Question 1

For accounting purposes, depreciation refers to the ________.

Accepted Answer

A)  method of allocating the cost of a plant asset to expense it over its useful life 
B)  method of declining the market value of an asset to its book value 
C)  method of estimating an asset's current market value 
D)  process of selling a used asset 
A)  method of allocating the cost of a plant asset to expense it over its useful life 
B)  method of declining the market value of an asset to its book value 
C)  method of estimating an asset's current market value 
D)  process of selling a used asset A

Question 2

The entry to record depreciation includes a credit to the ________.

Accepted Answer

A)  Depreciation Payable account 
B)  Cash account 
C)  Accumulated Depreciation account 
D)  Depreciation Expense account 
A)  Depreciation Payable account 
B)  Cash account 
C)  Accumulated Depreciation account 
D)  Depreciation Expense account C

Question 3

Harvard Financial Services purchased computers that are to be used in its consultancy services. Based on the matching principle, what account, other than Computers, should appear on the balance sheet as of December 31, 2016?

Accepted Answer

A)  Depreciation Expense 
B)  Service Revenue 
C)  Accumulated Depreciation 
D)  Equipment Expense 
A)  Depreciation Expense 
B)  Service Revenue 
C)  Accumulated Depreciation 
D)  Equipment Expense C

Question 4

In cash basis accounting, revenue is recorded when cash is received, and expenses are recorded when they are paid.

Accepted Answer

A) True 
 B)False

Question 5

The accountant of Omega Consulting failed to make an adjusting entry to record $6,000 for unearned service revenues that were earned before the end of the fiscal year. Assume the company initially recorded a liability. Which of the following statements is true?

Accepted Answer

A)  The total liabilities will be overstated. 
B)  The total liabilities will be understated. 
C)  The total assets will be overstated. 
D)  The total assets will be understated. 
A)  The total liabilities will be overstated. 
B)  The total liabilities will be understated. 
C)  The total assets will be overstated. 
D)  The total assets will be understated.

Question 6

A business hired a repair service to overhaul its plumbing system. The repair service began work on September 15 and completed it on October 15. The business agreed to pay the service $4,000 when the work was completed. As of September 30, the work was 50% complete, and the business made an adjusting entry to accrue repair expense as of the end of September. On October 15, the work was completed, and the repair service was paid in full. Provide the journal entry for the cash payment on October 15. (Ignore explanation.)

Accepted Answer

The answer of A business hired a repair service to...

Question 7

On September 1, Peterson Maintenance Company contracted to provide monthly maintenance services for the next six months at a rate of $2,000 per month. The client paid Peterson $12,000 on September 1. Assuming Peterson records deferred revenues using the alternative treatment, what would be the entry on September 1?

Accepted Answer

A)  Debit Cash and credit Unearned Revenue for $12,000 
B)  No entry is needed until the services are performed 
C)  Debit Cash and credit Service Revenue for $12,000 
D)  Debit Prepaid Maintenance and credit Cash for $12,000 
A)  Debit Cash and credit Unearned Revenue for $12,000 
B)  No entry is needed until the services are performed 
C)  Debit Cash and credit Service Revenue for $12,000 
D)  Debit Prepaid Maintenance and credit Cash for $12,000

Question 8

Dalton Delivery Service is hired on October 31, 2016 to perform services, beginning on November 1, 2016. The delivery services will be performed for six months at a rate of $3,200 per month. Dalton's fiscal year ends on December 31. What amount of service revenue should be recorded as an adjusting entry on December 31, 2016?

Accepted Answer

A)  $3,200 
B)  0 
C)  $6,400 
D)  $9,600 
A)  $3,200 
B)  0 
C)  $6,400 
D)  $9,600

Question 9

The sum of all the depreciation expense recorded to date for a depreciable asset is called ________.

Accepted Answer

A)  book value 
B)  residual value 
C)  depreciation expense 
D)  accumulated depreciation 
A)  book value 
B)  residual value 
C)  depreciation expense 
D)  accumulated depreciation

Question 10

The Brighton Dental Company prepays the rent on its dental office. On July 1, the business paid $18,000 for 6 months of rent. How much Rent Expense should Brighton Dental Company record the three months ended September 30 under the accrual basis? Why?

