Question 1

The Accumulated Depreciation account is:

Accepted Answer

A)  a record of the sum of all the depreciation expense recorded. 
B)  the price quoted to the buyer of a used asset. 
C)  an expense account. 
D)  the expense account used to expense the cost of an asset. 
A)  a record of the sum of all the depreciation expense recorded. 
B)  the price quoted to the buyer of a used asset. 
C)  an expense account. 
D)  the expense account used to expense the cost of an asset.

Question 2

The Generally Accepted Accounting Principles (GAAP) requires the use of accrual accounting.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following entries would be made because of the matching principle?

Accepted Answer

A)  $$\begin{array} { | c | r | r | } 
\hline \text { Salaries Expense } & 1,000 & \
\hline \text { Accounts Payable } & & 1,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Salaries Expense } & & 1,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Salaries Expense } & 1,000 & \
\hline \text { Salaries Payable } & & 1,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Unearned Revenue } & & 1,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | c | r | r | } 
\hline \text { Salaries Expense } & 1,000 & \
\hline \text { Accounts Payable } & & 1,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Salaries Expense } & & 1,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | c | r | r | } 
\hline \text { Salaries Expense } & 1,000 & \
\hline \text { Salaries Payable } & & 1,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Unearned Revenue } & & 1,000 \
\hline
\end{array}$$

Question 4

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

Question 5

Luminous Electrical Repair performed services costing $8,000 on January 24 and invoiced the customer. Luminous received the $8,000 on January 31. Provide the journal entry on January 24 when services were rendered.

Accepted Answer

\[\begin{array} { | c | r | r

Question 6

The partial worksheet of Ruth Furniture follows
   Calculate and enter the amounts for the Adjusted Trial Balance columns.

Accepted Answer

The answer of The partial worksheet of Ruth Furniture follows
...

Question 7

The matching principle is also called:

Accepted Answer

A)  adjusting entry concept. 
B)  revenue recognition principle. 
C)  expense recognition principle. 
D)  time period concept. 
A)  adjusting entry concept. 
B)  revenue recognition principle. 
C)  expense recognition principle. 
D)  time period concept.

Question 8

Unearned Revenue is classified as a(n) ________ account.

Accepted Answer

A)  liability 
B)  asset 
C)  revenue 
D)  equity 
A)  liability 
B)  asset 
C)  revenue 
D)  equity

Question 9

Under accrual basis accounting, revenue is recorded only when cash is received.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is the correct formula for calculating depreciation under the straight-line method?

Accepted Answer

A)  Straight-line depreciation = (Cost + Residual value) ÷ Useful life 
B)  Straight-line depreciation = (Cost - Residual value) ÷ Useful life 
C)  Straight-line depreciation = (Cost + Residual value) × Useful life 
D)  Straight-line depreciation = (Cost - Residual value) × Useful life 
A)  Straight-line depreciation = (Cost + Residual value) ÷ Useful life 
B)  Straight-line depreciation = (Cost - Residual value) ÷ Useful life 
C)  Straight-line depreciation = (Cost + Residual value) × Useful life 
D)  Straight-line depreciation = (Cost - Residual value) × Useful life

Question 11

In accounting, depreciation refers to the:

Accepted Answer

A)  method of spreading the cost of an asset over its useful life. 
B)  method of declining the market value of an asset to its book value. 
C)  method of estimation of an asset's current market value. 
D)  process of sale of a used asset. 
A)  method of spreading the cost of an asset over its useful life. 
B)  method of declining the market value of an asset to its book value. 
C)  method of estimation of an asset's current market value. 
D)  process of sale of a used asset.

Question 12

Which of the following is a contra account?

Accepted Answer

A)  Depreciation Expense 
B)  Accumulated Depreciation 
C)  Unearned Revenue 
D)  Earned Revenue 
A)  Depreciation Expense 
B)  Accumulated Depreciation 
C)  Unearned Revenue 
D)  Earned Revenue

Question 13

In the case of a prepaid expense, the adjusting entry required at the end of a period will consist of a credit to the Prepaid Expense account. Assume the prepaid expense was initially recorded as an asset.

Accepted Answer

A) True 
 B)False

Question 14

On December 31, 2014, the balance in Pinnacle Exploration Company's Unearned Revenue account was a credit of $8,000. In January, 2015, the company received an advance payment of $14,000 from a new customer for services to be performed. By January 31, adjustments had been made to recognize $7,000 of the revenue which had been earned during January. What was the balance in Unearned Revenue on January 31, 2015?

Accepted Answer

A)  $7,000 credit 
B)  $14,000 debit 
C)  $8,000 credit 
D)  $15,000 credit 
A)  $7,000 credit 
B)  $14,000 debit 
C)  $8,000 credit 
D)  $15,000 credit

Question 15

Smith owns manufacturing equipment that was bought for $12,600. It has an estimated useful life of 7 years. Smith should record depreciation expense of $100 per month.

Accepted Answer

A) True 
 B)False

Question 16

An adjusting entry that debits Accounts Receivable is an example of a(n):

Accepted Answer

A)  prepaid expense. 
B)  accrued revenue. 
C)  accrued expense. 
D)  unearned revenue. 
A)  prepaid expense. 
B)  accrued revenue. 
C)  accrued expense. 
D)  unearned revenue.

Question 17

Prepaid insurance is an asset account, and hence it appears on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 18

Under accrual accounting, transactions are recorded only when cash is received or paid.

Accepted Answer

A) True 
 B)False

Question 19

Accumulated Depreciation is a ________ account and carries a ________ normal balance.

Accepted Answer

A)  revenue; debit 
B)  expense; debit 
C)  contra asset; credit 
D)  liability; credit 
A)  revenue; debit 
B)  expense; debit 
C)  contra asset; credit 
D)  liability; credit

Question 20

On April 1, Balsa Company purchased office supplies for $1,500. At the end of April, they took a count of the remaining supplies and found that there was $500 of supplies left. Please provide the adjusting entry needed at the end of April. Assume the office supplies were initially recorded as an asset. Assume there were no office supplies on hand prior to the purchase on April 1.

Accepted Answer

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Exam 3: The Adjusting Process

The Accumulated Depreciation account is:

The Generally Accepted Accounting Principles (GAAP) requires the use of accrual accounting.

Which of the following entries would be made because of the matching principle?

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?

Luminous Electrical Repair performed services costing $8,000 on January 24 and invoiced the customer. Luminous received the $8,000 on January 31. Provide the journal entry on January 24 when services were rendered.

The partial worksheet of Ruth Furniture follows Calculate and enter the amounts for the Adjusted Trial Balance columns.

The matching principle is also called:

Unearned Revenue is classified as a(n) ________ account.

Under accrual basis accounting, revenue is recorded only when cash is received.

Which of the following is the correct formula for calculating depreciation under the straight-line method?

In accounting, depreciation refers to the:

Which of the following is a contra account?

In the case of a prepaid expense, the adjusting entry required at the end of a period will consist of a credit to the Prepaid Expense account. Assume the prepaid expense was initially recorded as an asset.

Smith owns manufacturing equipment that was bought for $12,600. It has an estimated useful life of 7 years. Smith should record depreciation expense of $100 per month.

An adjusting entry that debits Accounts Receivable is an example of a(n):

Prepaid insurance is an asset account, and hence it appears on the balance sheet.

Under accrual accounting, transactions are recorded only when cash is received or paid.

Accumulated Depreciation is a ________ account and carries a ________ normal balance.

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

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Accumulated Depreciation is a account and carries a normal balance.