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)Supplies

Answer 1

C

Question 2

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

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

Answer 2

D

Question 3

Robert purchased a truck for $35,000 with a residual value of $10,000 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.

Answer 3

A

Question 4

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 5

A contra-asset is:

A)in reality 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 6

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

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

Question 7

The cost of an asset less accumulated depreciation equals:

A)residual value.
B)book value.
C)depreciation expense.
D)None of these answers are correct.

Question 8

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

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

Question 9

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

A)original cost on the balance sheet.
B)residual value on the income statement.
C)residual value on the balance sheet.
D)original cost on the income statement.

Question 10

Prepaid Rent is considered to be a(n):

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

Question 11

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)allocation of the cost.

Question 12

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 13

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

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

Question 14

If Prepaid Rent 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)assets will be understated and expenses will be understated.

Question 15

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 16

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 17

Not recording the Prepaid Rent used causes:

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

Question 18

An adjustment for Prepaid Rent would indicate:

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

Question 19

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 high.

Question 20

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 are correct.

Question 21

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 22

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 23

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 24

Equipment with a cost of $200,000 has an accumulated depreciation of $100,000. What is the book value of the equipment?

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

Question 25

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)None of these answers are correct.

Question 26

Accumulated Depreciation is found on which of the following financial statements?

A)Balance sheet
B)Income statement
C)Statement of Owner's Equity
D)All of these answers are correct.

Question 27

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 28

Equipment with a cost of $150,000 has an accumulated depreciation of $100,000. What is the historical cost of the equipment?

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

Question 29

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 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

Depreciation Expense would be found on which of the following financial statements?

A)Balance sheet
B)Income statement
C)Statement of Owner's Equity
D)Depreciation report

Question 32

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

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

Question 33

As accumulated depreciation is recorded, the book value:

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

Question 34

Great Lakes Modeling Agency purchased $900 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)$900

Question 35

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 36

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

A)Office Supplies
B)Prepaid Rent
C)Accumulated Depreciation
D)Cash

Question 37

What type of account is Salaries Payable?

A)Asset
B)Expense
C)Liability
D)Owner's equity

Question 38

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

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

Question 39

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

Question 40

Alcatraz Boat Tours showed store supplies available during the year, $550. 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 41

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 are correct.

Question 42

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)Payment for routine maintenance on the company van

Question 43

Historical cost is the same as:

A)residual value.
B)original cost.
C)accumulated depreciation.
D)book value.

Question 44

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 45

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 expenses and understate assets.

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 entry to record the expiration of part of the prepaid rent will:

A)decrease total assets 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 48

Which of the following accounts would most likely be depreciated?

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

Question 49

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 50

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 are correct.

Question 51

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 are correct.

Question 52

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)Equipment depreciated over the period.

Question 53

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 54

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

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

Question 55

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
D)All of the above would have that effect

Question 56

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 57

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)net loss.

Question 58

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 59

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 capital.

Question 60

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 expenses decreasing.
D)total assets decreasing and total expenses increasing.

Question 61

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

Question 62

Adjustments are necessary to update account balances for internal transactions.

Question 63

The Sarbanes-Oxley Act:

A)prohibits companies from buying additional equipment.
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 64

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

Question 65

The worksheet contains a trial balance.

Question 66

Original cost of equipment is not adjusted on the worksheet.

Question 67

Accumulated Depreciation is a contra-asset account found on the balance sheet.

Question 68

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 69

The worksheet is a formal statement.

Question 70

The original cost of equipment is reduced by the amount of Depreciation Expense.

Question 71

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

Question 72

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

Question 73

Accumulated Depreciation is a contra-asset account.

Question 74

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

Question 75

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

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

Question 76

Prepaid Rent is an asset with a normal balance of a debit.

Question 77

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

Question 78

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

Question 79

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

Question 80

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