Deck 4: The Accounting Cycle Continued

Question 1

Which of the following would be an example of a contra-asset?

A)Depreciation Expense
B)Residual Value
C)Accumulated Depreciation
D)Discount on Bonds

Answer 1

C

Question 2

When historical cost is used to record equipment,it would appear as the:

A)original cost in an asset on the balance sheet.
B)residual value in the Stockholders Equity account.
C)residual value in an asset on the balance sheet.
D)original cost on the income statement.

Answer 2

A

Question 3

If the adjustment for Supplies used during the period was NOT made:

A)expenses would be too low.
B)assets would be too low.
C)expenses would be too high.
D)revenue would be too low.

Answer 3

A

Question 4

Prepaid Rent Expense is considered to be a(n):

A)liability.
B)asset.
C)contra-asset.
D)revenue.

Question 5

Bringing account balances up to date before preparing financial reports is called:

A)posting.
B)adjusting.
C)journalizing.
D)analyzing.

Question 6

When historical cost is used in the accounting records,the book value of the asset is:

A)the original cost.
B)the market value.
C)original cost less accumulated depreciation.
D)closed out.

Question 7

If Prepaid Rent Expense for the period is NOT adjusted:

A)assets will be overstated and expenses will be overstated.
B)assets will be overstated and expenses will be understated.
C)assets will be understated and expenses will be overstated.
D)revenue will be understated and expenses will be understated.

Question 8

Robert purchased a truck for $50,000 with a residual value of $20,000 and a life expectancy of 5 years;using straight-line depreciation,the amount of the depreciation adjustment for the first year would be:

A)$5,000.
B)$6,000.
C)$6,400.
D)$4,000.

Question 9

After the adjustment for depreciation has been made,the original cost of the equipment:

A)increases with a credit.
B)decreases with a debit.
C)remains the same.
D)None of these answers is correct.

Question 10

Residual value is the:

A)estimated value of the asset when it is purchased.
B)estimated value of the asset at the end of its useful life.
C)cost of the asset.
D)same as book value.

Question 11

The adjustment to record supplies used during the period would be:

A)debit Supplies;credit Supplies Expense.
B)debit Supplies Expense;credit Cash.
C)debit Supplies Expense;credit Supplies.
D)debit Supplies;credit Cash.

Question 12

NOT recording the Prepaid Rent Expense used causes:

A)assets to be too low.
B)liabilities to be too high.
C)expenses to be too low.
D)revenue to be too high.

Question 13

If the balance of supplies at the start of the month was $900 and at the end of the month you had $450 on hand,the adjustment for Supplies would be:

A)$450.
B)$550.
C)$350.
D)$900.

Question 14

An adjustment for Prepaid Rent Expense would indicate:

A)the amount originally paid.
B)the amount expired.
C)the amount of the ending balance.
D)the amount of the trial balance.

Question 15

If the Supplies account is NOT adjusted:

A)assets will be overstated and expenses will be understated.
B)assets will be overstated and expenses will be overstated.
C)assets will be understated and expenses will be overstated.
D)assets will be understated and expenses will be understated.

Question 16

As Prepaid Rent Expense is used,the asset becomes a(n):

A)liability.
B)expense.
C)contra-asset.
D)revenue.

Question 17

A form used to organize and check data before preparing financial reports is known as a(n):

A)trial balance.
B)income statement.
C)ledger.
D)worksheet.

Question 18

The cost of an asset less accumulated depreciation equals:

A)residual value.
B)book value.
C)depreciation expense.
D)depreciable value.

Question 19

A contra-asset is:

A)a liability.
B)an asset with a debit balance.
C)an account with an opposite balance of a normal asset.
D)an account that increases the asset.

Question 20

The adjustment that is made to allocate the cost of a building over its expected life is called:

A)depreciation expense.
B)residual value.
C)accumulated depreciation.
D)None of these answers is correct.

Question 21

Samantha purchased a two-year insurance policy for $7,200.The adjusting entry for one month would include a:

A)debit to Insurance Expense,$300.
B)credit to Cash,$300.
C)debit to Prepaid Insurance,$300.
D)credit to Insurance expense,$300.

Question 22

What type of account is Salaries Payable?

A)Asset
B)Contra-Asset
C)Liability
D)Owner's equity

Question 23

Bailey's received its electric bill for December on December 31 but did not pay nor record it in the general journal.This resulted in:

A)understated assets.
B)overstated net income.
C)overstated liabilities.
D)understated revenue.

Question 24

The adjustment for wages earned,but not yet paid is:

A)Debit Wages Expense,credit Cash.
B)Debit Wages Payable,credit Wages Expense.
C)Debit Wages Payable,credit Cash.
D)Debit Wages Expense,credit Wages Payable.

Question 25

Equipment with a cost of $150,000 has an accumulated depreciation of $50,000.What is the historical cost of the equipment?

