Exam 5: Adjusting Entries and the Work Sheet

While certain distinctive problems may arise in keeping the accounts of any specific enterprise, the principles of accounting on the cash basis are generally the same.

An asset cost $33,000. It has an expected useful life of 5 years and an expected salvage value of $3,000. Depreciation expense for the first year of the asset's life using the straight-line method is

A manual work sheet is usually prepared in pencil.

Depreciable cost is the amount of depreciation expense recorded for each accounting period.

Match the terms with the definitions. -A principle that requires assets to be recorded at their actual cost.

Matching the cost of an asset with the revenue it is expected to produce is called

The owner's capital account in the last two columns of the work sheet is not up-to-date because it does not yet include net income and withdrawals of the current period.

The fourth pair of columns on a 10-column work sheet prepared at the end of the period would be the

The depreciation system used by many businesses for tax purposes is the

Under the modified cash basis of accounting, cash payments for assets with lives longer than one accounting period (buildings, equipment, insurance, etc.) are recorded as assets and adjustments are made each period.

The cash basis of accounting is used by some small businesses and by most individuals for tax purposes.

Accumulated Depreciation-Delivery Equipment is an example of a(n) ____________________ account.

The cost of an asset that is subject to depreciation is called

The first pair of columns on a 10-column work sheet would be the

A computer workstation cost $35,000, has an expected life of 7 years, and an expected salvage value of $7,000. Depreciation expense using the straight-line method will be $5,000 per year.

The trial balance and information for year-end adjustments for Litton Company are as follows: a. Ending inventory of supplies is $800 at December 31, 20--. b. Unexpired insurance as of year-end is $600. c. Depreciation of equipment is $5,000. d. Wages earned but not paid as of year-end are $1,700. Prepare the necessary year-end adjustments on a 10-column work sheet (identify each adjustment by letter), and complete the work sheet.

An account used with a related account to bring about a decrease in the net amount of the two account balances is called a(n)

When posting an adjusting entry to the general ledger, write

The third pair of columns on a 10-column work sheet prepared at the end of the period would be the

The only correct way to change the balance of a ledger account is to make a journal entry.