Type:
Test Bank
Resource:
Accounting Principles
Edition:
5th Edition
Author(s):
Jerry J. Weygandt Donald E. Kieso Paul D. Kimmel Barbara Trenholm Valerie A. Kinnear
CHAPTER 1 ACCOUNTING IN ACTION SUMMARY OF QUESTIONS BY OBJECTIVES AND BLOOM’S TAXONOMY Item 1. 2. 3. 4. 5. 6. 7.
SO 1 1, 5 2 2 2 2 3
BT K C K K C C K
Item 8. 9. 10. 11. 12. 13. 14.
SO 3 3 3 3 3 3 3
BT
Item
SO
BT
K K AP AP AP AP AP
Exercises 15. 3 AP 16. 4 AN 17. 4 C 18. 4 C 19. 4 C 20. 4 C 21. 4 C
Item 22. 23. 24. 25. 26. 27. 28.
SO
BT
Item
SO
BT
4 4 4 4 5 5 5
K K AP AP AP K AP
29. 30. 31. 32. 33.
5 5 5 5 3,5
AP AP AP AP AP
1-2
Test Bank Exercises for Accounting Principles, Fourth Canadian Edition
SUMMARY OF STUDY OBJECTIVES BY QUESTION Item
Type
Item
Type
Item
Type
Item
Type
Item
Type
Item
Type
Item
Type
Study Objective 1 1.
Ex
2.
Ex Study Objective 2
3.
Ex
4.
Ex
5.
Ex
6.
Ex
Study Objective 3 7. 8.
Ex Ex
9. 10.
Ex Ex
11. 12.
Ex Ex
13. 14.
Ex Ex
15. 33.
Ex Ex
Study Objective 4 16. 17. 2. 26.
Ex Ex Ex Ex
18. 19. 27. 28.
Ex Ex Ex Ex
20. 21.
Ex Ex
22. 23.
Ex Ex
24. 25.
Ex Ex
29. 30.
Study Objective 5 Ex 31. Ex 33. Ex 32. Ex
Ex
Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
Accounting in Action
1-3
SUMMARY OF QUESTIONS BY LEVEL OF DIFFICULTY (LOD) Item 1. 2. 3. 4. 5.
LoD E M E M M
Item 6. 7. 8. 9. 10.
LoD E E E E M
Item 11. 12. 13. 14. 15.
LoD
Item
LoD
Item
LoD
Item
Type
Item
LoD
E M E M M
Exercises 16. D 17. M 18. M 19. M 20. D
21. 22. 23. 24. 25.
D E M D M
26. 27. 28. 29. 30.
D E E M H
31. 32. 33.
M M M
EASY = E MEDIUM = M DIFFICULT = D
Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.
1-4
Test Bank Exercises for Accounting Principles, Fourth Canadian Edition CHAPTER STUDY OBJECTIVES
1. Identify the use and users of accounting. Accounting is the information system that identifies, records, and communicates the economic events of an organization to a wide variety of interested users. Good accounting is important to people both inside and outside the organization. Internal users, such as management, use accounting information to plan, control, and evaluate business operations. External users include investors and creditors, among others. Accounting data are used by investors (owners) to decide whether to buy, hold, or sell their financial interests. Creditors (suppliers and bankers) evaluate the risks of granting credit or lending money based on the accounting information. Other groups that use accounting information are taxing authorities, regulatory agencies, customers, labour unions, and economic planners. For our economic system to function smoothly, reliable and ethical accounting and financial reporting are critical. The most common examples of business organizations include proprietorship, partnership, and corporation. 2. Explain Canadian accounting standards and apply basic accounting concepts. Generally accepted accounting principles are a common set of guidelines that are used to prepare and report accounting information. In Canada, as of 2011 there are two sets of standards or GAAP. Publicly accountable enterprises follow International Financial Reporting Standards (IFRS) and private enterprises have the choice of following IFRS or Canadian GAAP for Private Enterprises. The going concern assumption presumes that a business will continue operations for enough time to use its assets for their intended purpose and to complete its commitments. The economic entity assumption requires the activities of each economic entity to be kept separate from the activities of its owner and other economic entities. Recognition is the process of recording items and measurement is the process of determining the amount that should be recognized. The cost principle states that assets should be recorded at their historical (original) cost. The monetary unit assumption requires that only transaction data that can be expressed as an amount of money be included in the accounting records, and it assumes that the monetary unit is stable. 3. Use the accounting equation and explain the meaning of assets, liabilities, and owner’s equity. The accounting equation is: Assets = Liabilities + Owner’s Equity. Assets are resources owned by a business that are capable of providing future services or benefits. Liabilities are current obligations arising from past events to make future payments of assets or services. Owner’s equity is the owner’s claim on the company’s assets and is equal to total assets minus total liabilities. Owner’s equity is increased by investments by the owner and by revenues. It is decreased by drawings and expenses. Revenues are the increase in assets, or decrease in liabilities, that result from business activities that are done to earn profit. Expenses are the cost of assets consumed or services used in a company’s ordinary business activities. Drawings are withdrawals of cash or other assets from the business for the owner’s personal use. 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 is increased, there must be a corresponding (1) decrease in another asset, (2) increase in a liability, and/or (3) increase in owner’s equity. 5. Prepare financial statements. An income statement presents the revenues and expenses, and the resulting profit or loss, of a company for a specific period of time. A statement of owner’s equity summarizes the changes in owner’s equity that have occurred for a specific period of time. A balance sheet reports the assets, liabilities, and owner’s equity of a business at a specific date. A cash flow statement summarizes information about the cash inflows (receipts) and outflows (payments) for a specific period of time.
Copyright © 2010 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission of this page is strictly prohibited.