Deck 5: Adjustments and the Worksheet

Question 1

MacGyver Company bought equipment on January 3, 2019, for $52,000. At the time of purchase, the equipment was estimated to have a useful life of five years and a salvage value of $4,000. Using the straight-line method, the amount of one year's depreciation is:

A)$1,200.
B)$4,000.
C)$9,600.
D)$10,400.

Answer 1

C

Question 2

Land is a long-term asset that is not subject to depreciation.

Answer 2

True

Question 3

Prepaid expenses, such as prepaid rent and prepaid insurance, represent assets for a business until they are used.

Answer 3

True

Question 4

Which of the following need not be completed separately if a worksheet is prepared?

A)a trial balance
B)a balance sheet
C)an income statement
D)a statement of owner's equity

Question 5

The balances of the revenue accounts are recorded in the Trial Balance Credit column, the Adjusted Trial Balance Credit column, and the Balance Sheet Credit column of the worksheet.

Question 6

If the adjustment for supplies used is not recorded, the firm's assets will be overstated.

Question 7

Preparation of a worksheet eliminates the necessity of preparing an income statement and a balance sheet.

Question 8

A total of $2,800 in supplies was purchased during the year. At the end of the year $700 of the supplies were left. The adjusting entry needed at the end of the year is:

A)debit Supplies Expense $700; credit Supplies $700
B)debit Supplies Expense $2,800; credit Supplies $2,800
C)debit Supplies Expense $2,100; credit Supplies $2,100
D)debit Supplies $2,100; credit Supplies Expense $2,100

Question 9

Adjusting Entries are:

A)updating entries for previously unrecorded expenses or revenues.
B)corrections of errors.
C)not required.
D)will always affect cash.

Question 10

If the adjustment for expired rent is not recorded, the firm's expenses will be overstated.

Question 11

When a trial balance is in balance,

A)adjusting entries are not required.
B)the company has earned a net income.
C)the general ledger is free of errors.
D)the debit account balances equal the credit account balances.

Question 12

In the Adjusted Trial Balance section of the worksheet the total debits should equal the total credits.

Question 13

Letters are used to label the corresponding debit and credit transactions of an adjustment on the worksheet.

Question 14

A total of $3,700 in supplies was purchased during the year. By the end of the year, the company had used $2,200 of the supplies. The adjusting entry needed at the end of the year is:

A)debit Supplies $2,200; credit Supplies Expense $2,200
B)debit Supplies Expense $3,700; credit Supplies $3,700
C)debit Supplies Expense $1,500; credit Supplies $1,500
D)debit Supplies Expense $2,200; credit Supplies $2,200

Question 15

The cost of a long-term asset, such as equipment, is transferred to expense as it is used during its useful life.

Question 16

The balance of the owner's drawing account is extended to the Income Statement Debit column of the worksheet.

Question 17

The normal balance of a contra asset account is a debit.

Question 18

The balance of a liability account is extended to the Balance Sheet Credit column of the worksheet.

Question 19

The statement of owner's equity is prepared from the data in the Balance Sheet section of the worksheet.

Question 20

If adjustments are entered on a worksheet, it is not necessary to record them in the journal or the ledger.

Question 21

The adjusting entry to account for the use of supplies consists of:

A)a debit to Supplies and a credit to Accumulated Depreciation.
B)a debit to Accumulated Depreciation and a credit to Supplies.
C)a debit to Supplies and a credit to Supplies Expense.
D)a debit to Supplies Expense and a credit to Supplies.

Question 22

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 $350 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)

B)

C)

D)

Question 23

J. B. Consulting purchased a machine for $6,000 on August 1, 2019. The company expects the useful life of the machine to be 5 years and no salvage value is expected. If the company uses the straight-line method to depreciate the machine, what will be the depreciation adjustment for the year ending December 31, 2019?

A)Debit Depreciation Expense $500 and Credit Equipment $500.
B)Debit Depreciation Expense $400 and Credit Accumulated Depreciation $400.
C)Debit Depreciation Expense $500 and Credit Accumulated Depreciation $500.
D)Debit Accumulated Depreciation $100 and Credit Depreciation Expense $100.

Question 24

The balance in the Prepaid Rent account before adjustment at the end of the year is $12,000, which represents 12 months rent paid on November 1. The adjusting entry required on December 31 to show the amount of rent that had expired is:

A)

B)

C)

D)

Question 25

On October 25, 2019, the company paid $24,000 rent in advance for the six-month period (November 2019 through April 2020). On December 31, 2019, the adjustment for expired rent would include:
A)a $4,000 credit to Prepaid Rent.

