Chapter 23 Accounting Review

False

Depreciation Expense is reported on the income statement in the cost of goods sold section.

True

Depreciation amounts are estimates of the decrease in value or usefulness of a plant asset over a period of time.

Plant Assets

____________ are long-lived assets that are used in the production or sale of other assets or services over several accounting periods

Straight-line Depreciation

____________ is a method of equally distributing the depreciation expense on a plant asset over its estimated useful life.

(B) $20,000.

0) On January 3, Washington Delivery Service purchased a new delivery truck for $20,000. The delivery truck has an estimated disposal value of $3,200 and an estimated useful life of seven years. Using this information, select the answer that best completes each of the following statements. Write your answer in the space provided. The amount that will be debited to Delivery Equipment is (A) $16,800. (B) $20,000. (C) $3,200. (D) $23,200

(D) $2,400.

1) On January 3, Washington Delivery Service purchased a new delivery truck for $20,000. The delivery truck has an estimated disposal value of $3,200 and an estimated useful life of seven years. Using this information, select the answer that best completes each of the following statements. Write your answer in the space provided. The estimated annual depreciation amount using the straight-line method is (A) $3,200. (B) $16,800. (C) $2,857. (D) $2,400.

(C) Depreciation Expense—Delivery Equipment.

2) On January 3, Washington Delivery Service purchased a new delivery truck for $20,000. The delivery truck has an estimated disposal value of $3,200 and an estimated useful life of seven years. Using this information, select the answer that best completes each of the following statements. Write your answer in the space provided. The estimated depreciation amount will be recorded as a debit to (A) Accumulated Depreciation—Delivery Equipment. (B) Delivery Expense. (C) Depreciation Expense—Delivery Equipment. (D) Delivery Equipment.

(B) debit to Depreciation Expense—Delivery Equipment and a credit to Accumulated Depreciation—Delivery Equipment.

3) On January 3, Washington Delivery Service purchased a new delivery truck for $20,000. The delivery truck has an estimated disposal value of $3,200 and an estimated useful life of seven years. Using this information, select the answer that best completes each of the following statements. Write your answer in the space provided. At the end of the fiscal period, the adjusting entry for the depreciation is a (A) debit to Depreciation Expense—Delivery Equipment and a credit to Delivery Equipment. (B) debit to Depreciation Expense—Delivery Equipment and a credit to Accumulated Depreciation—Delivery Equipment. (C) debit to Accumulated Depreciation—Delivery Equipment and a credit to Depreciation Expense—Delivery Equipment. (D) debit to Delivery Equipment and a credit to Accumulated Depreciation— Delivery Equipment.

(C) a debit balance.

4) On January 3, Washington Delivery Service purchased a new delivery truck for $20,000. The delivery truck has an estimated disposal value of $3,200 and an estimated useful life of seven years. Using this information, select the answer that best completes each of the following statements. Write your answer in the space provided. After the adjusting entries are posted to the general ledger, Depreciation Expense— Delivery Equipment will have (A) a zero balance. (B) either a debit or credit balance. (C) a debit balance. (D) a credit balance.

(C) debit balance equal to the original purchase price.

5) On January 3, Washington Delivery Service purchased a new delivery truck for $20,000. The delivery truck has an estimated disposal value of $3,200 and an estimated useful life of seven years. Using this information, select the answer that best completes each of the following statements. Write your answer in the space provided. After the adjusting entries are posted, the Delivery Equipment account will have a (A) debit balance equal to the original purchase price less the amount of the accumulated depreciation. (B) debit balance for the amount of the depreciation. (C) debit balance equal to the original purchase price. (D) credit balance for the amount of the accumulated depreciation.

(A) a zero balance.

6) On January 3, Washington Delivery Service purchased a new delivery truck for $20,000. The delivery truck has an estimated disposal value of $3,200 and an estimated useful life of seven years. Using this information, select the answer that best completes each of the following statements. Write your answer in the space provided. After the closing entry is posted, the Depreciation Expense—Delivery Equipment account will have (A) a zero balance. (B) a debit balance. (C) a credit balance. (D) either a debit or credit balance.

(B) a credit balance.

7) On January 3, Washington Delivery Service purchased a new delivery truck for $20,000. The delivery truck has an estimated disposal value of $3,200 and an estimated useful life of seven years. Using this information, select the answer that best completes each of the following statements. Write your answer in the space provided. At the beginning of the next fiscal period, Accumulated Depreciation—Delivery Equipment will have (A) a debit balance. (B) a credit balance. (C) either a debit or credit balance. (D) a zero balance.

True

Depreciation Expense is recorded by an adjusting entry made in the general journal.

(C) $10,400.

8) On January 3, Washington Delivery Service purchased a new delivery truck for $20,000. The delivery truck has an estimated disposal value of $3,200 and an estimated useful life of seven years. Using this information, select the answer that best completes each of the following statements. Write your answer in the space provided. The book value of the delivery truck at the end of four years is (A) $9,600. (B) $12,800. (C) $10,400. (D) $7,200.

(D) $600.

9) On January 3, Washington Delivery Service purchased a new delivery truck for $20,000. The delivery truck has an estimated disposal value of $3,200 and an estimated useful life of seven years. Using this information, select the answer that best completes each of the following statements. Write your answer in the space provided. If the Delivery Equipment had been purchased on October 1 instead of January 3, the estimated depreciation for the first year would be (A) $400. (B) $1,200. (C) $200. (D) $600.

True

Accumulated Depreciation is classified as a contra plant asset account.

False

Accumulated Depreciation is reported on the balance sheet as a liability.

False

All plant assets, including land, depreciate in value.

Depreciation

Allocating the cost of a plant asset over the asset's useful life is called ____________.

False

Current assets include cash, merchandise, equipment, and Accounts Receivable

True

Delivery equipment, office equipment, buildings, and land are long-lived assets because they are expected to produce benefits for the business for more than one year.

False

The adjusting entry for depreciation affects two accounts for each type of plant asset: Depreciation Expense and Delivery Equipment.

False

The amount of depreciation taken for a plant asset is usually recorded in the accounting records at the beginning of the fiscal period.

True

The cost of a plant asset is the price paid for the asset plus taxes, installation charges, and delivery charges.

Disposal Value

The estimated value of a plant asset at its replacement time is called ____________.

Book Value

The original cost of a plant asset less its accumulated depreciation is the ____________.

False

The plant asset record does not list the accumulated depreciation of an asset or its book value at the end of each year.

Current Assets

_____________ are either used up or converted to cash during a one-year accounting period.

Accumulated Depreciation

_____________ is the total amount of depreciation for a plant asset that has been recorded up to a specific point in time.