Ch 3 accounting learn smart

A $300,000 building was purchased on December 1. It is estimated that it will have a life of 20 years and zero salvage value. Calculate depreciation expense for the month of December using straight-line depreciation.

$1,250

A calendar year-end reporting period is defined as a ______(1 / 3 / 12) -month period which ends on ______(December/January/March) 31st.

12 December

Given the following information for Mouse Inc., calculate its profit margin for the year.

14.29%

What is a plant asset?

A plant asset refers to a long-term tangible asset used to produce and sell products or services.

Which of the following adjustments would be required at the end of the period? (Check all that apply.)

Accrued revenues Deferred expenses Deferred revenues Accrued expenses

Demonstrate your knowledge of a depreciation adjusting entry by completing the following sentence. A depreciation adjustment would include a debit to____and______ to

Blank 1: depreciation expense Blank 2: credit Blank 3: accumulated depreciation

Accrual basis accounting recognizes ________ (equity/revenues/expenses) when the service or product is delivered and records _______(revenues/expenses/liabilities) when ______(incurred/paid) in order to adhere to the matching principle.

Blank 1: revenues Blank 2: expenses Blank 3: incurred

Choose the statement below that demonstrates the correct adjusting entry to recognize depreciation expense on a building.

Debit Depreciation expense; credit Accumulated depreciation.

A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. Demonstrate the required adjusting journal entry on Dec. 31 by selecting from the choices below.

Insurance expense would be debited for $300.

Select all that apply $1,000 of supplies were purchased at the beginning of the month. $300 were used during the month. (The Supplies account was increased at the time of the initial purchase.) Demonstrate the required adjusting journal entry by selecting from the choices below.

Supplies expense would be debited for $300. Supplies would be credited for $300.

$800 of supplies were purchased at the beginning of the month and the Supplies account was increased. As of the end of the period, $200 of supplies still remain. Which of the following is the correct adjusting entry?

Supplies expense would be debited for $600.

Explain what unearned revenues are by selecting the statements below which are correct. (Check all that apply.)

They refer to cash received in advance of performing a service or product. They are also called deferred revenues. They are a liability. They are reported on a balance sheet.

Explain your understanding of what an accrued expense is by selecting the statements below which are correct. (Check all that apply.)

They refer to costs that are incurred in a period that are both unpaid and unrecorded. Adjustments involve increasing both an expense and a liability account. Examples of accrued expenses are salaries expense and interest expense.

Explain what unearned revenues are by choosing the correct statement below.

Unearned revenues refer to cash received in advance of providing a service or product.

Which of the accounts below are considered accrued expenses?

Wages expense, Interest expense

All of the following are types of adjustments except: accrued revenue accrued expense accrued cash deferral of expense deferral of revenue

accrued cash

Accrual basis accounting is defined as: (Check all that apply.)

an accounting system that uses the adjusting process to recognize revenues when earned and expenses when incurred. an accounting system that uses the matching principle to determine when to recognize revenues and expenses.

Select all that apply A 12-month insurance policy was purchased on Dec. 1 for $4,800 and the Prepaid insurance account was initially increased for the payment. The required adjusting journal entry on December 31 includes a:

debit to Insurance expense for $400. credit to Prepaid insurance for $400.

Profit Margin Ratio

net income/net sales

$21,000 of equipment is purchased on December 1. It is estimated that it will have a life of 5 years and zero salvage value. Calculate depreciation expense for one month, as of December 31, of the first year using the straight-line method.

$350

Which of the following statements correctly define(s) profit margin? (Check all that apply.)

Profit margin is also called return on sales. Profit margin is the ratio of a business's net income to its net sales. Profit margin is a useful measure of a business's operating results.

A plant asset can be defined by which of the following statements? (Check all that apply)

Provide benefits for greater than one period. It is a tangible long-term asset. Its cost (minus any salvage value) is gradually reported as expenses over its useful life. It is reported on the balance sheet.