP 134. 5 AP 162. 5 C
51. 1 C 79. 2 C 107. 3 AP 135. 5 AP 163. 6 K
52. 1 C 80. 2 C 108. 3 C 136. 5 AN 164. 7 K
53. 1 C 81. 2 K 109. 3 AP 137. 5 AN 165. 7 K
54. 1 C 82. 2 K 110. 3 C 138. 5 AP 166. 7 K
a
55. 6 K 83. 2 C 111. 3 C 139. 5 AP 167. 7 K
a
56. 6 K 84. 2 K 112. 4 C 140. 5 AP 168. 7 K
a
57. 6 K 85. 2 K 113. 4 C 141. 5 AP 169. 7 K
a
58. 6 C 86. 2 K 114. 3 C 142. 5 AP 170. 7 K
59. 1 K 87. 2 K 115. 4 C 143. 5 AN 171. 7 K
60. 1 K 88. 3 K 116. 4 K 144. 5 AP 172. 7 K
61. 2 C 89. 3 K 117. 4 C 145. 5 AP 173. 7 K
62. 2 K 90. 3 K 118. 4 C 146. 5 AP 174. 7 K
63. 2 C 91. 3 C 119. 4 C 147. 5 AP 175. 7 K
64. 2 K 92. 3 K 120. 4 AN 148. 5 AN 176. 7 K
65. 2 K 93. 3 K 121. 4 C 149. 5 AN 177. 7 K
66. 2 C 94. 3 C 122. 5 C 150. 5 AN
67. 2 K 95. 3 K 123. 5 C 151. 5 AN
68. 2 K 96. 3 K 124. 5 K 152. 1 K
st
This question also appears in a self-test at the student companion website.
a
This question covers a topic in an appendix to the chapter.
,1-2 Test Bank for Accounting Principles, Thirteenth Edition
SUMMARY OF QUESTIONS BY LEARNING OBJECTIVES AND BLOOM’S
TAXONOMY
Brief Exercises
178. 1 C 181. 3 AP 184. 4 C 187. 5 AP
179. 3 K 182. 3 AP 185. 5 AP 188. 5 AP
180. 3 K 183. 3 C 186. 5 C
Exercises
189. 1,4 K 197. 3 C 205. 4 C 213. 5 AP 221. 5 AN
190. 3 AP 198. 3,4 C 206. 4 C 214. 5 AP 222. 5 C
191. 3 C 199. 3,4 C 207. 4 AP 215. 5 AP 223. 5 AP
192. 3 AP 200. 3,4 AP 208. 4 C 216. 5 AN 224. 5 AP
193. 3 C 201. 4 AP 209. 4 C 217. 5 AP 225. 5 AP
194. 3 AP 202. 4 AP 210. 4 C 218. 5 AP
195. 3 AN 203. 4 C 211. 4 AN 219. 5 C
196. 3 AN 204. 4 AN 212. 4 C 220. 5 AP
Completion Statements
226. 1 K 228. 1 K 230. 2 K 232. 2 K 234. 3 K
227. 1 K 229. 1 K 231. 2 K 233. 3 K 235. 5 K
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE
Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Learning Objective 1
1. TF 7. TF 34. TF 46. MC 52. MC 153. MC 228. C
2. TF 8. TF 41. MC 47. MC 53. MC 154. MC 229. C
3. TF 9. TF 42. MC 48. MC 54. MC 178. BE
4. TF 10. TF 43. MC 49. MC 59. MC 189. Ex
5. TF 11. TF 44. MC 50. MC 60. MC 226. C
6. TF 33. TF 45. MC 51. MC 152. MC 227. C
Learning Objective 2
12. TF 19. TF 63. MC 70. MC 77. MC 84. MC 158. MC
13. TF 20. TF 64. MC 71. MC 78. MC 85. MC 230. C
14. TF 35. TF 65. MC 72. MC 79. MC 86. MC 231. C
15. TF 36. TF 66. MC 73. MC 80. MC 87. MC 232. C
16. TF 37. TF 67. MC 74. MC 81. MC 155. MC
17. TF 61. MC 68. MC 75. MC 82. MC 156. MC
18. TF 62. MC 69. MC 76. MC 83. MC 157. MC
FOR INSTRUCTOR USE ONLY
,1-3 Accounting in Action
SUMMARY OF LEARNING OBJECTIVES BY QUESTION TYPE
Learning Objective 3
21. TF 91. MC 98. MC 105. MC 114. MC 190. Ex 197. Ex
22. TF 92. MC 99. MC 106. MC 159. MC 191. Ex 198. Ex
23. TF 93. MC 100. MC 107. MC 179. BE 192. Ex 199. Ex
38. TF 94. MC 101. MC 108. MC 180. BE 193. Ex 200. Ex
88. MC 95. MC 102. MC 109. MC 181. BE 194. Ex 233. C
89. MC 96. MC 103. MC 110. MC 182. BE 195. Ex 234. C
90. MC 97. MC 104. MC 111. MC 183. BE 196. Ex
Learning Objective 4
24. TF 112. MC 118. MC 161. MC 200. Ex 205. Ex 210. Ex
25. TF 113. MC 119. MC 184. BE 201. Ex 206. Ex 211. Ex
26. TF 115. MC 120. MC 189. Ex 202. Ex 207. Ex 212. Ex
27. TF 116. MC 121. MC 198. Ex 203. Ex 208. Ex
39. TF 117. MC 160. MC 199. Ex 204. Ex 209. Ex
Learning Objective 5
28. TF 127. MC 135. MC 143. MC 151. MC 215. Ex 223. Ex
29. TF 128. MC 136. MC 144. MC 162. MC 216. Ex 224. Ex
40. TF 129. MC 137. MC 145. MC 185. BE 217. Ex 225. Ex
122. MC 130. MC 138. MC 146. MC 186. BE 218. Ex 235. C
123. MC 131. MC 139. MC 147. MC 187. BE 219. Ex
124. MC 132. MC 140. MC 148. MC 188. BE 220. Ex
125. MC 133. MC 141. MC 149. MC 213. Ex 221. Ex
126. MC 134. MC 142. MC 150. MC 214. Ex 222. Ex
Learning Objective 6
a
30. TF a
32. TF a
56. MC a
58. MC
a
31. TF a
55. MC a
57. MC a
163. MC
Learning Objective 7
164. MC 166. MC 168. MC 170. MC 172. MC 174. MC 176. MC
165. MC 167. MC 169. MC 171. MC 173. MC 175. MC 177. MC
Note: TF = True-False BE = Brief Exercise C = Completion
MC = Multiple Choice Ex = Exercise
This chapter also contains one set of ten Matching questions and Short-Answer Essay questions.
