Chapter 5 Quiz example #20836

Which of the following statements is correct? a. The cost of supplies used is reported on the statement of owner's equity. b. The cost of supplies used represents an operating expense of the business. c. Accumulated Depreciation-Equipment is presented in the liabilities section of a balance sheet. d. At the time of their acquisition, prepaid expenses are recorded in expense accounts.

A consecutive, twelve-month accounting period is called a(n) a. accrual year. b. fiscal year. c. accounting year. d. adjusted year

Accumulated Depreciation, Equipment, is shown as: a. a liability on the Balance Sheet b. a reduction of Capital on the Statement of Owner's Equity c. a contra asset on the Balance Sheet d. an expense on the Income Statement.

If the prepaid expenses are not adjusted, assets on the balance sheet a. will be overstated. b. will be understated. c. will not be affected. d. may be either overstated or understated.

On June 1, Sidney Consulting Services paid $18,000 for 12 months of advance rent on its office building. Select the adjusting entry made on December 31, to record the amount of rent that had expired. a. Prepaid Rent....................9,000 Rent Expense.............9,000 b. Prepaid Rent.................10,500 Rent Expense..........10,500 c. Rent Expense...............18,000 Prepaid Rent............18,000 d. Rent Expense...............10,500 Prepaid Rent............10,500

The adjusting entry to account for the expiration of prepaid insurance consists of a. a debit to Insurance Expense and a credit to Prepaid Insurance. b. a debit to Insurance Expense and a credit to Accumulated Depreciation. c. a debit to Prepaid Insurance and a credit to Accumulated Depreciation. d. a debit to Accumulated Depreciation and a credit to Prepaid Insurance.

On December 31, Treats Catering Inc.'s trial balance shows a $1,000 balance in the Supplies account. However, a physical count of the supplies determined that only $400 of supplies actually remain in the supply cabinet. Select the adjusting entry made on December 31, to record the amount of supplies that had been used during the year. a. Supplies............................1,000 Supplies Expense.......1,000 b. Supplies Expense..............400 Supplies.........................400 c. Supplies Expense.............600 Supplies........................600 d. Supplies.............................600 Supplies Expense........600

On a worksheet, the adjusted balance of the Depreciation Expense account is extended to: a. the Income Statement Debit column b. the Income Statement Credit column c. the Balance Sheet Debit column d. the Balance Sheet Credit column

On November 1, 2016, Peaches Consulting Service paid $4,800 for 12 months of advance rent on its office space. The correct adjusting entry on December 31 to show the amount of rent that had expired would include: a. debit Rent Expense $400; credit Prepaid Rent $400 b. debit Rent Expense $800; credit Prepaid Rent $800 c. debit Prepaid Rent $4,000; credit Rent Expense $4,000 d. debit Rent Expense $4,800; credit Prepaid Rent $4,800

On October 1, 2016, Jay Walker Company purchased a one-year insurance policy for $660. The correct adjusting entry on December 31, 2016, is a. debit Insurance Expense $660; credit Prepaid Insurance $660 b. debit Insurance Expense $495; credit Prepaid Insurance $495 c. debit Prepaid Insurance $55; credit Insurance Expense $55 d. debit Insurance Expense $165; credit Prepaid Insurance $165.

Which of the following entries records the depreciation on equipment for the fiscal year-end adjustment? a. Debit Accumulated Depreciation; credit Depreciation Expense b. Debit Depreciation Expense; credit Equipment c. Debit Depreciation Expense; credit Accumulated Depreciation d. Debit Depreciation; credit Depreciation Expense

Equipment costing $13,500 with an estimated salvage value of $1,020 and an estimated life of 4 years was purchased on November 1, 2016. Using the straight-line depreciation method, what is the amount of depreciation expense to be recorded at December 31, 2016? a. $260 b. $520 c. $3,120 d. $1,020

On a worksheet, the adjusting entry to account for depreciation of equipment consists of a. a debit to Depreciation Expense and a credit to Equipment. b. a debit to Depreciation Expense and a credit to Accumulated Depreciation. c. a debit to Equipment and a credit to Accumulated Depreciation. d. a debit to Accumulated Depreciation and a credit to Equipment.

