Multiple Choice Study Questions

Depreciable cost is defined as ______.

cost minus scrap value

The expected cash value of a plant asset at the end of its useful life is called all the following except _____.

current book value

If total assets decreased by $15,000 during an accounting period, and liabilities increased by $10, 000 during the same period, the amount and direction (increase or decrease) of the period's change in total capital is ______.

$25,000 decrease

On January 9, 1998, Hereford Corporation acquired equipment for $100,000. The estimated life of the equipment is 4 years, and estimated salvage value is $10,000. If Hereford Corporation uses the straight-line method of depreciation, what will be the debit to depreciation expense for the year ended December 31, 1999?

$25,200

In a worksheet, which of the following errors will not cause the debit and credit columns of the trial balance to be unequal?

A debit entry was made in an account as a credit.

Which of the following is true? A) Depreciation is a valuation process of placing market values on assets. B) Depreciation means that a business sets aside cash to replace assets as they become unfunctional. C) Accumulated depreciation represents cash that can be used to replace assets. D) Accumulated depreciation represents a portion of a plant asset's cost that has been recorded as an expense.

D

The form that accompanies the payment of taxes to the federal government is a ______.

Form 940

The form that summarizes the information reported on each employee's report of income and taxes is a/an ______.

Form W-4

The form that contains information necessary to determine the employee's net earnings is a _____.

Form w-3

The total of a one-column purchases journal is posted to the account(s) ______.

Purchases and Accounts Payable

An example of a business document that indicates a transaction has occurred is ______.

a memo

If the credit amount of an entry to record the payment of advertising fees was not posted, ______.

assets would be overstated

John Caviness, a CPA, owns his own business. His company records show an account, Accounting Fees Earned, with a balance of $65,000. This account should be extended as a ________.

debit to the Income Statement columns of the work sheet

The best definition of assets is ______.

economic resources owned by a company that are expected to benefit future business periods

Expecting a business to remain in operation indefinitely is a referral to the accounting concept ______.

going concern

In accounting, a prepaid expense ______.

is an asset account amount

The persons or business to whom the signer of a promissory note promises a future payment is called the ______.

payee

The procedure for transferring information from a journal to a ledger is known as ______.

posting

The accountant for American Packing company is completing the worksheet for 2000. the subtotals of the Income Statement columns show debits of $240,000 and credits of ______________.

the company incurred a net loss of $20,000