accounting #4

Question Mode Multiple Select Question Select all that apply $1,000 of cash was received in advance of performing services. By the end of the period, $300 had not yet been earned. (The Unearned revenue account was increased at the time of the initial cash receipt.) Demonstrate the required adjusting journal entry by selecting from the choices below. (Check all that apply.) Multiple select question. A.Service revenue would be credited for $700. B.Unearned revenue would be debited for $300. C.Accounts receivable would be debited for $700. D.Unearned revenue would be debited for $700. e.Service revenue would be credited for $300.

A,B

A business has a $10,000 loan from a bank at 8% annual interest. Calculate the amount of interest to accrue if the loan has been outstanding for 45 days. Use a 360 day year.

$100 $10,000 x.08 x 45/360.

Which of the following accounts would be considered a prepaid expense or prepaid asset account? (Check all that apply.) Multiple select question. A.Supplies B.Prepaid insurance C.Prepaid rent D.Accounts payable E.Common Stock

A,B,C

A plant asset can be defined by which of the following statements? (Check all that apply.) Multiple select question. A.It has a life within the business greater than one year. B.It is reported on the balance sheet. C.It is a tangible long-term asset. D.Its original cost is expensed in the period in which it was purchased. E.its original cost (minus any salvage value) is expensed over its useful life.

A,B,C,E

Which of the following statements about the Accumulated depreciation account is (are) correct? (Check all that apply.) Multiple select question. A.Accumulated depreciation is a contra account. B.The Accumulated depreciation account allows the original cost of the asset to remain in the plant asset account. C.Accumulated depreciation is an expense account. D.Accumulated depreciation accumulates the total depreciation taken on an asset since its purchase. E.Accumulated depreciation is subtracted from its plant asset on the balance sheet. F.Accumulated depreciation is added to its plant asset on the income statement.

A,B,D,E

What is needed in order to figure interest expense? (Check all that apply.) Multiple select question. A.Principal amount owed B.Fraction of year since last payment C.Salvage value D.Original cost of asset E.Annual interest rate F.Years of useful life

A,B,E

$500 of supplies were purchased at the beginning of the period. By the end of the period, only $100 remains. The adjustment to show the $400 of supplies used would have the following effect(s). (Check all that apply.) Multiple select question. A.It would increase expenses, so net income would be reduced. B.It would reduce expenses, so net income would be increased. C.It would reduce assets, so total assets would be lower.

A,C

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: (Check all that apply.) Multiple select question. A.credit to Prepaid insurance for $400. B.credit to Insurance expense for $400. C.debit to Insurance expense for $400. D.debit to Insurance expense for $4,800. E.debit to Prepaid insurance for $400.

A,C

Explain your understanding of what an accrued expense is by selecting the statements below which are correct. (Check all that apply.) Multiple select question. A.Adjustments involve increasing both an expense and a liability account. B. They are also called accounts receivable. C.Examples of accrued expenses are wages expense and interest expense. D.They refer to costs that are incurred in a period, but are both unpaid and unrecorded. E.They are reported on an income statement. F.They refer to earnings which have been earned, but not yet billed.

A,C,D,E

What is depreciation? Multiple choice question. A.Depreciation is the process of allocating the costs of long-term assets over their expected useful life. B.Depreciation is the process of determining the value of accounts receivable which will be collected in the current period. C.Depreciation is the process of recognizing revenues earned within the current accounting period.

A.

What is the date primarily used in adjusting entries? Multiple choice question. A.The last day of the period B. The original date of the transaction being adjusted C.The first day of the period D.The date is unimportant

A.

$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? Multiple choice question. A.Supplies expense would be debited for $600. B.Supplies would be debited for $200. C.Supplies would be credited for $200. D.Supplies expense would be debited for $200.

A. 800-200=600 which is the expense

$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. (Check all that apply.) Multiple select question. A.Supplies expense would be debited for $700. B.Supplies would be credited for $300. C.Supplies expense would be debited for $300. D.Supplies expense would be credited for $300.

B,C

Which of the following statements are true regarding depreciation? (Check all that apply.) Multiple select question. A.Depreciation always measures the "decline in value". B.Depreciation is recognized at the end of an accounting period. C.Depreciation is the original cost of an asset minus any residual value and this amount is expensed over its useful life. D.Depreciation is the process of allocating the cost of an asset to the period the asset benefits. E.Depreciation is recorded through an adjusting entry. F.Depreciation is recognized on the day a plant asset is purchased.

B,C,D,E

Describe the effect of the adjusting entry to show the earned amount of a previously recorded unearned revenue on the income statement and on the balance sheet by choosing the correct statements below. (Check all that apply.) A.Total liabilities are increased. B.Total liabilities are reduced. C.Net income is increased. D.A liability (unearned revenue) will be reduced. E.A revenue account is increased. F.Net income is reduced.

