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| 1 | |
A net loss occurs when there is more revenue than expense. |
| | A) | True |
| | B) | False |
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| 2 | |
An asset's book value represents the true market value of the asset. |
| | A) | True |
| | B) | False |
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| 3 | |
The revenue recognition principle states that revenues should be recorded in the period when they are earned. |
| | A) | True |
| | B) | False |
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| 4 | |
The adjusted trial balance should be used to prepare financial statements instead of the trial balance |
| | A) | True |
| | B) | False |
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| 5 | |
Since adjusting journal entries are recorded at the end of an accounting period they do not need to be posted to the general ledger. |
| | A) | True |
| | B) | False |
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| 6 | |
Depreciation is used to record the fair market value of long term assets. |
| | A) | True |
| | B) | False |
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| 7 | |
In recording the adjusting entries for depreciation, Accumulated Depreciation is credited |
| | A) | True |
| | B) | False |
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| 8 | |
As equipment is depreciated, its book value decreases and its accumulated depreciation increases. |
| | A) | True |
| | B) | False |
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| 9 | |
In recording the adjusting entry for accrued wages, wages expense is decreased. |
| | A) | True |
| | B) | False |
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| 10 | |
The Accounts Payable account is recorded on the Income Statement |
| | A) | True |
| | B) | False |
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| 11 | |
The Accounts Receivable account is recorded on the Income Statement |
| | A) | True |
| | B) | False |
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| 12 | |
The Salaries Expense account is recorded on the Income Statement |
| | A) | True |
| | B) | False |
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| 13 | |
In recording the adjusting entries for supplies used during the period, Supplies is credited |
| | A) | True |
| | B) | False |
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| 14 | |
In recording the adjusting entries for the amount of prepaid insurance which had expired during the period, Insurance Expense is credited |
| | A) | True |
| | B) | False |
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| 15 | |
Accumulated Depreciation is a contra account |
| | A) | True |
| | B) | False |
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| 16 | |
Depreciation is |
| | A) | an estimate of the loss of usefulness of equipment during an accounting period. |
| | B) | an expense that is incurred during an accounting period. |
| | C) | used to show a more proper balance in the equipment account by subtracting accumulated depreciation from the equipment account. |
| | D) | all of these. |
| | E) | none of these. |
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| 17 | |
Accumulated Depreciation, Equipment, is shown as |
| | A) | an expense on the income statement. |
| | B) | a liability on the balance sheet. |
| | C) | a contra account on the balance sheet. |
| | D) | a deduction from net income on the statement of owner's equity. |
| | E) | none of these. |
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| 18 | |
Accrued wages are |
| | A) | wages that have been neither earned nor paid. |
| | B) | wages that have been paid. |
| | C) | wages that have been earned but not paid. |
| | D) | wages that were earned and have been paid. |
| | E) | none of these. |
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| 19 | |
The type of account and normal balance of Accumulated Depreciation is |
| | A) | contra asset, credit. |
| | B) | asset, debit. |
| | C) | asset, credit. |
| | D) | contra asset, debit. |
| | E) | none of these. |
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| 20 | |
The adjusting entry to record depreciation of equipment is |
| | A) | debit Equipment, credit Accumulated Depreciation. |
| | B) | debit Depreciation Expense, credit Equipment. |
| | C) | debit Depreciation Expense, credit Depreciation Payable. |
| | D) | debit Accumulated Depreciation, credit Depreciation Expense. |
| | E) | none of these. |
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| 21 | |
The difference between the balance of the Equipment account and its related Accumulated Depreciation account is called |
| | A) | a contra asset. |
| | B) | book value. |
| | C) | trade-in value. |
| | D) | an accrued asset. |
| | E) | none of these. |
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| 22 | |
Porter Company bought equipment on January 3 of this year for $10,000. At the time of purchase, the equipment was estimated to have a useful life of nine years and a trade-in value of $1,000 at the end of nine years. Using the straight-line method, the amount of one year's depreciation is |
| | A) | $1,111.11. |
| | B) | $1,000. |
| | C) | $1,222.22. |
| | D) | $9,000. |
| | E) | none of these. |
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| 23 | |
If a company reports $1,000 of Service Fee Revenue, $300 of Supplies Expense and $200 of Equipment, what is their net income for the period? |
| | A) | $1,200 |
| | B) | $1,000. |
| | C) | $700. |
| | D) | $500. |
| | E) | none of these. |
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| 24 | |
If a company started out with $500 of supplies at the beginning of the year but only has $100 of supplies left, the adjusting entry to show the amount of supplies used will include: |
| | A) | A credit to supplies expense for $400. |
| | B) | A debit to supplies for $100. |
| | C) | A debit to supplies expense for $400. |
| | D) | A debit to supplies expense for $100. |
| | E) | A credit to supplies for $100. |
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| 25 | |
The balance in the Prepaid Insurance account before adjustment at the end of the year is $720, which represents twelve months' insurance purchased on December 1. The adjusting entry required for the month of December on December 31, the end of the fiscal year, is |
| | A) | debit Insurance Expense, $660; credit Prepaid Insurance, $660. |
| | B) | debit Insurance Expense, $60; credit Prepaid Insurance, $60. |
| | C) | debit Prepaid Insurance, $60; credit Insurance Expense, $60. |
| | D) | debit Prepaid Insurance, $720; credit Insurance Expense, $720. |
| | E) | none of these. |
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| 26 | |
If a company started out with $500 of supplies at the beginning of the year but used $100 of supplies during the year, the adjusting entry to show the amount of supplies used will include: |
| | A) | A credit to supplies expense for $400. |
| | B) | A debit to supplies for $100. |
| | C) | A debit to supplies expense for $400. |
| | D) | A credit to supplies expense for $100. |
| | E) | A credit to supplies for $100. |
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| 27 | |
A business pays weekly wages of $20,000 on Friday for a five-day week ending on that day. If the fiscal period ends on Wednesday, the adjusting entry is |
| | A) | debit Drawing, $12,000; credit Wages Payable, $12,000. |
| | B) | debit Wages Expense, $12,000; credit Drawing, $12,000. |
| | C) | debit Wages Expense, $12,000; credit Wages Payable, $12,000. |
| | D) | debit Wages Payable, $12,000; credit Wages Expense, $12,000. |
| | E) | none of these. |
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| 28 | |
If Equipment was purchased for $4,000 on Jan 1 and has no salvage value and will be used for 8 years, what is the adjusting entry at the end of the first year to record depreciation if the straight-line method was used) |
| | A) | debit Depreciation Expense, $500; credit Accumulated Depreciation, $500. |
| | B) | debit Accumulated Depreciation, $500; credit Depreciation Expense, $500 |
| | C) | debit Depreciation Expense, $4,000; credit Accumulated Depreciation, $4,000. |
| | D) | debit Equipment, $500; credit Depreciation Expense, $500 |
| | E) | none of these |
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| 29 | |
If an accountant fails to make an adjusting entry at the end of a fiscal period to record expired insurance, the omission will cause |
| | A) | total assets to be understated. |
| | B) | total expenses to be understated. |
| | C) | total revenue to be understated. |
| | D) | all of these. |
| | E) | none of these. |
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| 30 | |
If equipment cost $20,000 and accumulated depreciation amounts to $6,000, the book value of the equipment is |
| | A) | $20,000. |
| | B) | $26,000. |
| | C) | $14,000. |
| | D) | $6,000. |
| | E) | none of these. |
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