A)a $8,000 debit to Rent Expense.
B)a $8,000 credit to Rent Expense.
D)a $24,000 credit to Cash.

Question 26

On a worksheet, the adjusting entry to account for depreciation of equipment consists of:

A)a debit to Accumulated Depreciation and a credit to Equipment.
B)a debit to Depreciation Expense and a credit to Accumulated Depreciation.
C)a debit to Depreciation Expense and a credit to Equipment.
D)a debit to Accumulated Depreciation and a credit to Depreciation Expense.

Question 27

On July 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 during the year.

A)

B)

C)

D)

Question 28

On March 1, 2019, the company paid $6,000 rent in advance for a 12-month period. On December 31, 2019, the company's adjustment for expired rent would include:

A)a $6,000 debit to Prepaid Rent; a $6,000 credit to Rent Expense.
B)a $1,000 debit to Rent Expense; a $1,000 credit to Prepaid Rent.
C)a $5,000 debit to Rent Expense; a $5,000 credit to Prepaid Rent.
D)a $5,000 debit to Prepaid Rent; a $5,000 credit to Rent Expense.

Question 29

On November 1, 2019, Peaches Consulting Service paid $4,800 for 12 months of advance rent on its office space. The correct adjusting entry on December 31, 2019, to show the amount of rent that had expired would include:

A)debit Rent Expense $4,800; credit Prepaid Rent $4,800
B)debit Rent Expense $800; credit Prepaid Rent $800
C)debit Rent Expense $400; credit Prepaid Rent $400
D)debit Prepaid Rent $4,000; credit Rent Expense $4,000

Question 30

If the prepaid expenses are not adjusted, assets on the balance sheet:

A)will be understated.
B)will be overstated.
C)may be either overstated or understated.
D)will not be affected.

Question 31

Equipment costing $27,000 with an estimated salvage value of $2,040 and an estimated life of 4 years was purchased on October 31, 2019. Using the straight-line depreciation method, what is the amount of depreciation expense to be recorded at December 31, 2019?

A)$520
B)$1,560
C)$1,125
D)$1,040

Question 32

Adjusting entries can be journalized:

A)only once per accounting quarter.
B)only once a month.
C)as often as necessary.
D)only once a year at the end of the accounting year.

Question 33

During its first year of business, XYZ Inc. purchased $1,600 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)$1,600
C)$1,100
D)$2,100

Question 34

On September 1, 2019, Jay Walker Company purchased a one-year insurance policy for $1,320. The correct adjusting entry on December 31, 2019, is:

A)debit Prepaid Insurance $110; credit Insurance Expense $110
B)debit Insurance Expense $330; credit Prepaid Insurance $330
C)debit Prepaid Insurance $1,320; credit Insurance Expense $1,320
D)debit Insurance Expense $440; credit Prepaid Insurance $440

Question 35

On January 1, 2019, Johnson Consulting purchased a truck for $18,000. The truck is expected to last 60 months and have no salvage value. Calculate the book value of the truck on December 31, 2020.

A)$3,600
B)$14,400
C)$7,200
D)$10,800

Question 36

The adjusting entry to account for the expiration of prepaid insurance consists of:

A)a debit to Accumulated Depreciation and a credit to Prepaid Insurance.
B)a debit to Insurance Expense and a credit to Prepaid Insurance.
C)a debit to Insurance Expense and a credit to Accumulated Depreciation.
D)a debit to Prepaid Insurance and a credit to Accumulated Depreciation.

Question 37

On January 1, ABC Catering purchased an oven for $5,000. The oven is 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)

B)

C)

D)

Question 38

Equipment cost $36,000 and is expected to be useful for 5 years and have no salvage value. Under the straight-line method, monthly depreciation will be:

A)$12.
B)$600.
C)$60.
D)$720.

Question 39

Which of the following entries records the depreciation on equipment for the fiscal year-end adjustment?

A)Debit Depreciation; credit Depreciation Expense
B)Debit Depreciation Expense; credit Equipment
C)Debit Depreciation Expense; credit Accumulated Depreciation
D)Debit Accumulated Depreciation; credit Depreciation Expense

Question 40

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 understated.

Question 41

Which of the following statements is not correct?

A)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.
B)Net loss is recorded on the worksheet in the Income Statement Credit column and the Balance Sheet Debit column.
C)Net income is recorded on the worksheet in the Income Statement Debit column and the Balance Sheet Credit column.
D)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.

