Question 1

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

Accepted Answer

The supplies used during the year is $3,200 - $700 = $2,500. The adjusting entry should reflect the expense incurred, so Supplies Expense is debited and Supplies is credited for $2,500.

Question 2

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

Accepted Answer

Since Peaches Consulting Service paid for 12 months of advance rent, the total amount paid is $4,800. However, as of December 31, only 2 months have passed (November and December), which means that $800 (2 months x $400) of rent has already expired. To adjust for this, we need to debit Rent Expense (an expense account) and credit Prepaid Rent (an asset account), both for $800. This would reduce the balance in the Prepaid Rent account to $4,000 ($4,800 - $800), representing the amount of rent that is still prepaid for the remaining 10 months. Therefore, the correct adjusting entry on December 31 would be:

Debit Rent Expense $800
Credit Prepaid Rent $800

Question 3

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

Accepted Answer

The adjusting entry needed at the end of the year is to debit Supplies Expense $1,300 and credit Supplies $1,300. This is because the company has already used up $1,300 worth of supplies and needs to recognize that expense in the current period, which is Supplies Expense. The credit goes to Supplies because it is reducing the asset balance to reflect the amount of supplies that have been used up. The other choices either do not reflect the correct amounts or do not properly account for the use of supplies during the year.

Question 4

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)

Accepted Answer

The answer of On January 1,ABC Catering purchased an oven...

Question 5

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.

Accepted Answer

A trial balance is a statement of all the accounts in a ledger with their debit or credit balances. The purpose of preparing a trial balance is to ensure that the total of debit balances equals the total of credit balances. If the trial balance is in balance, it means that the debit account balances equal the credit account balances. However, it does not necessarily mean that there are no errors in the general ledger or that adjusting entries are not required. Similarly, it does not indicate whether the company has earned a net income or not.

Question 6

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

Accepted Answer

A worksheet includes a trial balance, so it need not be completed separately.

Question 7

An accumulated depreciation account has a normal ____________________ balance.

Accepted Answer

The answer of An accumulated depreciation account has a normal...

Question 8

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

Accepted Answer

The answer of Equipment costing $13,500 with an estimated salvage...

Question 9

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

Accepted Answer

This entry records the depreciation on equipment for the fiscal year-end adjustment. It increases the expense account (Depreciation Expense) and decreases the contra asset account (Accumulated Depreciation).

Question 10

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

Accepted Answer

To calculate the book value of the truck after two years, we need to determine the depreciation expense for the first two years.

First, we need to determine the annual depreciation expense:

Cost of truck / Useful life in years = Annual Depreciation Expense

$12,000 / 60 = $200 per year

Next, we can calculate the depreciation expense for the first two years:

$200 per year x 2 years = $400

To find the book value of the truck after two years, we need to subtract the accumulated depreciation from the cost of the truck:

Cost of truck - Accumulated depreciation = Book value

$12,000 - $400 = $11,600

Therefore, the correct answer is B) $7,200.

Question 11

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

Accepted Answer

The answer of When the ____________________ method of depreciation is...

Question 12

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.

Accepted Answer

The straight-line depreciation method calculates annual depreciation by subtracting the salvage value from the cost and dividing by the useful life. ($34,000 - $880) / 6 = $5,520.

Question 13

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.

Accepted Answer

The straight-line depreciation method divides the cost of the asset by its useful life. $36,000 divided by 5 years equals $7,200 per year. Dividing $7,200 by 12 months gives $600 per month.

Question 14

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

Accepted Answer

Adjusting entries are made to update the accounts for expenses and revenues that have been incurred or earned but not yet recorded in the accounting records. They do not correct errors or always affect cash.

Question 15

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.

Accepted Answer

If prepaid expenses are not adjusted, they will be recorded as an asset on the balance sheet. However, since they represent expenses that have been paid in advance, they should be reduced or expensed over time. If they are not adjusted, the asset balance will be overstated as the prepaid expenses should have been recognized as an expense.

Question 16

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

Accepted Answer

The insurance policy was purchased on October 1st, which means that on December 31st (the end of the year), there are still 3 months left (October, November, December) that have not been used. Therefore, the amount that should be expensed (debit Insurance Expense) is $165 ($660/12 months x 3 months remaining). The remaining amount of $495 should be credited to Prepaid Insurance ($660 - $165 = $495).

Question 17

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.

Accepted Answer

The adjusting entry to account for depreciation of equipment involves recognizing an expense (Depreciation Expense) and reducing the value of the asset (Equipment). However, since depreciation is an ongoing process of gradually reducing the value of the asset over time, we need to also show how much has already been depreciated up to this point. That is where Accumulated Depreciation comes in - it is a contra asset account that shows the total amount of depreciation taken on an asset since it was acquired. Therefore, the entry should be a debit to Depreciation Expense (an income statement account) and a credit to Accumulated Depreciation (a balance sheet contra asset account). This reduces the carrying value of the asset on the balance sheet, but does not affect the company's overall net income because the expense was already incurred when the asset was initially acquired.

Question 18

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

Accepted Answer

The answer of On a worksheet,the adjusted balance of Depreciation...

Question 19

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

Accepted Answer

The answer of On a worksheet,the adjusted balance of Supplies...

Question 20

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.

Accepted Answer

The answer of A(n)____________________ is prepared at the end of...

Quiz 5: Adjustments and the Worksheet

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:

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 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:

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.

When a trial balance is in balance,

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

An accumulated depreciation account has a normal ____________________ balance.

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?

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

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?

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

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

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

Adjusting Entries are

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

On October 1,2016,Jay Walker Company purchased a one-year insurance policy for $660.The correct adjusting entry on December 31,2016,is

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

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

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

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.