3.3-29 Unearned rent is reported on the balance sheet as a(n):
A) expense.
B) liability.
C) asset.
D) contra asset.
3.3-30 Which term refers to the allocation of the cost of an asset over the asset’s useful life?
A) Accrual
B) Deferral
C) Depreciation
D) Expiration
3.3-31 All of the following are true statements about the Accumulated Depreciation account EXCEPT that it:
A) is a contra asset account with a normal credit balance.
B) shows the sum of all depreciation expense from using the asset.
C) is a contra asset account with a normal debit balance.
D) always has a normal balance opposite that of its companion account.
3.3-32 The book value of a PPE is the:
A) accumulated depreciation less the cost of the asset.
B) cost of the asset.
C) balance in the accumulated depreciation account.
D) cost of the asset less the accumulated depreciation.
3.3-33 An adjustment for which the business paid or received cash in advance is:
A) an accrual.
B) a deferral.
C) earned revenue.
D) expense recognition.
3.3-34 A liability that arises from an expense that has not yet been paid is a(n):
A) unearned expense.
B) prepaid expense.
C) accrued expense.
D) accrued revenue.
3.3-35 A revenue that has been earned, but not yet collected is a(n):
A) unearned expense.
B) prepaid expense.
C) accrued expense.
D) accrued revenue.
3.3-36 Unearned revenue is a(n):
A) asset account.
B) liability account.
C) revenue account.
D) expense account.
3.3-37 Which account is debited in the adjusting entry to record insurance expired during the current period?
A) Prepaid Insurance
B) Insurance Expense
C) Accrued Insurance
D) Insurance Payable
3.3-38 Which account is credited in the adjusting entry to allocate the cost of equipment?
A) Equipment Expense
B) Depreciation Expense
C) Accumulated Equipment
D) Accumulated Depreciation
3.3-39 Plant, Property and Equipment include:
A) equipment, supplies and land.
B) equipment, prepaid insurance and furniture.
C) equipment, buildings and land.
D) land, buildings and accounts receivable.
3.3-40 Ben George, Inc. has an unadjusted balance in Accumulated Depreciation─Truck of $9,000 as of
December 31, 20X6. This relates to a Truck purchased for $15,000 with an expected useful life of 5 years
that is depreciated using the straight line method. After recording the depreciation expense for 2011, the
adjusted balance in the Accumulated Depreciation─Truck account as of December 31, 20X7 is:
A) $15,000.
B) $12,000.
C) $3,000.
D) $1,000.
3.3-41 Which account is debited in the adjusting entry to record salaries owed to employees, but not paid until
next accounting period?
A) Salary Expense
B) Unearned Salaries
C) Salary Payable
D) Deferred Salary
3.3-42 A company pays an employee $1,000 per week for a five day work week. The adjusting entry on
December 31, which is a Tuesday, is a:
A) debit to Salaries Expense for $1,000 and a credit to Salaries Payable for $1,000.
B) debit to Salaries Expense for $500 and a credit to Salaries Payable for $500.
C) debit to Salaries Expense for $400 and a credit to Salaries Payable for $400.
D) debit to Salaries Payable for $1,000 and a credit to Salaries Expense for $1,000.
3.3-43 On November 1 of the current year, Prepaid Rent was debited $5,400 for three months of rent, paid in
advance. The amount of the adjusting entry on December 31 is:
A) $1,800.
B) $3,600.
C) $5,400.
D) $0.
3.3-44 On September 1, Banger Bros. Company paid $9,000 for one year of rent, in advance. Which of the
following accounts and amounts will appear on an adjusted trial balance prepared on December 31?
A) Prepaid Rent, $9,000
B) Prepaid Rent, $3,000
C) Rent Expense, $6,000
D) Rent Expense, $3,000
3.3-45 On August 1 of the current year, Jamie Simmons received $5,400 for legal services to be performed
evenly throughout the next six months. The adjusting entry on December 31 of the current year would
include a:
A) credit to Unearned Service Revenue of $4,500.
B) debit to Unearned Service Revenue of $900.
C) debit to Service Revenue of $900.
D) credit to Service Revenue of $4,500.
3.3-46 The Houston Rockets basketball team receives $5,000 for season tickets on August 1. By December 31,
they have earned $2,000 of the revenue. The adjusting entry to be made on December 31 by the Houston
Rockets includes a:
A) credit to Unearned Revenue of $2,000.
B) debit to Unearned Revenue of $2,000.
C) debit to Service Revenue of $2,000.
D) credit to Prepaid Revenue of $3,000.
3.3-47 On August 1 of the current year, Magic Carpet Entertainment received $4,800 for services to be
performed evenly over the next twelve months. The adjusting entry on December 31, of the current year
would include a:
A) debit to Cash for $4,800.
B) credit to Service Revenue for $4,800.
C) debit to Unearned Service Revenue for $2,000.
D) debit to Unearned Service Revenue for $2,800.
3.3-48 On August 1 of the current year, Jamie Simmons received $5,400 for legal services to be performed
evenly throughout the next six months. An adjusted trial balance prepared on December 31 of the current
year will show a credit balance in Unearned Revenue in the amount of:
A) $0.
B) $900.
C) $4,500.
D) $5,400.
3.3-49 A company started the year with $400 of supplies. During the year, the company purchased an additional
$1,200 of supplies. There were $700 of supplies on hand at the end of the year. An adjusting entry
prepared at the end of the accounting period includes a:
A) debit to Supplies for $800.
B) debit to Supplies for $700.