A)$150,000
B)$50,000
C)$200,000
D)$100,000

Question 26

Total wages per week are $4,800.You need to accrue $5,000 of wages.The adjusting entry would include which of the following?

A)Credit Wages Expense,$5,000;debit Wages Payable,$5,000
B)Debit Wages Expense,$5,000;credit Wages Payable,$5,000
C)Debit Wages Expense,$4,800;credit Wages Payable,$4,800
D)Debit Wages Expense,$4,800;credit Cash,$4,800

Question 27

The estimated value of an item at the end of its useful life is:

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

Question 28

Equipment with a cost of $500,000 has an accumulated depreciation of $400,000.What is the book value of the equipment?

A)$150,000
B)$50,000
C)$200,000
D)$100,000

Question 29

Unlimited Doors showed supplies available during the year of $1,900.A count of the supplies on hand as of October 31 is $800.The adjusting entry for Store Supplies would include:

A)a debit to Store Supplies Expense for $800.
B)a credit to Store Supplies Expense for $800.
C)a debit to Store Supplies for $1,100.
D)a debit to Store Supplies Expense for $1,100.

Question 30

Evans Golf Academy estimated depreciation on its building at $300.The adjusting entry for depreciation of the building would include:

A)a debit to Accumulated Depreciation for $300.
B)a debit to Depreciation Expense for $300.
C)a credit to Building for $300.
D)a credit to Depreciation Expense for $300.

Question 31

Which of the following accounts would most likely NOT need to be adjusted at the end of the year?

A)Office Supplies
B)Prepaid Insurance Expense
C)Accumulated Depreciation
D)Cash

Question 32

Great Lakes Modeling Agency purchased $800 of office furniture at the beginning of the month.Depreciation Expense at the end of the month is $200.What is the balance of the Office Furniture account at the end of the month?

A)$700
B)$1,000
C)$200
D)$800

Question 33

Online Service received its telephone bill for January,but is not going to pay the bill until February.What adjustment is needed to record the transaction?

A)Debit Telephone Expense;credit Cash
B)Debit Accounts Payable;credit Telephone Expense
C)Debit Telephone Expense;credit Accounts Payable
D)Debit Accounts Payable;credit Cash

Question 34

Sarah's Spices accrued wages are $1,800.Which of the following is the required adjusting entry?

A)Debit Salaries Expense,$1,800;credit Salaries Payable,$1,800
B)Credit Salaries Expense,$1,800;debit Salaries Payable,$1,800
C)Debit Cash,$1,800;credit Salaries Expense,$1,800
D)Debit Salaries Payable,$1,800;credit Cash,$1,800

Question 35

On November 1,Duane paid $24,000 in advance for a year's rent.The November 30 adjusting entry for rent expense should include a:

A)debit Rent Expense,$24,000.
B)credit Prepaid Rent Expense,$24,000.
C)debit Rent Expense,$2,000.
D)credit Cash,$2,000.

Question 36

As accumulated depreciation is recorded,the book value:

A)increases.
B)decreases.
C)remains the same.
D)is closed out.

Question 37

To record accrued salaries,you would:

A)debit Cash and credit Salaries Payable.
B)debit Salaries Payable and credit Salaries Expense.
C)debit Salaries Expense and credit Salaries Payable.
D)debit Salaries Expense and credit Cash.

Question 38

The adjusted trial balance on the worksheet shows Accumulated Depreciation,$1,200,and Depreciation Expense,$900.What was the balance in the Accumulated Depreciation account before the adjustment?

A)$2,100
B)$300
C)$900
D)$1,200

Question 39

Alcatraz Boat Tours showed store supplies available during the year,$600.If at the end of the month supplies used were $200,the adjusting entry would include a:

A)debit to Supplies Expense for $200.
B)debit to Supplies Expense for $350.
C)credit to Supplies Expense for $200.
D)credit to Supplies Expense for $350.

Question 40

Logan's Snowboards estimated depreciation for office equipment at $250.The adjusting entry to record the depreciation would include:

A)a debit to Accumulated Depreciation for $250.
B)a credit to Depreciation Expense for $250.
C)a credit to Accumulated Depreciation for $250.
D)a credit to Office Equipment for $250.

Question 41

Adjusting the supplies account will:

A)decrease the total assets and increase the total expenses.
B)decrease the total assets and decrease the total expenses.
C)increase the total assets and increase the total expenses.
D)increase the total assets and decrease the total expenses.

Question 42

The entry to record the expiration of part of the Prepaid Rent Expense will:

A)decrease total liabilities and increase total expenses at the end of the month.
B)decrease total assets and decrease total expenses at the end of the month.
C)increase total assets and increase total expenses at the end of the month.
D)increase total assets and decrease total expenses at the end of the month.

Question 43

Assuming no investments were made during the period,the balance of Capital shown on the worksheet is:

A)beginning capital.
B)ending capital.
C)net income.
D)equal to owner's withdrawals.

Question 44

The adjustment for accrued wages included the entire pay period,some of which occurs next month.This would:

A)understate the liabilities.
B)overstate the liabilities.
C)overstate net income.
D)None of these is correct.