Question 42

On a balance sheet, Accumulated Depreciation-Equipment is reported:

A)as a contra-asset on the Balance Sheet.
B)as a liability on the Income Statement.
C)as an expense on the Income Statement.
D)as owner's equity on the Balance Sheet.

Question 43

On the worksheet, the Balance Sheet columns should balance:

A)after the net income amount is added to the Balance Sheet Credit column.
B)before the net income amount is added to the Balance Sheet Credit column.
C)before the net income amount is added to the Balance Sheet Debit column.
D)after the net income amount is added to the Balance Sheet Debit column.

Question 44

On a worksheet, the adjusted balance of the Accumulated Depreciation account is extended to:

A)the Balance Sheet Credit column.
B)the Income Statement Debit column.
C)the Income Statement Credit column.
D)the Balance Sheet Debit column.

Question 45

On a worksheet, the adjusted balance of the revenue account Fees Income would be extended to:

A)the Balance Sheet Credit column.
B)the Income Statement Debit column.
C)the Income Statement Credit column.
D)the Balance Sheet Debit column.

Question 46

The adjustments made on the worksheet:

A)need not be entered in the journal or the ledger.
B)are posted to the ledger but are not recorded in the journal.
C)are recorded in the journal but are not posted to the ledger.
D)are recorded in the journal and then posted to the general ledger accounts.

Question 47

The adjusting entry to account for the expiration of prepaid advertising consists of:

A)a debit to Prepaid Advertising and a credit to Accumulated Depreciation.
B)a debit to Prepaid Advertising and a credit to Advertising Expense.
C)a debit to Advertising Expense and a credit to Accumulated Depreciation.
D)a debit to Advertising Expense and a credit to Prepaid Advertising.

Question 48

On a worksheet, the adjusted balance of the Supplies account is extended to:

A)the Income Statement Debit column.
B)the Balance Sheet Credit column.
C)the Income Statement Credit column.
D)the Balance Sheet Debit column.

Question 49

The balance in the account Accumulated Depreciation, Equipment will:

A)be reported on the Statement of Owner's Equity.
B)will be reported on the Balance Sheet.
C)not appear on any financial statement.
D)be reported on the Income Statement.

Question 50

On a worksheet, the adjusted balance of the Supplies Expense account is extended to:

A)the Balance Sheet Debit column.
B)the Income Statement Debit column.
C)the Balance Sheet Credit column.
D)the Income Statement Credit column.

Question 51

A consecutive, twelve-month accounting period is called a(n):

A)adjusted year.
B)fiscal year.
C)accounting year.
D)accrual year.

Question 52

On a worksheet, the adjusted balance of the Prepaid Rent account is extended to the:

A)Income Statement Debit column.
B)Balance Sheet Credit column.
C)Balance Sheet Debit column.
D)Income Statement Credit column.

Question 53

On a worksheet, a net loss is:

A)recorded in the Income Statement Debit column.
B)not recorded.
C)recorded in the Balance Sheet Credit column.
D)recorded in the Balance Sheet Debit column.

Question 54

On a worksheet, the adjusted balance of a contra asset account would be extended to:

A)the Income Statement Debit column.
B)the Balance Sheet Debit column.
C)the Income Statement Credit column.
D)the Balance Sheet Credit column.

Question 55

Which of the following statements is not correct?

A)The book value of a long-term asset is reduced each year as depreciation is recorded.
B)Buildings and trucks are examples of long-term assets.
C)Salvage value is computed by subtracting the accumulated depreciation from the cost of a long-term asset.
D)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.

Question 56

Accumulated Depreciation, Equipment, is shown as:

A)an addition to expenses on the Income Statement.
B)a deduction of Capital on the Statement of Owner's Equity.
C)an addition to assets on the Balance Sheet.
D)a deduction from assets on the Balance Sheet.

Question 57

Which of the following statements is correct?

A)Accumulated Depreciation--Equipment is presented in the Liabilities section of a balance sheet.
B)The cost of supplies used is reported on the statement of owner's equity.
C)The cost of supplies used represents an operating expense of the business.
D)At the time of their acquisition, prepaid expenses are recorded in expense accounts.

Question 58

If a worksheet is prepared at the end of the accounting year,

A)the financial statements are prepared using the worksheet data.
B)preparation of the financial statements is not required.
C)the adjusting entries do not need to be journalized.
D)only a balance sheet is required.

Question 59

On a worksheet, the adjusted balance of the Depreciation Expense account is extended to:

A)the Income Statement Debit column.
B)the Balance Sheet Debit column.
C)the Income Statement Credit column.
D)the Balance Sheet Credit column.

