Copyright 2022 WILEY Weygandt Financial Accounting, IFRS, 5e, Solutions Manual For Instructor Use Only 1-1

Copyright © 2022 WILEY Weygandt Financial Accounting, IFRS, 5/e, Solutions Manual (For Instructor Use Only) 1-1

CHAPTER 1

Accounting in Action Learning Objectives 1.Identify the activities and users associated with accounting.

2.Explain the building blocks of accounting: ethics, principles, and assumptions.

3.State the accounting equation and define its components.

4.Analyze the effects of business transactions on the accounting equation.

5.Describe the five financial statements and how they are prepared.*6. Explain the career opportunities in accounting.Financial Accounting with International Financial Reporting Standards (IFRS), 5e Jerry Weygandt, Paul Kimmel (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) All Chapters Solutions Manual Supplement files download link at the end of this file. 1 / 4

1-2 Copyright © 2022 WILEY Weygandt Financial Accounting, IFRS, 5/e, Solutions Manual (For Instructor Use Only)

ANSWERS TO QUESTIONS

• Yes, this is correct. 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

• 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 therefore 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

• (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 from 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

• (a) Investors (owners) use accounting information to make decisions to buy, hold, or sell shares.

(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

• The four most common types of data analytics and the basic question each one addresses are:

Descriptive (What happened?), Diagnostic (Why did it happen?), Predictive (What is likely to happen?), and Prescriptive (What should we do about it?).LO 1 BT: K Difficulty: E TOT: 2 min. AACSB: Data Analytics AICPA FC: Measurement Analysis and Interpretation

• No, this is incorrect. 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

• Remmers Travel Agency should report the land at £85,000 on its December 31, 2025 statement of

financial position. 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 basis to use (cost or fair value) companies weigh the factual nature of cost figures versus the relevance of fair value. In general, companies use cost.Only in situations where assets are actively traded do companies apply the fair value basis extensively. An important concept that accountants follow is the historical cost basis.LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation

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Copyright © 2022 WILEY Weygandt Financial Accounting, IFRS, 5/e, Solutions Manual (For Instructor Use Only) 1-3 Questions Chapter 1 (Continued)

• 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

• The economic entity assumption requires that the activities of the entity be kept separate and

distinct from the activities of its owners and all other economic entities.LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Measurement, Analysis and Interpretation

• The three basic forms of business organizations are: (1) proprietorship, (2) partnership, and

(3) corporation.LO 2, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting

• One of the advantages Teresa Alvarez would enjoy is that ownership of a corporation is repre-

sented by transferable shares. This would allow Teresa to raise money easily by selling a part of her ownership in the company. Another advantage is that because holders of the shares (shareholders) enjoy limited liability, they are not personally liable for the debts of the corporate entity. Also, because ownership can be transferred without dissolving the corporation, the corporation enjoys an unlimited life.LO 2, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting

• The basic accounting equation is Assets = Liabilities + Equity.

LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting

• (a) Assets are resources owned by a business. Liabilities are claims against assets. Put more

simply, liabilities are existing debts and obligations. Equity is the ownership claim on total assets.(b) Equity is affected by shareholders’ investments, dividends, revenues, and expenses.LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting

• The liabilities are: (b) Accounts payable and (g) Salaries and wages payable.

LO 3, BT: K, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting

• Yes, a business can enter into a transaction in which only the left side of the accounting equation

is affected. An example would be a transaction where an increase in one asset is offset by a decrease in another asset. An increase in the Equipment account which is offset by a decrease in the Cash account is a specific example.LO 3, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting

• Business transactions are the economic events of the enterprise recorded by accountants because

they affect the basic equation.(a) No, the death of the president of the company is not a business transaction as it does not affect the basic equation.(b) Yes, supplies purchased on account is a business transaction as it affects the basic equation.(c) No, an employee being fired is not a business transaction as it does not affect the basic equation.LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting

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1-4 Copyright © 2022 WILEY Weygandt Financial Accounting, IFRS, 5/e, Solutions Manual (For Instructor Use Only) Questions Chapter 1 (Continued)

• (a) Decrease assets and decrease equity.

(b) Increase assets and decrease assets.(c) Increase assets and increase equity.(d) Decrease assets and decrease liabilities.

LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting

• (a) Income statement. (d) Statement of financial position.

(b) Statement of financial position. (e) Statement of financial position and retained (c) Income statement. earnings statement.(f) Statement of financial position.LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting

• No, this treatment is not proper. While the transaction does involve a receipt of cash, it does not

represent revenues. Revenues are the gross increase in equity resulting from business activities entered into for the purpose of earning income. This transaction is simply an additional investment made by one of the owners of the business.LO 4, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting

• Yes. Net income does appear on the income statement—it is the result of subtracting expenses

from revenues. In addition, net income appears in the retained earnings statement—it is shown as an addition to the beginning-of-period retained earnings. Indirectly, the net income of a company is also included in the statement of financial position. It is included in the Retained Earnings account which appears in the equity section of the statement of financial position.LO 5, BT: C, Difficulty: Easy, TOT: 2 min., AACSB: None, AICPA FC: Reporting

• (a) Ending equity balance ...................................................................................... £198,000

Less: Beginning equity balance ........................................................................ 158,000 Net income ....................................................................................................... £ 40,000

(b) Ending equity balance ...................................................................................... £198,000 Less: Beginning equity balance ........................................................................ 158,000

40,000

Less: Investment ............................................................................................. 13,000 Net income ....................................................................................................... £ 27,000 LO 5, BT: AN, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting

• (a) Total revenues (£30,000 + £70,000) ................................................................ £100,000

(b) Total expenses (£26,000 + £40,000) ................................................................ £66,000

(c) Total revenues ................................................................................................. £100,000 Total expenses................................................................................................. 66,000 Net income ....................................................................................................... £34,000 LO 5, BT: AN, Difficulty: Easy, TOT: 3 min., AACSB: Analytic, AICPA FC: Reporting

• TSMC’s accounting equation at December 31, 2020 was NT$2,760,600.5 = NT$924,836.7+

NT$1,835,763.8.

LO 3, BT: AP, Difficulty: Easy, TOT: 4 min., AACSB: Analytic, AICPA FC: Reporting

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