978-0134125053 Chapter 3 Part 2

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36) The difference between the cost of office equipment and accumulated depreciation–office

equipment is called:

A) market value.

B) salvage value.

C) book value.

D) original value.

Question Type: Concept

37) The total dollars in an Accumulated Depreciation account are:

A) added to the corresponding asset account.

B) divided into the corresponding asset account.

C) subtracted from the corresponding asset account.

D) subtracted from the corresponding liability account.

Question Type: Concept

38) If a piece of equipment was purchased on September 1, it would have ________ months

depreciation included in the adjusting entry for the calendar year.

A) 12

B) 8

C) 4

D) 6

Question Type: Application

39) A 40-month insurance policy was purchased for $2,100 on May 1. How much insurance will

be expensed on December 31?

A) $2,100

B) $53

C) $210

D) $420

Question Type: Application

40) A machine with a cost of $20,000, a salvage value of $8,000 and expected life of 15 years

was purchased on September 1. For a calendar year company, the journal entry to record

depreciation expense for the first year would be to:

A) debit Depreciation Expense, $67; credit Accumulated Depreciation, $67.

B) debit Depreciation Expense, $333; credit Accumulated Depreciation, $333.

C) debit Depreciation Expense, $267; credit Accumulated Depreciation, $267.

D) debit Depreciation Expense, $200; credit Accumulated Depreciation, $200.

Question Type: Application

41) Supplies on hand were $434 of the original $1,134. The adjusting amount for supplies for the

year would be:

A) $1,134.

B) $434.

C) $700.

D) some other number.

Question Type: Application

42) Another name for “book value” is:

A) Accumulated Depreciation.

B) carrying value.

C) market value.

D) Depreciation Expense.

Question Type: Concept

43) A machine costing $49,000 has a life of 10 years. The salvage value is $10,000. It was

purchased on February 1. The depreciation expense for the calendar year is: (Do not round any

intermediary calculations. Round your final answer to the nearest dollar.)

A) $408.

B) $4,492.

C) $325.

D) $3,575.

Question Type: Application

44) Salary expense is $1,175 per day, Monday through Friday, and the business pays employees

each Friday. If December 31 falls on a Wednesday, the amount of the adjusting entry to record

accrued salaries would be:

A) $3,525.

B) $1,175.

C) $2,350.

D) $5,875.

Question Type: Application

45) The journal entry to record $2,750 of depreciation expense for the year would be to:

A) debit Depreciation Expense, $2,750; credit Equipment, $2,750.

B) debit Accumulated Depreciation, $2,750; credit Depreciation Expense, $2,750.

C) debit Accumulated Depreciation, $2,750; credit Equipment, $2,750.

D) debit Depreciation Expense, $2,750; credit Accumulated Depreciation, $2,750.

Question Type: Application

46) Salary expense is $2,600 per day, Monday through Friday, and the business pays employees

each Friday. If December 31 falls on a Tuesday, the adjusting entry to record accrued salaries

would be to:

A) debit Salaries Payable, $2,600; credit Salaries Expense, $2,600.

B) debit Salaries Expense, $5,200; credit Salaries Payable, $5,200.

C) debit Salaries Expense, $2,600; credit Salaries Payable, $2,600.

D) debit Salaries Payable, $5,200; credit Salaries Expense, $5,200.

Question Type: Application

47) The balance in Unearned Revenues prior to adjustment was $3,150. If the amount still

unearned as of the end of the period is $1,700, the adjusting entry needed would be to:

A) debit Cash, $3,150; credit Unearned Service Revenue, $3,150.

B) debit Unearned Service Revenue, $1,700; credit Service Revenue, $1,700.

C) debit Unearned Service Revenue, $1,450; credit Service Revenue, $1,450.

D) debit Service Revenue, $1,450; credit Unearned Service Revenue, $1,450.

Question Type: Application

48) A company started the year with no supplies. During this year they bought $230 worth of

supplies on account and later paid $150 of this debt. If there were $20 supplies left at the end of

this year, what was the supply expense for the period?

A) $210

B) $80

C) $20

D) $60

Question Type: Application

49) Which of the following is a TRUE statement regarding the Unearned Revenue account?