C) debit to Supplies Expense for $900.
D) debit to Supplies Expense for $600.
3.3-50 A company started the year with $400 of supplies. During the year the company purchased additional
supplies costing $1,600. There were $800 of supplies on hand at the end of the year. An adjusted trial
balance prepared at the end of the accounting period will show the following balance in Supplies:
A) $1,400.
B) $800.
C) $600.
D) $0.
3.3-51 O’Connor Company purchased supplies totaling $21,600. By year end, $9,300 of supplies were still on
hand. How much Supplies Expense should O’Connor recognize?
A) $9,300
B) $12,300
C) $21,600
D) $0
3.3-52 On December 31, 20X6, salaries owed to employees total $4,150. These will be paid on January 4, 20X7.
The adjusting entry prepared on December 31, 20X6, includes a:
A) debit to Salary Expense for $4,150.
B) debit to Salary Payable for $4,150.
C) credit to Cash for $4,150.
D) credit to Salary Expense for $4,150.
3.3-53 On December 31, 20X6, salaries owed to employees total $4,150. These will be paid on January 4, 2011.
An adjusted trial balance prepared on December 31, 20X6, includes which of the following?
A) Salaries Expense, $4,150
B) Salaries Payable, $4,150
C) Unearned Salaries, $4,150
D) Both Unearned salaries, $4,150 and Salaries Payable, $4,150
3.3-54 The book value of an asset that cost $20,000 and has accumulated depreciation of $6,000 is:
A) $20,000.
B) $ 6,000.
C) $26,000.
D) $14,000.
3.3-55 The book value of an asset at the beginning of the year was $17,000. The equipment originally cost
$27,000. Depreciation expense for the year was $8,000. The book value of the asset at the end of the year
is:
A) $19,000.
B) $17,000.
C) $10,000.
D) $ 9,000.
3.3-56 Associated Services Company paid twelve months’ insurance in advance totaling $9,000. At the end of
the first month, the adjusting entry would include a:
A) debit to Prepaid Insurance for $8,250.
B) debit to Prepaid Insurance for $750.
C) debit to Insurance Expense for $8,250.
D) debit to Insurance Expense for $750.
3.3-57 On November 1, Phillips Tool and Die Company paid six months’ insurance in advance totaling $9,000.
An adjusted trial balance prepared on December 31 would include a balance in the Prepaid Insurance
account of:
A) $9,000.
B) $6,000.
C) $3,000.
D) $0.
3.3-58 Hamilton Tool and Die Company purchased $72,000 of equipment with an estimated service life of 4
years. The annual amount of depreciation using straight-line method on this equipment is:
A) $17,000.
B) $18,000.
C) $19,000.
D) $36,000.
3.3-59 Arizona Teak Company paid $54,000 for computers. These computers have an estimated service life of 3
years. The straight line depreciation method is used. After one year of use, the book value of the
computers will be:
A) $17,000.
B) $37,000.
C) $51,000.
D) $36,000.
3.3-60 HG Enterprises paid $105,000 for office furniture. The furniture is depreciated using the straight-line
method and has an estimated service life of 7 years. After three years of use, the book value of the
furniture will be:
A) $45,000.
B) $60,000.
C) $90,000.
D) $105,000.
3.3-61 Which of the following accurately describes the account type and the normal balance of the Accumulated
Depreciation account?
A) Contra-expense account, credit balance
B) Liability account, credit balance
C) Contra-asset account, credit balance
D) Expense account, debit balance
3.3-62 A journal entry contains a debit to a liability account and a credit to a revenue account. This is an example
of a(n):
A) accrued expense.
B) deferred expense.
C) unearned revenue.
D) accrued revenue.
3.3-63 A company has $800 in beginning supplies and $150 of supplies on hand at the end of the month. The
adjusting entry for this company is a debit to:
A) Supplies of $150 and a credit of $150 to Supplies Expense.
B) Supplies Expense of $150 and a credit of $150 to Supplies.
C) Supplies Expense of $650 and a credit of $650 to Supplies.
D) There is not enough information given to prepare the entry.
3.3-64 An adjusting journal entry contains a debit to an expense account and a credit to an asset account. This is
an example of a(n):
A) accrued revenue.
B) deferred revenue.
C) accrued expense.
D) deferred expense.
3.3-65 Which of the following financial statements is prepared using the adjusted trial balance?
A) Both the balance sheet and the income statement
B) Neither the balance sheet nor the income statement
C) The balance sheet only
D) The income statement only
3.3-66 A tired accountant failed to record the adjusting entry for accrued salaries. How does this error affect net
income?
A) The assets for the period will be understated.
B) The net income for the period will be understated.
C) The net income for the period will be overstated.
D) The net income for the period will not be affected.
3.3-67 The Unearned Revenue account was not adjusted for work performed in the current period. What is the
effect of this error?
A) The assets will be understated and expenses will be understated.
B) The assets will be overstated and liabilities will be overstated.
C) The liabilities will be overstated and revenues will be understated.
D) The liabilities will be understated and revenues will be understated.
3.3-68 On September 1, Boz sold to Skaggs prepaid maintenance for $6,000 for six months. As of December 31,
what is the amount in the Unearned Revenue account?
A) $0
B) $2,000
C) $4,000
D) $6,000
3.3-69 On September 1, Boz sold to Skaggs prepaid maintenance for $6,000 for six months. As of December 31,
what is the amount that has been earned?
A) $ 0
B) $2,000
C) $4,000
D) $6,000