Accounting General Journal, 11E-Chapter 15
Annual straight-line depreciation expense calculated as the original cost of the plant asset divided by the years of estimated useful life.
False
Cash and other assets expected to be exchanged for cash or consumed within a year are called liquid assets.
False
Depreciation expense is recorded on all plant assets.
False
Estimated federal income tax must be paid in monthly installments
False
For a business using the periodic inventory method, purchases are recorded in the Merchandise Inventory account.
False
For a business using the periodic inventory method, the balance of Merchandise Inventory in the unadjusted trial balance represents the beginning balance plus all purchases of merchandise made in the fiscal period
False
The Internal Revenue Service sets the amounts and rates of the tax brackets used to calculate federal income tax expense.
False
The annual straight-line depreciation of equipment costing $7,000 with a salvage value of $1,000 and a useful life of 5 years would be $1,400.00
False
The tax rate associated with an income tax bracket is called the tax rate.
False
The total amount of depreciation expense that has been recorded since the purchase of a plant asset is called
accumulated depreciation
The amount of the adjustment to Allowance for Uncollectible Accounts when the account balance is a $800 debit and $8,800 of accounts receivable is estimated to be uncollectible would be
$8,800
Revenue earned in one fiscal period but not received until a later fiscal period is called accrued revenue.
True
The Income Summary account is one of the accounts used to adjust the Merchandise Inventory account at the end of the fiscal period.
True
The Prepaid Insurance account must be adjusted at the end of a fiscal period because the account balance does not reflect the value of the insurance premiums that expired during the period.
True
The book value of a plant asset is its original cost minus accumulated depreciation.
True
The difference between an asset's account balance and its related contra account is called book value.
True
The marginal tax rate increases as the net income before federal income tax increases.
True
The total amount of depreciation expense that has been recorded since the purchase of a plant asset is called accumulated depreciation.
True
The value of the insurance coverage used is recorded as a debit to Insurance Expense.
True
Recording depreciation expenses is an application of the accounting concept
Matching Expenses with Revenue
The adjustment unique to merchandising businesses adjusts
Merchandise Inventory
A business can use any 12-month period for reporting its financial performance.
True
All accounts are listed on the unadjusted trial balance regardless of whether there is a balance or now.
True
Functional depreciation should be considered in estimating the useful life of computer equipment.
True
The journal entry to adjust Merchandise Inventory when the beginning merchandise inventory is $125,000 and ending merchandise inventory is $115,000 would be
debit Income Summary, $10,000 and credit Merchandise Inventory $10,000
The adjustment for unpaid federal income tax includes
expense and a liability account
Depreciation expense is calculated using all of the following amounts except
fair market value
A physical inventory is always conducted at the end of each
fiscal year
Accrued interest income on notes receivable is calculated using all of the following information except the
term of the note