A summary table of all learning outcomes, including AACSB, AICPA, and IMA professional
standards, is available on the Weygandt Accounting Principles 13e instructor web site.
FOR INSTRUCTOR USE ONLY
,1-4 Test Bank for Accounting Principles, Thirteenth Edition
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.
Generally accepted accounting principles are a common set of standards used by
accountants.
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 + Owner's Equity
Assets are resources owned by a business. Liabilities are creditorship claims on total assets.
Owner's equity is the ownership claim on total assets.
The expanded accounting equation is:
Assets = Liabilities + Owner's Capital - Owner's Drawings + Revenues -
Expenses
Owner's Capital is assets the owner puts into the business. Owner's drawings are the Assets
the owner withdraws for personal use. Revenues are increases in assets resulting from
income-earning activities. Expenses are the costs of assets consumed of services used in the
process of earning revenue.
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 owner's equity.
5. Describe the four financial statements and how they are prepared. An income statement
presents the revenues and expenses, and resulting net income or net loss for a specific
period of time. An owner's equity statement summarizes the changes in owner's equity for a
specific period of time. A balance sheet reports the assets, liabilities, and owner's 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
6. Explain the career opportunities in accounting. Accounting offers many different jobs in
fields such as public and private accounting, governmental, and forensic accounting.
Accounting is a popular major because there are many different types of jobs, with unlimited
potential for career advancement.
FOR INSTRUCTOR USE ONLY
,1-5 Accounting in Action
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: None AICPA FC: 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: None AICPA FC: Measurement
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: None AICPA FC: Measurement
4.Management of a business enterprise is the major external user of information.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min AACSB: None AICPA FC: Measurement
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: None AICPA FC: Measurement
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: None AICPA FC: Measurement
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: None AICPA FC: Measurement
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: None AICPA FC: Measurement
9.The origins of accounting are attributed to Luca Pacioli, a famous mathematician.
Ans: T LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
10.The study of accounting is not useful for a business career unless your career objective is to
become an accountant.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
11.A working knowledge of accounting is not relevant to a lawyer or an architect.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
12.A partnership must have more than one owner.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
13.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: None AICPA FC: Measurement
14.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: None AICPA FC: Measurement
FOR INSTRUCTOR USE ONLY
,1-6 Test Bank for Accounting Principles, Thirteenth Edition
15.Accountants rely on a fundamental business concept—ethical behavior—in reporting financial
information.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
16.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: None AICPA FC: Measurement
17.The Financial Accounting Standards Board is a part of the Securities and Exchange
Commission.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
18.The Securities and Exchange Commission oversees U.S. financial markets and accounting
standard-setting bodies.