A) Unearned Revenue is accrued as the business provides goods or services.

B) Unearned Revenue is expensed as the business provides goods or services.

C) Unearned Revenue decreases as the business provides goods or services.

D) Unearned Revenue increases as the business provides goods or services.

Question Type: Concept

50) Prepaid expenses are also called:

A) accrued expenses.

B) deferred expenses.

C) both A and B.

D) neither A or B.

Question Type: Concept

51) On January 1 Corporate Condos, Inc received $89,000 for one year’s rent for building A.

What would the adjusting entry be on March 31?

A) Debit Rent Expense $7,417, credit Prepaid Rent $7,417

B) Debit Unearned Rent Revenue $7,417, credit Rent Revenue $7,417

C) Debit Rent Expense $22,250, credit Prepaid Rent $22,250

D) Debit Unearned Rent Revenue $22,250, credit Rent Revenue $22,250

Question Type: Application

52) On January 1, Daisy Company paid $6,400 for six months rent. Assume no other adjusting

entries have been done this fiscal year. What would the adjusting entry be on March 31?

A) Debit Rent Expense $1,067, credit Prepaid Rent $1,067

B) Debit Rent Expense $1,067, credit Cash $1,067

C) Debit Rent Expense $3,200, credit Prepaid Rent $3,200

D) Debit Rent Expense $3,200, credit Cash $3,200

Question Type: Application

53) Annual depreciation on equipment at Charmed, Inc.is $1,800. The adjusting entry to record

one month’s worth of depreciation would be:

A) Debit Depreciation Expense $150, credit Cash $150

B) Debit Depreciation Expense $150, credit Accumulated Depreciation $150

C) Debit Depreciation Expense $1,800 credit Cash $1,800

D) Debit Depreciation Expense $1,800, credit Accumulated Depreciation $1,800

Question Type: Application

54) Safety First Supply Company purchased a 5-year insurance policy for $2,900. What would

the adjusting entry be at the end of the first year?

A) Debit Insurance Expense $2,900, credit Prepaid Insurance $2,900

B) Debit Insurance Expense $2,900, credit Cash $2,900

C) Debit Insurance Expense $580, credit Prepaid Insurance $580

D) Debit Insurance Expense $580, credit Cash $580

Question Type: Application

55) If a company forgets to make an adjusting entry relating to a deferred expense, which of the

following would NOT be true?

A) Assets would be overstated

B) Expenses would be understated

C) Retained earnings would be overstated

D) Stockholders‘ Equity would be understated

Question Type: Concept

56) If a company forgets to make an adjusting entry relating to a deferred revenue, which of the

following would NOT be true?

A) Liabilities would be overstated

B) Revenues would be understated

C) Retained earnings would be overstated

D) Stockholders‘ Equity would be understated

Question Type: Concept

3.3 Prepare financial statements from an adjusted trial balance

1) The adjusted trial balance is prepared before the adjusting entries are completed and posted.

Question Type: Concept

2) After preparing the adjusted trial balance, those figures are used to complete the Balance

Sheet only.

Question Type: Concept

3) The balance of Retained Earnings on the adjusted trial balance does not represent the final

Retained Earnings balance on the Balance Sheet.

Question Type: Concept

4) Net income or net loss can be determined by the adjusted trial balance figures.

Question Type: Concept

5) On the Income Statement, expenses are always listed in descending order from the largest to

the smallest amount.

Question Type: Concept

6) Using the adjusted trial balance, the first financial statement to prepare is the Income

Statement.

Question Type: Concept

7) Dividends are not included on an adjusted trial balance.

Question Type: Concept

8) Expenses are always listed in alphabetical order on the Income Statement.

Question Type: Concept

9) The unadjusted trial balance for Supplies shows a normal balance of $525. If $100 of supplies

were expensed, the adjusted trial balance would show a debit balance of $625 in Supplies.

Question Type: Application

10) The unadjusted trial balance for Prepaid Rent shows a normal balance of $8,000. If $4,000

of rent were used during the period, the adjusted trial balance would show a credit balance of

$4,000.

Question Type: Application

11) Of the following, which are reported on the Balance Sheet?