On a worksheet, the adjusted balance of the revenue account Fees Income would be extended to: a. the Income Statement Debit column. b. the Balance Sheet Credit column. c. the Balance Sheet Debit column d. the Income Statement Credit column.

On a balance sheet, Accumulated Depreciation—Equipment is reported a. as a deduction from the cost of the equipment. b. as a liability. c. as an expense. d. as a deduction from the total of the assets.

Which of the following statements is not correct? a. Generally accepted accounting principles require that the original cost of a long-term asset continue to appear in the asset account until the disposition of the asset. b. The book value of a long-term asset is reduced each year as depreciation is recorded. c. Buildings and trucks are examples of long-term assets. d. Salvage value is computed by subtracting the accumulated depreciation from the cost of a long-term asset.

If long-term assets are not adjusted, expenses on the income statement a. will be overstated. b. will be understated. c. will not be affected. d. may be either overstated or underrated.

The balance in the account ACCUMULATED DEPRECIATION, EQUIPMENT will a. be reported on the Income Statement. b. be reported on the Statement of Owner's Equity. c. will be reported on the Balance Sheet. d. not appear on any financial statement.

Which of the following statements is NOT correct? a. The difference between the total of the Income Statement Debit column and the total of the Income Statement Credit column of the worksheet represents either net income or net loss. b. Net income is recorded on the worksheet in the Income Statement Debit column and the Balance Sheet Credit column. c. Only the balances of accounts that are affected by adjustments must be recalculated before they are recorded in the Adjusted Trial Balance section of the worksheet. d. If an account has a debit balance in the Trial Balance section of the worksheet and there is a credit entry in the Adjustments section, the credit amount is added when computing the balance to be shown in the Adjusted Trial Balance section of the worksheet.

When a trial balance is in balance, a. adjusting entries are not required. b. the general ledger is free of errors. c. the debit account balances equal the credit account balances. d. the company has earned a net income.

The adjustments made on the worksheet a. are posted to the ledger but are not recorded in the journal. b. are recorded in the journal but are not posted to the ledger. c. need not be entered in the journal or the ledger. d. are recorded in the journal and then posted to the general ledger accounts.

On January 1, ABC Catering purchased an oven for $2,000. The oven was expected to last five years and have no salvage value. Select the adjusting entry made on December 31, to record the depreciation of the oven for one year. a. Depreciation Expense.......500 Accumulated Depreciation - Equipment.......500 b. Accumulated Depreciation - Equipment.......400 Equipment.......400 c. Depreciation Expense.......400 Equipment.......400 d. Depreciation Expense.......400 Accumulated Depreciation - Equipment.......400

During its first year of business, XYZ Inc. purchased $2,400 of supplies. By the end of the year, only $500 of supplies remain in the supply cabinet. Determine the amount to be reported in the Supplies account in the Adjusted Trial Balance section of the worksheet prepared on December 31. a. $500 b. $1,900 c. $2,400 d. $2,900

The adjusting entry to account for the expiration of prepaid insurance consists of a. a debit to Insurance Expense and a credit to Prepaid Insurance b. a debit to Insurance Expense and a credit to Accumulated Depreciation. c. a debit to Prepaid Insurance and a credit to Accumulated Depreciation. d. a debit to Accumulated Depreciation and a credit to Prepaid Insurance.

On a worksheet, the adjusted balance of a contra asset account would be extended to a. the Balance Sheet Debit column b. the Balance Sheet Credit column. c. the Income Statement Debit column d. the Income Statement Credit column.

J. B. Consulting purchased a machine for $6,000 on November 1, 2016. The company expects the useful life of the machine to be 5 years and have no salvage value. If the company uses the straight-line method to depreciate the machine, what will be the depreciation adjustment for the year ending December 31, 2016? a. Debit Depreciation Expense $200 and Credit Accumulated Depreciation $200. b. Debit Depreciation Expense $1,200 and Credit Accumulated Depreciation $1,200. c. Debit Accumulated Depreciation $200 and Credit Depreciation Expense $200. d. Debit Depreciation Expense $200 and Credit Equipment $200.

If a worksheet is prepared at the end of the accounting year, a. preparation of the financial statements is not required. b. the adjusting entries do not need to be journalized. c. only a balance sheet is required. d. the financial statements are prepared using the worksheet data.