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$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 about the Accumulated depreciation account is (are) correct? (Check all that apply.)

Accumulated depreciation is a contra account. The Accumulated depreciation account allows the original cost of the asset to remain in the plant asset account. Accumulated depreciation is subtracted from its plant asset on the balance sheet. Accumulated depreciation accumulates the total depreciation taken on an asset since its purchase.

Which of the following statements describes the expense recognition (matching) principle? (Check all that apply.)

Expenses should be matched in the same accounting period as the revenues that are earned as a result of those expenses. Matching of expenses with revenues is a major part of the adjusting process.

Which of the following could be a logical or realistic accounting period for a business when preparing their financial statements? (Check all that apply.)

One-year period One-month period Six-month period

Which of the following accounts is considered a prepaid expense? Multiple choice question.

Supplies

What is the difference between an adjusted trial balance and an unadjusted trial balance? (Check all that apply.)

The adjusted trial balance is a list of accounts and their balances after adjusting entries have been posted. The adjusted trial balance is used to prepare financial statements. The adjusted trial balance generally has more accounts listed than the unadjusted trial balance.

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.

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

Demonstrate your knowledge of a depreciation adjusting entry by completing the following sentence. A depreciation adjustment would include a debit to accumulated depreciationBlank 1Blank 1 accumulated depreciation , Incorrect Unavailable (depreciation expense/accumulated depreciation/building) and creditBlank 2Blank 2 credit , Correct Unavailable (debit/credit) to depreciation expenseBlank 3Blank 3 depreciation expense , Incorrect Unavailable (depreciation expense/accumulated depreciation/building).

depreciation expense credit accumulated depreciation

On December 1, a company pays $3,600 for a 36-month insurance policy. After one month, accrual accounting requires $100Blank 1Blank 1 100 , Correct Unavailable (100/3,600) of insurance expense be reported on the income statement ending December 31. However, if cash basis accounting is used, $3,600Blank 2Blank 2 3,600 , Correct Unavailable (100/3,600) of insurance expense would be reported at the time of purchase.

100 3,600 or 3600

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 the December 31 adjusting entry by choosing the correct statement below.

Debit Unearned revenues for $400.

Which of the following statements describes why accrual accounting better reflects a business's performance as compared to the cash basis? (Check all that apply.)

Expenses are always recognized in the period in which they are incurred. Comparability of financial statements is improved. Revenues are always recorded in the period in which they are earned when services and products are delivered.

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.

$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.)

It would reduce assets, so total assets would be lower. It would increase expenses, so net income would be reduced.

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

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

$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.)

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.

What is the purpose of the Accumulated Depreciation account?

The account allows both the original cost of plant assets and the total depreciation taken to be shown simultaneously.

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.

Cash basis accounting recognizes revenueBlank 1Blank 1 revenue , Correct Unavailable (equity/revenues/expenses) when cash is received and records expensesBlank 2Blank 2 expenses , Correct Unavailable

revenues expenses