Deck 5: Adjustments and the Worksheet

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

An accumulated depreciation account is often referred to as a(n)____________________ asset account.

Answer 3

contra

Question 4

The Supplies account had a balance of $1,200 when a physical count indicated that supplies on hand totaled $400.This means that supplies in the amount of ____________________ were used during the accounting period.

Question 5

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

Question 6

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 7

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 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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 17

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

Question 18

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

Question 19

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 20

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

Question 21

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

Question 22

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

Question 23

A total of $4,000 in supplies was purchased during the year.By the end of the year,the company had used up $1,300 of the supplies.The adjusting entry needed at the end of the year is:

A) debit Supplies $1,300;credit Supplies Expense $1,300
B) debit Supplies Expense $1,300;credit Supplies $1,300
C) debit Supplies Expense $2,700;credit Supplies $2,700
D) debit Supplies Expense $4,000;credit Supplies $4,000

Question 24

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)

B)

C)

D)

Question 25

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.

Question 26

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

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

Question 27

An accumulated depreciation account has a normal ____________________ balance.

Question 28

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

Question 29

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

Question 30

On Jan.1,2016 Johnson Consulting purchased a truck for $12,000.The truck was expected to last 60 months and have no salvage value.Calculate the book value of the truck after two years?

A) $4,800
B) $7,200
C) $11,600
D) $12,000

Question 31

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 32

MacGyver Company bought equipment on January 3,2016,for $34,000.At the time of purchase,the equipment was estimated to have a useful life of six years and a salvage value of $880.Using the straight-line method,the amount of one year's depreciation is

A) $880.
B) $5,520.
C) $460.
D) $5,667.

Question 33

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

Question 34

Adjusting Entries are

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

Question 35

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.

Question 36

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

Question 37

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.

Question 38

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

Question 39

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

Question 40

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 41

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

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

Question 42

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.

Question 43

On a worksheet,the adjusted balance of the Supplies 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.

Question 44

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)

B)

C)

D)

Question 45

The balance in the Prepaid Rent account before adjustment at the end of the year is $12,000,which represents six 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 46

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.

Question 47

On the worksheet,the Balance Sheet columns should balance

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

Question 48

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 49

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

Question 50

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.

Question 51

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)

B)

C)

D)

Question 52

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.

Question 53

On November 25,2016,the company paid $24,000 rent in advance for a six-month period (December 2016 through May 2017).On December 31,2016,the adjustment for expired rent would include

A) a $4,000 debit to Prepaid Rent.
B) a $4,000 credit to Rent Expense.
C) a $24,000 debit to Rent Expense.
D) a $4,000 credit to Prepaid Rent.

Question 54

On March 1,2016,the company paid $6,000 rent in advance for a 12-month period.On December 31,2016,the company's adjustment for expired rent would include:

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

Question 55

On a worksheet,the adjusted balance of the Accumulated Depreciation 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.

Question 56

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.

Question 57

On a worksheet,the adjusted balance of the Supplies 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.

Question 58

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

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

Question 59

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

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

Question 60

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.

Question 61

The balances of the ledger accounts for Lance's Landscaping Design on March 31,2016,and the information needed for adjustments are shown below.Prepare the Trial Balance section,record the adjustments,and complete the worksheet. Adjustment information:
(a)The supplies were purchased on March 1,2016.An inventory of supplies showed $300 on hand on March 31,2016.
(b)The amount of Prepaid Insurance represents a payment made March 1,2016,for a six-month insurance policy.
(c)The equipment,purchased March 1,2016,has an estimated useful life of 5 years with no salvage value.The firm uses the straight-line method of depreciation.

Question 62

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

Question 63

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.

Question 64

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.

Question 65

The book value of long-term assets is reported on

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

Question 66

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.

Question 67

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

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

Question 68

The balances of the ledger accounts for Buffet Services on September 30,2016,and the information needed for adjustments are shown below.Prepare the Trial Balance section,record the adjustments,and complete the worksheet. Adjustment information:
(a)The supplies were purchased on September 1,2016.An inventory of supplies showed $1,200 on hand on September 30,2016.
(b)The amount of Prepaid Insurance represents a payment made September 1,2016,for a six-month insurance policy.
(c)The equipment,purchased September 1,2016,has an estimated useful life of 5 years with no salvage value.The firm uses the straight-line method of depreciation.

Question 69

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.

Question 70

The partial worksheet for the Lorado Insurance Agency for the month ended October 31,2016,is shown below.Using this data,prepare an income statement,a statement of owner's equity,and a balance sheet.The owner made no additional investments during the month.

Question 71

The partial worksheet for the Marion Consulting Services for the month ended January 31,2016,is shown below.Using this data,prepare an income statement,a statement of owner's equity,and a balance sheet.The owner made no additional investments during the month.

Question 72

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 73

On a worksheet,a net loss is

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

Question 74

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 75

The balances of the ledger accounts for Oleman Services on January 31,2016,and the information needed for adjustments are shown below.Prepare the Trial Balance section,record the adjustments,and complete the worksheet. Adjustment information:
(a)The supplies were purchased on January 1,2016.An inventory of supplies showed $600 on hand on January 31,2016.
(b)The amount of Prepaid Insurance represents a payment made January 1,2016,for a six-month insurance policy.
(c)The equipment,purchased January 1,2016,has an estimated useful life of 5 years with no salvage value.The firm uses the straight-line method of depreciation.

Question 76

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.