weygandt chapter 1 solution (covers all homeworks)

Feb 3rd, 2012
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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.  8. 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.  9. The three basic forms of business organizations are: (1) proprietorship, (2) partnership, and (3) corporation. 10. One of the advantages Tersa Alvarez would enjoy is that ownership of a corporation is repre­sented by transferable shares of stock. 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 (stockholders) enjoy limited liability, they are not personally liable for the debts of the corporate entity. Also, because ownership can be transferred without dissolving the co

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CHAPTER 1Accounting in ActionANSWERS TO QUESTIONS1.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.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 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 accountants 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.(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.4.

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