Question 60

The book value of long-term assets is reported on:

A)the worksheet.
B)the statement of owner's equity.
C)the income statement.
D)the balance sheet.

Question 61

The account accumulated depreciation has a normal________ balance.

Question 62

The unadjusted net income on the income statement was $64,916. After journalizing and posting the adjusting entries for expired insurance during the year of $3,400 and for supplies used during the year of $1,480, the adjusted net income is:

A)$69,796.
B)$61,516.
C)$64,916.
D)$60,036.

Question 63

Read each of the following transactions for Patel's Repair Services. Determine the accounts and amounts to be debited and credited in the necessary end-of-May adjustments.
A. On May 1, 2019, Patel's Repair Services, a new firm, paid $6,600 rent in advance for a six-month period. The $6,600 was debited to the Prepaid Rent account.
B. On May 1, 2019, the firm bought supplies for $2,000. The $2,000 was debited to the Supplies account. An inventory of supplies at the end of May showed that supplies costing $800 were on hand.
C. On May 1, 2019, the firm bought equipment costing $12,000. The equipment has an expected useful life of 10 years and no salvage value. The firm will use the straight-line method of depreciation.

Question 64

The unadjusted net income on the income statement was $46,850. After journalizing and posting the adjusting entry for the $2,300 of supplies used during the year, the adjusted net income is:

A)$46,850.
B)$44,550.
C)$49,150.
D)$45,700.

Question 65

For each of the accounts listed below, enter the words, Increase or Decrease, in the Debit and Credit columns to indicate the effects of each on the account balance.

Question 66

The unadjusted net income on the income statement was $41,800. After journalizing and posting the adjusting entry for the $600 of prepaid advertising that expired and $1,600 in supplies used during the year, the adjusted net income is:

A)$41,800.
B)$39,600.
C)$40,200.
D)$41,200.

Question 67

The process of allocating the cost of a long-term asset as an expense of operations during the asset's expected useful life is known as ________.

Question 68

The Supplies account had a balance of $1,200 when a physical count indicated that supplies on hand totaled $250. This means that supplies in the amount of ________ were used during the accounting period.

Question 69

The account credited in the adjusting entry made to record the expiration of a portion of prepaid rent is the ________ account.

Question 70

The total assets on the balance sheet was $128,800 before journalizing and posting the adjusting entries for $800 of expired insurance, $2,400 of expired rent and $900 of depreciation. What are the total assets after journalizing and posting the adjusting?

A)$128,800.
B)$124,700.
C)$126,500.
D)$132,900.

Question 71

On a worksheet, the adjusted balance of Supplies is extended from the Adjusted Trial Balance Debit column to the ________ Debit column.

Question 72

The process of updating accounts at the end of an accounting period for previously unrecorded items that belong to the period is referred to as making ________.

Question 73

The difference between the debit balance of the Equipment account and the credit balance of the Accumulated Depreciation-Equipment account is called the ________ of an asset.

Question 74

On a worksheet, the adjusted balance of Depreciation Expense is extended from the Adjusted Trial Balance Debit column to the ________ Debit column.

Question 75

Accumulated depreciation is classified as a(n)________ account.

Question 76

Read each of the following transactions for Pickerton Printer Repair Services. Determine the accounts and amounts to be debited and credited in the necessary end-of-April adjustments.
A. On April 1, 2019, Pickerton Printer Repair Services, a new firm, bought supplies for $2,500. The
$2,500 was debited to the Supplies account. An inventory of supplies at the end of April showed that supplies costing $1,500 were on hand.
B. On April 1, 2019, the firm bought equipment costing $25,000. The equipment has an expected useful life of 10 years and a salvage value of $1,000. The firm will use the straight-line method of depreciation.
C. On April 1, 2019, the firm paid $7,200 rent in advance for a six-month period. The $7,200 was debited to the Prepaid Rent account.

Question 77

When the ________ method of depreciation is used, an equal amount of depreciation is charged to each accounting period during the asset's useful life.

Question 78

The unadjusted net income on the income statement was $23,760. After journalizing and posting the adjusting entries for the $1,620 of supplies used and $3,700 of depreciation on the company's equipment for the year, the adjusted net income is:

A)$25,840.
B)$18,440.
C)$21,680.
D)$29,080.

Question 79

A(n)________ is prepared at the end of each accounting period to organize and summarize the data needed for the preparation of the financial statements.

Question 80

For each of the accounts listed below, enter the words, Increase or Decrease, in the Debit and Credit columns to indicate the effects of each on the account balance.