Accepted Answer

Brighton Dental shou

Question 11

At the end of the current year, the accountant for Colorful Graphics forgot to make an adjusting entry to accrue Wages Payable to the company's employees for the last week in December. The wages will be paid to the employees in January. Which of the following is an effect of this error?

Accepted Answer

A)  Net income is overstated. 
B)  Liabilities are overstated. 
C)  Net income is understated. 
D)  Expenses are overstated. 
A)  Net income is overstated. 
B)  Liabilities are overstated. 
C)  Net income is understated. 
D)  Expenses are overstated.

Question 12

The revenue recognition principle is the basis for recording revenues-both when to record revenue and the amount of revenue to record.

Accepted Answer

A) True 
 B)False

Question 13

On the first day of January, Harris Company borrowed $3,000 on a one-year note payable bearing interest at 5% per year. The note specifies that principal and interest must be paid in full at the end of the one-year period. On June 30, the adjusted trial balance will show Interest Payable of ________.

Accepted Answer

A)  $75 credit 
B)  $75 debit 
C)  $150 credit 
D)  $150 debit 
A)  $75 credit 
B)  $75 debit 
C)  $150 credit 
D)  $150 debit

Question 14

Ursula Tax Planning Service has the following plant assets: Communications equipment: Cost, $6,960 with useful life of eight years; Furniture: Cost, $19,200 with useful life of 12 years; and Computer: Cost, $14,000 with useful life of four years. (Assume residual value of all the assets is zero.) Ursula's monthly depreciation expense calculated using the straight-line method is ________. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

Accepted Answer

A)  $291.67 
B)  $133.33 
C)  $72.50 
D)  $498 
A)  $291.67 
B)  $133.33 
C)  $72.50 
D)  $498

Question 15

The accountant of Barnes Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense. Which of the following statements is true?

Accepted Answer

A)  The total revenue will be overstated. 
B)  The total revenue will be understated. 
C)  The total expenses will be overstated. 
D)  The total expenses will be understated. 
A)  The total revenue will be overstated. 
B)  The total revenue will be understated. 
C)  The total expenses will be overstated. 
D)  The total expenses will be understated.

Question 16

The accountant for Jones Auto Repair failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year. Which of the following is an effect of this omission?

Accepted Answer

A)  The net income will be overstated. 
B)  The total assets will be understated. 
C)  The net income will be understated. 
D)  The total assets will be overstated. 
A)  The net income will be overstated. 
B)  The total assets will be understated. 
C)  The net income will be understated. 
D)  The total assets will be overstated.

Question 17

What type of account is Prepaid Rent, and what is its normal balance?

Accepted Answer

A)  It is an expense account and has a debit balance. 
B)  It is a liability account and has a credit balance. 
C)  It is a revenue account and has a credit balance. 
D)  It is an asset account and has a debit balance. 
A)  It is an expense account and has a debit balance. 
B)  It is a liability account and has a credit balance. 
C)  It is a revenue account and has a credit balance. 
D)  It is an asset account and has a debit balance.

Question 18

The accountant for Noble Jewelry Repair Services forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?

Accepted Answer

A)  Revenues are understated. 
B)  Total assets are understated. 
C)  Net income is overstated. 
D)  Total liabilities are understated. 
A)  Revenues are understated. 
B)  Total assets are understated. 
C)  Net income is overstated. 
D)  Total liabilities are understated.

Question 19

Holland Company purchased manufacturing equipment for $10,920. It has an estimated useful life of seven years and no residual value. The company should record depreciation expense of $80 per month. (Assume that the company uses the straight-line method.)

Accepted Answer

A) True 
 B)False

Question 20

What is the effect of the adjusting entry for Depreciation Expense?

