Question 1

As accumulated depreciation is recorded,the book value:

Accepted Answer

Accumulated depreciation is the total depreciation that has been charged on the asset since its acquisition. It is a contra-asset account and is subtracted from the cost of the asset to derive its net book value. Therefore, as accumulated depreciation increases, the book value decreases.

Question 2

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

Accepted Answer

Accumulated Depreciation is a contra asset account and is therefore listed on the balance sheet as a deduction from the related asset (such as Property, Plant and Equipment). It is not found on the income statement or statement of owner's equity.

Question 3

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

Accepted Answer

The adjustment for wages earned but not yet paid involves recognizing the expense in the period it was earned (Wages Expense) and creating a liability for the amount owed to employees (Wages Payable). Therefore, the entry should be to debit Wages Expense and credit Wages Payable.

Question 4

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

Accepted Answer

Cash balance is continuously changing and being updated throughout the accounting period. Therefore, it would not typically require adjusting entries at the end of the year.

Question 5

What type of account is Salaries Payable?

Accepted Answer

Salaries Payable is a liability account. It represents the amount of money that a company owes to its employees for the work they have done but have not yet been paid for. It is classified as a current liability on the balance sheet as the payment is due within one year.

Question 6

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

Accepted Answer

The book value of the equipment is calculated by subtracting the accumulated depreciation from the cost of the equipment. Therefore, $200,000 (cost) - $100,000 (accumulated depreciation) = $100,000 (book value).

Question 7

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

Accepted Answer

Accrued wages means that the employees have worked and earned their wages, but the payment has not been made yet. Therefore, the entry should increase the Salaries Expense (debit) and create a liability in the Salaries Payable account (credit). Option A correctly reflects this entry. Option B has the accounts reversed. Option C records a payment, but the question refers to an accrual, where no payment has been made. Option D credits Cash, which is not relevant to the situation.

Question 8

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

Accepted Answer

Depreciation expense reflects the decrease in value of fixed assets over time and is included on the income statement, which shows a company's revenues and expenses over a given period of time.

Question 9

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

Accepted Answer

The adjusting entry should reflect the amount of wages that have been earned but not yet paid, which is $4,000. Therefore, Wages Expense should be debited for $4,000 and Wages Payable should be credited for $4,000. Option A is incorrect because it would decrease the Wages Payable by $4,000, which is the opposite of what is needed. Option C is incorrect because it would overstate the amount of Wages Expense by including the amount of wages that have already been paid. Option D is incorrect because it does not reflect the accrual of wages earned but not yet paid.

Question 10

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?

Accepted Answer

The balance in the Office Furniture account remains $900 because depreciation expense affects the accumulated depreciation account, not the original cost account of the asset.

Question 11

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

Accepted Answer

The adjusting entry for depreciation of the building would include a debit to Depreciation Expense for $300. This is because depreciation expense is an income statement account that needs to be recognized in the period it is incurred. The corresponding credit would be to Accumulated Depreciation, which is a contra asset account that reduces the value of the building on the balance sheet. Option A is incorrect because it only includes the credit portion of the entry. Option C is incorrect because it is not an expense account. Option D is incorrect because it reverses the debit and credit portions of the entry.

Question 12

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

Accepted Answer

The historical cost of the equipment is its original purchase price, which is $150,000. Accumulated depreciation is the total depreciation expense that has been recorded against the asset, but it does not change the historical cost.

Question 13

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

Accepted Answer

The total cost of the insurance policy is $7,200 for two years, which equals 24 months. Dividing $7,200 by 24 months gives $300 per month. The adjusting entry for one month would include a debit to Insurance Expense for $300 to recognize the expense for that month.

Question 14

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

Accepted Answer

The estimated value of an item at the end of its useful life is referred to as its residual value. Depreciation expense is the allocation of the cost of the asset over its useful life, and accumulated depreciation is the total amount of depreciation expense that has been recorded for an asset up to a particular point in time. None of these alternatives reflects the estimated value of the asset at the end of its useful life.

Question 15

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:

Accepted Answer

Based on the information given, we know that $1,100 worth of supplies have been used ($1,900 - $800). Therefore, the adjusting entry should be a debit to Store Supplies Expense for $1,100 to reflect the amount of supplies used during the year.

Question 16

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:

Accepted Answer

Since Duane paid $24,000 in advance for a year's rent, the monthly rent expense is $2,000 ($24,000/12 months). Therefore, the adjusting entry for rent expense on November 30 should be a debit of $2,000 to Rent Expense (to recognize the portion of the prepaid rent that has been used up during the month) and a credit of $2,000 to Prepaid Rent (to reduce the balance of the prepaid rent to reflect the remaining months of the lease). Choices A and B are incorrect because they do not reflect the amount of rent expense for the month of November. Choice D is incorrect because it does not reflect the recognition of rent expense for the month of November.

Question 17

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?

Accepted Answer

The balance in the Accumulated Depreciation account before the adjustment was $300. The adjustment of $900 in Depreciation Expense increased the Accumulated Depreciation to $1,200 ($300 + $900 = $1,200).

Question 18

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

Accepted Answer

The adjusting entry to record depreciation for office equipment requires a credit to Accumulated Depreciation, which is a contra-asset account that represents the total amount of depreciation recorded on the asset to date. Since the estimated depreciation for the year is $250, a credit of $250 must be recorded to Accumulated Depreciation. This will reduce the carrying value of the office equipment on the balance sheet and recognize the expense on the income statement. Option A is incorrect because it suggests to debit the Accumulated Depreciation, which is not correct. Option B is incorrect because it suggests to credit Depreciation Expense, which is the expense account to be debited. Option D is incorrect because it suggests to credit Office Equipment, which is not a contra-asset account.

Question 19

To record accrued salaries,you would:

Accepted Answer

To record accrued salaries, you need to debit Salaries Expense account for the amount of salaries earned and credit Salaries Payable account. Since the salaries have been earned but not yet paid, cash account is not involved in this transaction. Therefore, option A is incorrect. Option B incorrectly records the transaction as an expense rather than a liability. Option D is incorrect as one of the other options is correct.

Question 20

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:

Accepted Answer

The correct adjusting entry for supplies used would include a debit to Supplies Expense for $200, reflecting the amount of supplies consumed during the period. This decreases the asset (Supplies) and increases the expense (Supplies Expense), accurately reflecting the use of supplies in the income statement.

Quiz 4: The Accounting Cycle Continued