Ans: T LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
19.The cost and fair market value of an asset are the same at the time of acquisition and in all
subsequent periods.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
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: None AICPA FC: Measurement
21.In order to possess future service potential, an asset must have physical substance.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
22.Owners' claims to total business assets take precedence over the claims of creditors because
owners invest assets in the business and are liable for losses.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
23.The basic accounting equation states that Assets = Liabilities.
Ans: F LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
24.Accountants record both internal and external transactions.
Ans: T LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
25.Internal transactions do not affect the basic accounting equation because they are economic
events that occur entirely within one company.
Ans: F LO4 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
26.The purchase of store equipment for cash reduces assets and owner's equity by an equal
amount.
Ans: F LO4 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
27.The purchase of office equipment on credit increases total assets and total liabilities.
Ans: T LO4 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
28.The primary purpose of the statement of cash flows is to provide information about the cash
receipts and cash payments of a company during a period.
Ans: T LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
FOR INSTRUCTOR USE ONLY
,1-7 Accounting in Action
29.Net income for the period is determined by subtracting total expenses and drawings from total
revenues.
Ans: F LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement, Reporting
a
30. The study of accounting will be useful only if a student is interested in working for a profit-
oriented business firm.
Ans: F LO6 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
a
31. Private accountants are accountants who are not employees of business enterprises.
Ans: F LO6 BT:K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
a
32. Expressing an opinion as to the fairness of the information presented in financial
statements is a service performed by CPAs.
Ans: T LO6 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
33.Identifying is the process of keeping a chronological diary of events measured in dollars and
cents.
Ans: F LO1 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
34.Management consulting includes examining the financial statements of companies and
expressing an opinion as to the fairness of their presentation.
Ans: F LO1 BT: K Difficulty; Easy TOT: .5 min. AACSB: None AICPA FC: Measurement, Reporting
35.Accountants do not have to worry about issues of ethics.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: Ethics AICPA PC: Professional Demeanor AICPA FC: Measurement
36.At the time an asset is acquired, cost and fair value should be the same.
Ans: T LO2 BT: C Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
37.The monetary unit assumption requires that all dollar amounts be rounded to the nearest
dollar.
Ans: F LO2 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
38.The basic accounting equation is in balance when the creditor and ownership claims against
the business equal the assets.
Ans: T LO3 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
39.External transactions involve economic events between the company and some other
enterprise or party.
Ans: T LO4 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
40.In the owner's equity statement, revenues are listed first, followed by expenses, and net
income (or net loss).
Ans: F LO5 BT: K Difficulty: Easy TOT: .5 min. AACSB: None AICPA FC: Measurement
Answers to True-False Statements
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
1. F 7. T 13. T 19. F 25. F a
31. F 37. F
2. T 8. F 14. T 20. T 26. F a
32. T 38. T
3. F 9. T 15. T 21. F 27. T 33. F 39. T
4. F 10. F 16. F 22. F 28. T 34. F 40. F
5. T 11. F 17. F 23. F 29. F 35. F
FOR INSTRUCTOR USE ONLY
, 1-8 Test Bank for Accounting Principles, Thirteenth Edition
6. F 12. T 18. T 24. T a
30. F 36. T
MULTIPLE CHOICE QUESTIONS
41.Accountants refer to an economic event as a
a. purchase.
b. sale.
c. transaction.
d. change in ownership.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
42.The starting point of the accounting process is
a. communicating information to users.
b. identifying economic events.
c. recording economic events.
d. None of these answers are correct.
Ans: b LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
43.Communication of economic events is the part of the accounting process that involves
a. identifying economic events.
b. quantifying transactions into dollars and cents.
c. preparing accounting reports.
d. recording and classifying information.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
44.Which of the following events cannot be quantified into dollars and cents and recorded as an
accounting transaction?
a. The appointment of a new CPA firm to perform an audit.
b. The purchase of a new computer.
c. The sale of store equipment.
d. Payment of income taxes.
Ans: a LO1 BT: C Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
45.Interpretation of reported information involves each of the following except
a. limitations of reported data.
b. meaning of reported data.
c. uses of reported data.
d. All of these choices are correct.
Ans: d LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
46.The accounting process involves all of the following except
a. identifying economic transactions that are relevant to the business.
b. communicating financial information to users by preparing financial reports.
c. recording nonquantifiable economic events.
d. analyzing and interpreting financial reports.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
47.The accounting process is correctly sequenced as
a. identification, communication, recording.
b. recording, communication, identification.
c. identification, recording, communication.
d. communication, recording, identification.
Ans: c LO1 BT: K Difficulty: Easy TOT: 1.0 min. AACSB: None AICPA FC: Measurement
FOR INSTRUCTOR USE ONLY