A) Assets

B) Revenues

C) Expenses

D) Net income or net loss

Question Type: Concept

12) Of the following, which is NOT reported on the Balance Sheet?

A) cash

B) equipment

C) Depreciation Expense

D) account payable

Question Type: Concept

13) Of the following, which would be reported on the Income Statement?

A) Rent Expense

B) rent revenue

C) Prepaid Rent

D) both A and B

Question Type: Concept

14) The adjusted trial balance is the basis for the preparation of:

A) the Statement of Retained Earnings.

B) the Income Statement.

C) the Balance Sheet.

D) all financial statements.

Question Type: Concept

15) Which of the following accounts does NOT go onto the Income Statement from the adjusted

trial balance?

A) Sales Revenue

B) Insurance Expense

C) Accounts Receivable

D) Rent Expense

Question Type: Concept

16) Which of the following does NOT go onto the Balance Sheet from the adjusted trial balance?

A) Dividends

B) Accounts Payable

C) Land

D) Cash

Question Type: Concept

17) The adjusted trial balance will directly show the:

A) amount of the adjustments made to expense accounts only.

B) final balance in the Retained Earnings account.

C) amount of the adjustment made to each account.

D) adjusted balances for every account affected by an adjusting entry.

Question Type: Concept

18) The adjusted trial balance shows:

A) accounts that may still be out of balance.

B) revenues and expense amounts only.

C) numbers ready to be transferred to the financial statements.

D) assets, liabilities and Stockholders‘ Equity amounts only.

Question Type: Concept

19) The balance in the Depreciation Expense account on the adjusted trial balance:

A) is generally equal to the balance on the unadjusted trial balance.

B) is generally greater than the balance on the unadjusted trial balance.

C) is generally less than the balance on the unadjusted trial balance.

D) has no relationship to the balance on the unadjusted trial balance.

Question Type: Concept

20) The balance in the Supplies account on the adjusted trial balance:

A) is generally equal to the balance on the unadjusted trial balance.

B) is generally greater than the balance on the unadjusted trial balance.

C) is generally less than the balance on the unadjusted trial balance.

D) has no relationship to the balance on the unadjusted trial balance.

Question Type: Concept

21) The balance in the Accumulated Depreciation account on the adjusted trial balance:

A) is equal to the balance on the unadjusted trial balance.

B) is greater than the balance on the unadjusted trial balance.

C) is less than the balance on the unadjusted trial balance.

D) has no relationship to the balance on the unadjusted trial balance.

Question Type: Concept

22) The balance for the Land account on the adjusted trial balance:

A) must be equal to the balance on the unadjusted trial balance.

B) must be greater than the balance on the unadjusted trial balance.

C) must be less than the balance on the unadjusted trial balance.

D) has no relationship to the balance on the unadjusted trial balance.

Question Type: Concept

23) The Income Statement that is prepared from the adjusted trial balance begins with the:

A) first asset account listed on the adjusted trial balance.

B) first liability account listed on the adjusted trial balance.

C) first revenue account listed on the adjusted trial balance.

D) first expense account listed on the adjusted trial balance.

Question Type: Concept

24) The Statement of Retained Earnings that is prepared from the adjusted trial balance begins

with the:

A) first stock account listed on the adjusted trial balance.

B) Retained Earnings balance on the adjusted trial balance.

C) first dividend account listed on the adjusted trial balance.

D) net income listed on the adjusted trial balance.

Question Type: Concept

25) All financial statements must have, in order, the:

A) title of financial statement and specific date.

B) title of financial statement, name of company, and specific date.

C) name of company, title of financial statement, and specific date.

D) name of company, title of financial statement, and a specific date or period.

Question Type: Concept

26) The adjusted trial balance proves that:

A) all adjusting entries have been recorded correctly.

B) debit totals equal credit totals.

C) no adjusting entry has been entered twice.

D) the balance of the adjusted trial balance is correct.

Question Type: Concept

27) The unadjusted trial balance for Supplies shows a $634 balance. If $532 of supplies were

used during the period, the adjusted balance for Supplies would be a:

A) $102 credit.

B) $102 debit.

C) $532 debit.

D) $532 credit.

Question Type: Application