Question 45

When making the adjustment for prepaid insurance,instead of writing off only the time that has passed,the entire policy was written off.This would:

A)overstate the assets.
B)overstate the liabilities.
C)understate net income.
D)None of these is correct.

Question 46

Which of the following would cause a liability to be credited and an expense to be debited?

A)Recording the adjustment for the expiration of rent
B)Recording the depreciation of equipment
C)Recording the accrual of salaries incurred
D)Purchasing equipment

Question 47

The accrual of an expense was not recorded.This would:

A)overstate assets and overstate liabilities.
B)overstate expenses and understate liabilities.
C)understate expenses and overstate liabilities.
D)understate expenses and understate liabilities.

Question 48

The depreciation of equipment will require an adjustment that results in:

A)total assets increasing and total expenses increasing.
B)total assets increasing and total expenses decreasing.
C)total assets and revenue decreasing.
D)total assets decreasing and total expenses increasing.

Question 49

Historical cost is the same as:

A)residual value.
B)original cost.
C)depreciable value.
D)book value.

Question 50

Which of the following accounts would most likely be depreciated?

A)Equipment
B)Office Supplies
C)Investments
D)Accounts Payable

Question 51

Adjusting entries affect:

A)the balance sheet.
B)the income statement.
C)Neither of these answers is correct.
D)Both A and B are correct.

Question 52

At the start of this year 18 months rent was paid.At the year's end,how will this affect the balance sheet?

A)Assets will be decreased.
B)Liabilities will be increased.
C)Owner's equity will be increased.
D)This has no effect on the period end balance sheet.

Question 53

The adjustment for depreciation was credited to Equipment and debited to Depreciation Expense.This would:

A)overstate the assets.
B)understate the assets.
C)overstate net income.
D)None of these is correct.

Question 54

Depreciation of equipment was recorded twice this period.This would:

A)overstate expenses and overstate assets.
B)overstate expenses and understate assets.
C)understate expenses and overstate assets.
D)understate assets and understate assets.

Question 55

Which of the following transactions would result in an accrual?

A)Salary expense has been incurred but unpaid.
B)Rent expired for the month.
C)Supplies used during the accounting period
D)Owner's withdrawals

Question 56

It's the end of the accounting period and no electric bill has been received (but the expense has been incurred);you should record an entry that:

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

Question 57

Which of the following would cause total assets to decrease and total expense to increase?

A)Recording the depreciation of equipment
B)Recording the consumption of supplies
C)Recording the expiration of Prepaid Rent Expense
D)All of the above would have that effect

Question 58

Which of the following is most likely to result in an adjusting entry at the end of the period?

A)Payment of two months' insurance in advance
B)Payment of one month's rent
C)Owner's withdrawals
D)Owner's investment

Question 59

It is the year end,but not the pay period end.How will this affect the balance sheet?

A)Assets will be decreased.
B)Liabilities will be increased.
C)Owner's equity will be increased.
D)This has no effect on the period end balance sheet.

Question 60

Which of the following would cause a contra-asset to be credited and an expense debited?

A)Recording an accrued expense
B)Recording the consumption of supplies
C)Recording the building depreciation
D)All of the above would have that effect.

Question 61

When an asset expires or is used up,it becomes an liability.

Question 62

Adjustments are necessary to update account balances for internal transactions.

Question 63

Depreciation Expense is debited when recording the depreciation for the period.

Question 64

Original cost of equipment is adjusted on the worksheet.

Question 65

The amount of supplies used during the period would be shown in the adjustment columns of the worksheet.

Question 66

Rent expired at the end of an accounting period requires an adjustment.

Question 67

Revenue is recorded when earned,and expenses are recorded only when incurred.

Question 68

The accounts added below the trial balance,on the worksheet,are always decreasing.

Question 69

To compute net income or net loss,the debit and credit columns of the income statement section of the worksheet are totaled,and the difference is placed on the smaller side.

Question 70

Accumulated Depreciation is a contra-asset account found on the income statement.

Question 71

Prepaid Rent Expense is a contra-asset with a normal balance of a debit.

Question 72

The worksheet is a formal financial statement.

Question 73

The original cost of equipment is not reduced by the amount of Depreciation Expense.

Question 74

The use of straight-line depreciation results in equal amounts of depreciation being taken over a period of time.

Question 75

An important function of the worksheet is for the accountant to find and correct errors before the financial statements are prepared.

Question 76

The Sarbanes-Oxley Act:

A)requires a minimum cash balance.
B)does not allow adjusting entries.
C)states the need to have accurate financial reports.
D)does not allow the use of a worksheet.

Question 77

If an adjustment to Supplies is not made,the balance in the Supplies account will be too low.

Question 78

The spreading or allocating of the cost of a long-term asset is called discounting.

Question 79

The worksheet contains a trial balance.

Question 80

Accumulated Depreciation is a contra-asset account.