B,C,D,E,

Explain what unearned revenues are by selecting the statements below which are correct. (Check all that apply.) Multiple select question. A.They refer to earnings which have been earned, but not yet billed. B.They are reported on a balance sheet. C.They are also called accounts receivable. D.They are a liability. e.They are also called deferred revenues. F.They refer to cash received in advance of performing a service or product.

B,D,E,F

Identify which group of accounts may require adjustments at the end of the accounting period. Multiple choice question. A.Cash; Notes receivable; Land B.Unearned revenue; Supplies; Prepaid rent C.Utilities expense; Cash; Common Stock

B.

What is the book value of an asset? Multiple choice question. A.Book value is the original cost of an asset plus its accumulated depreciation B.Book value is the original cost of an asset minus its accumulated depreciation. C.Book value is the difference between the original cost of an asset and its fair market value. D.Book value is another name for the original cost of an asset

B.

What is the purpose of the Accumulated Depreciation account? Multiple choice question. A. The account is added to the plant asset account at the end of the period, so that the fair market value of assets is evident to users. B. The account allows both the original cost of plant assets and the total depreciation taken to be shown simultaneously. C.The account is used to record only the current portion of depreciation expense. D.The account accumulates the repair expenses incurred on the plant asset since its purchase.

B.

$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 the first month's depreciation expense as of December 31 using the straight-line method. Multiple choice question. A.$700 B.$350 C.$21,000 D.$4,200

B. $21,000/60mos=$350 per month. December 1 - December 31 = 1 month.

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. Multiple choice question. A.$15,000 B.$1,250 C.$0 D.$2,500

B.$300,000/20 yrs = $15,000 per year. $15,000/12 months= 1250.

At the end of the previous year, a customer owed Chocolates R US $500. On January 31 of the current year, the customer paid $900 total, which included the $500 owed plus $400 owed for the current month of January. What would be the journal entry on January 31 that reflects this? (Check all that apply.) Multiple select question. A. Service revenue will be credited for $900. B. Accounts receivable will be debited for $500. C. Service revenue would be credited for $400. D. Accounts receivable will be credited for $500. E. Cash will be debited for $900.

C,D,E

Choose the statement below that demonstrates the correct adjusting entry to recognize depreciation expense on a building. Multiple choice question. A.Debit Accumulated depreciation; credit Depreciation expense. B.Debit Building; credit Accumulated depreciation. C.Debit Depreciation expense; credit Accumulated depreciation. D.Debit Depreciation expense; credit Building.

C.

Explain what unearned revenues are by choosing the correct statement below. Multiple choice question. A.Unearned revenues refer to amounts owed to the company that have not yet been billed. B.Unearned revenues refer to income reported on the income statement. C.Unearned revenues refer to cash received in advance of providing a service or product. D.Unearned revenues refer to customer payments which have not yet been received.

C.

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. Multiple choice question. A.Prepaid insurance would be credited for $3,600. B.Cash would be credited for $3,600. C.Insurance expense would be debited for $300. D.Insurance expense would be debited for $3,600.

C. 3600/12=300

An advance payment of $1,000 for services was received on December 1 and was recorded as a liability. By the end of the year, $400 had been earned. Demonstrate what the correct adjusting entry should include by choosing the correct statement below. Multiple choice question. A.Debit Service revenue for $400. B.Credit Unearned revenues for $400. C.Debit Unearned revenues for $400. D. Debit Unearned revenues for $600.

C. unearned is a liability usually a credit but since unearned revenues is decreasing it needs to be a debit

What is a plant asset? Multiple choice question. A.A plant asset is the portion of a current asset which will be used up in the next accounting period. B.A plant asset is considered temporary and will be used up within one accounting period. C.A plant asset refers to the stock purchased by a business held for future investment. D.A plant asset refers to a long-term tangible asset used to produce and sell products or services.

D.

Which of the accounts below would be classified as long-term or fixed assets? (Check all that apply.) Multiple select question. A.Accounts receivable B.Equipment C.Vehicles D.Building E.Land

E,D,C,B

Explain a contra account by filling in the following blanks. A contra account is an account that is linked with another __________ (report/account/statement). It has a(n) ___________ (similar/opposite) balance and is ___________ (added/subtracted) to/from the other account's balance.

account, opposite, subtracted

$200 of supplies were purchased at the beginning of the period and recorded as an asset. During the period, $90 of supplies were used. The adjustment to show the supplies used up would cause (assets/liabilities/expenses) to be reduced and (expenses/liabilities/revenues) to be increased, so net income would decline.

assets, expenses

Demonstrate your knowledge of a depreciation adjusting entry by completing the following sentence. A depreciation adjustment would include a debit to _____________(depreciation expense/accumulated depreciation/building) and __________(debit/credit) to ____________(depreciation expense/accumulated depreciation/building).

depreciation expense, credit, accumulated depreciation

By the end of the accounting period, employees have earned salaries of $650, but they will not be paid until the following pay period. Demonstrate the required adjusting entry by completing the following sentence. The required adjusting entry would be to debit the Salaries (expense/payable) account and (debit/credit) the Salaries (expense/payable/unearned) account.

expense, credit, payable