Accounting 101 Unit 3

The formula to calculate straight‐line depreciation is:

(Cost - residual value) / useful life

An adjusted trial balance is

A listing of accounts after adjusting entries have been recorded and posted

An example of a contra account is

Accumulated depreciation

Closing entries are prepared

After financial statements are prepared

The Accumulated Depreciation account appears on the

Balance Sheet and Income Statement

If there is a net loss there will be a ___________ balance in the Income Summary account before moving the balance to Retained Earnings

Debit

Which of the following is a temporary account?

Dividends

The following does not describe the matching principle

Expenses are reported on the income statement when cash is paid

What of the following is a true statement about depreciation?

It is the allocation of the cost of plant or equipment over the time they are expected to be used

Which of the following is a non‐depreciable asset?

Land

The final step in the accounting cycle is to:

Prepare post closing trial balance

Cost outlays are recorded as an expense when they are incurred to earn revenue in the _______________ accounting period

Present

If there is a net loss there will be a ___________ balance in the Income Summary account after all closing entries have been posted

Zero