Accepted Answer

A)  It increases total liabilities and increases total expenses. 
B)  It increases total assets and increases total expenses. 
C)  It decreases total assets and increases total expenses. 
D)  It decreases total liabilities and increases total expenses. 
A)  It increases total liabilities and increases total expenses. 
B)  It increases total assets and increases total expenses. 
C)  It decreases total assets and increases total expenses. 
D)  It decreases total liabilities and increases total expenses.

For accounting purposes, depreciation refers to the ________.

The entry to record depreciation includes a credit to the ________.

Harvard Financial Services purchased computers that are to be used in its consultancy services. Based on the matching principle, what account, other than Computers, should appear on the balance sheet as of December 31, 2016?

In cash basis accounting, revenue is recorded when cash is received, and expenses are recorded when they are paid.

The accountant of Omega Consulting failed to make an adjusting entry to record $6,000 for unearned service revenues that were earned before the end of the fiscal year. Assume the company initially recorded a liability. Which of the following statements is true?

The sum of all the depreciation expense recorded to date for a depreciable asset is called ________.

The Brighton Dental Company prepays the rent on its dental office. On July 1, the business paid $18,000 for 6 months of rent. How much Rent Expense should Brighton Dental Company record the three months ended September 30 under the accrual basis? Why?

At the end of the current year, the accountant for Colorful Graphics forgot to make an adjusting entry to accrue Wages Payable to the company's employees for the last week in December. The wages will be paid to the employees in January. Which of the following is an effect of this error?

The revenue recognition principle is the basis for recording revenues-both when to record revenue and the amount of revenue to record.

The accountant of Barnes Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense. Which of the following statements is true?

The accountant for Jones Auto Repair failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year. Which of the following is an effect of this omission?

What type of account is Prepaid Rent, and what is its normal balance?

The accountant for Noble Jewelry Repair Services forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?

Holland Company purchased manufacturing equipment for $10,920. It has an estimated useful life of seven years and no residual value. The company should record depreciation expense of $80 per month. (Assume that the company uses the straight-line method.)

What is the effect of the adjusting entry for Depreciation Expense?

Accounting and the Business Environment

Recording Business Transactions

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

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Exam 3: The Adjusting Process

For accounting purposes, depreciation refers to the ________.

The entry to record depreciation includes a credit to the ________.

Harvard Financial Services purchased computers that are to be used in its consultancy services. Based on the matching principle, what account, other than Computers, should appear on the balance sheet as of December 31, 2016?

In cash basis accounting, revenue is recorded when cash is received, and expenses are recorded when they are paid.

The accountant of Omega Consulting failed to make an adjusting entry to record $6,000 for unearned service revenues that were earned before the end of the fiscal year. Assume the company initially recorded a liability. Which of the following statements is true?

The sum of all the depreciation expense recorded to date for a depreciable asset is called ________.

The Brighton Dental Company prepays the rent on its dental office. On July 1, the business paid $18,000 for 6 months of rent. How much Rent Expense should Brighton Dental Company record the three months ended September 30 under the accrual basis? Why?

At the end of the current year, the accountant for Colorful Graphics forgot to make an adjusting entry to accrue Wages Payable to the company's employees for the last week in December. The wages will be paid to the employees in January. Which of the following is an effect of this error?

The revenue recognition principle is the basis for recording revenues-both when to record revenue and the amount of revenue to record.

The accountant of Barnes Architectural Services failed to make an adjusting entry to record $7,000 of depreciation expense. Which of the following statements is true?

The accountant for Jones Auto Repair failed to make an adjusting entry to record $5,000 of unpaid salaries for the last two weeks of the year. Which of the following is an effect of this omission?

What type of account is Prepaid Rent, and what is its normal balance?

The accountant for Noble Jewelry Repair Services forgot to make an adjusting entry for Depreciation Expense for the current year. Which of the following is an effect of this error?

Holland Company purchased manufacturing equipment for $10,920. It has an estimated useful life of seven years and no residual value. The company should record depreciation expense of $80 per month. (Assume that the company uses the straight-line method.)

What is the effect of the adjusting entry for Depreciation Expense?

Accounting and the Business Environment

Recording Business Transactions

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Filters