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Copyright © 2018 WILEY   Weygandt, Accounting Principles, IFRS 1/e, Solutions Manual   (For Instructor Use Only) 1-1 CHAPTER 1 EXERCISE 1.2 (a) Internal users Marketing manager Production supervisor Store manager Vice-president of finance External users Customers Financial regulators Labor unions Suppliers Tax authorities (b) I Can we afford to give our employees a pay raise? E Did the company earn a satisfactory income? I Do we need to borrow in the near future? E How does the company’s profitability compare to other companies? I What does it cost us to manufacture each unit produced? I Which product should we emphasize? E Will the company be able to pay its short-term debts?
1-2 Copyright © 2018 WILEY   Weygandt, Accounting Principles, IFRS 1/e, Solutions Manual   (For Instructor Use Only) EXERCISE 1.4 1. Incorrect. The historical cost principle requires that assets (such as buildings) be recorded and reported at their cost. 2. Correct. The monetary unit assumption requires that companies include in the accounting records only transaction data that can be expressed in terms of money. 3. Incorrect. The economic entity assumption requires that the activities of the entity be kept separate and distinct from the activities of its owner and all other economic entities.
Copyright © 2018 WILEY   Weygandt, Accounting Principles, IFRS 1/e, Solutions Manual   (For Instructor Use Only) 1-3 EXERCISE 1.5 Asset Liability Owner’s Equity Cash Accounts payable Owner’s capital Equipment Notes payable Supplies Accounts receivable Salaries and wages    payable EXERCISE 1.6 1. Increase in assets and increase in owner’s equity. 2. Decrease in assets and decrease in owner’s equity. 3. Increase in assets and increase in liabilities. 4. Increase in assets and increase in owner’s equity. 5. Decrease in assets and decrease in owner’s equity. 6. Increase in assets and decrease in assets. 7. Increase in liabilities and decrease in owner’s equity. 8. Increase in assets and decrease in assets. 9. Increase in assets and increase in owner’s equity. EXERCISE 1.7 1. (c) 5. (d) 2. (d) 6. (b) 3. (a) 7. (e) 4. (b) 8. (f) EXERCISE 1.11 (a) Total assets (beginning of year) €110,000 Total liabilities (beginning of year) 85,000 Total owner’s equity (beginning of year) € 25,000 (b) Total owner’s equity (end of year) € 40,000 Total owner’s equity (beginning of year) 25,000
1-4 Copyright © 2018 WILEY   Weygandt, Accounting Principles, IFRS 1/e, Solutions Manual   (For Instructor Use Only) Increase in owner’s equity € 15,000 Total revenues €220,000 Total expenses 175,000 Net income € 45,000 Increase in owner’s equity € 15,000 Less: Net income € (45,000) Add: Drawings 37,000) (8,000 ) Additional investment € 7,000 (c) Total assets (beginning of year) €129,000 Total owner’s equity (beginning of year) 80,000 Total liabilities (beginning of year) € 49,000