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Chapter 4 Learning Objective 4

Quiz by Tracy Weber

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28 questions
Show answers
  • Q1
    If the cost of a piece of equipment is $15,000 and accumulated depreciation amounts to $5,000, the book value of the equipment is:
    $24,000.
    $10,000.
    $34,000.
    $5,000.
    30s
  • Q2
    Which of the following refers to the cost of an asset minus its accumulated depreciation?
    Opportunity value
    Future value
    Book value
    Real-time value
    30s
  • Q3
    Which of the following errors occur when an accountant does not record the entry to adjust accrued wages?
    Understatement of Accounts payable in the balance sheet.
    Understatement of Wages Expense account in the income statement.
    Overstatement of operating expense in the income statement.
    Overstatement of total liabilities in the balance sheet.
    30s
  • Q4
    The balance in the Prepaid Insurance account before adjustment at the end of the year is $720, which represents twelve months' insurance purchased on December 1. The adjusting entry required for the month of December, on December 31, the end of the fiscal year, is
    debit Insurance Expense, $660; credit Prepaid Insurance, $660.
    debit Insurance Expense, $60; credit Prepaid Insurance, $60.
    debit Prepaid Insurance, $60; credit Insurance Expense, $60.
    debit Prepaid Insurance, $720; credit Insurance Expense, $720.
    30s
  • Q5
    Every Friday, Neil pays weekly wages of $15,000 to his workers for a five-day week which ends on that day. Assuming that the fiscal period ends on a Tuesday, the adjusting entry for accrual of wages recorded by Neil is:
    debit to Wages Payable for $15,000, credit to Wages Expense for $15,000.
    debit to Wages Expense for $6,000, credit to Wages Payable for $6,000.
    debit to Drawing for $6,000, credit to Wages Payable for $6,000.
    debit to Wages Expense for $10,000, credit to Drawing for $10,000.
    30s
  • Q6
    Which of the following entries contains both a balance sheet account and an income statement account?
    An adjusting entry
    An accumulated entry
    A contra entry
    A matching entry
    30s
  • Q7
    The entry to record expired insurance is omitted. This error causes
    liabilities
    assets to be overstated.
    expenses to be overstated.
    liabilities to be overstated.
    30s
  • Q8
    If an accountant fails to make an adjusting entry at the end of a fiscal period to record expired insurance, the omission will cause
    total revenue to be understated.
    total expenses to be understated.
    total assets to be understated.
    liabilities to be overstated.
    30s
  • Q9
    The $4,500 balance in Prepaid Insurance represents the premium paid in advance for a three-month liability insurance policy. Assuming that 2 months of premium has now expired, the adjustment would be recorded in the work sheet as a:
    debit to Insurance Expense, $4,500
    debit to Insurance Expense, $3,000
    credit to Prepaid Insurance, $1,500
    debit to Prepaid Insurance, $4,500
    30s
  • Q10
    Coffee Co. has a $3,600 balance in Prepaid Insurance that represents the premium paid in advance for a six-month liability insurance policy. Assuming that 4 months of premium is still remaining, the adjustment would be recorded in the work sheet as a:
    debit to Prepaid Insurance, $1,200
    debit to Insurance Expense, $2,400
    credit to Insurance Expense, $2,400
    credit to Prepaid Insurance, $1,200
    30s
  • Q11
    Assume that Sophia Co. pays its employees $250 per day and that pay day falls on Friday. Sophia Co. employees work Monday through Friday. Assume the last day of the fiscal period falls on Wednesday, the adjustment for accrued wages would be recorded in the work sheet as a:
    debit to wages expense, $750.
    debit to wages expense, $1,250.
    credit to cash, $750.
    credit to wages payable, $1,250.
    30s
  • Q12
    Jackson Co. purchases equipment with a cost of $26,000 and a trade-in value of $2,000. Jackson Co. estimates that the equipment will have a useful life of 5 years. Assuming Jackson Co. records depreciation for six months using the straight-line method, the adjustment would be recorded in the work sheet as a:
    a debit to depreciation expense and a credit to accumulated depreciation, $2,400.
    a debit to depreciation expense and a credit to equipment, $2,400.
    a debit to equipment and credit to depreciation expense, $2,400.
    a debit to accumulated depreciation and a credit to equipment, $2,400.
    30s
  • Q13
    Sweet Stuff Co. purchases equipment with a cost of $36,400 and a trade-in value of $4,000. Sweet Stuff Co. estimates that the equipment will have a useful life of 9 years. Assuming Sweet Stuff Co. records depreciation for one month using the straight-line method, the adjustment would be recorded in the work sheet as a:
    credit to equipment, $300.
    credit to accumulated depreciation, $3,600.
    credit to depreciation expense, $3,600.
    debit to depreciation expense, $300.
    30s
  • Q14
    After preparing the work sheet, adjusting entries must be recorded in the __________ and then posted to the ______________.
    general journal; financial statements
    trial balance; financial statements
    general journal; general ledger
    none of the answers listed
    30s
  • Q15
    Squirrel Co. purchases equipment with a cost of $20,000 and a trade-in value of $2,000. Squirrel Co. estimates that the equipment will have a useful life of 5 years. Assuming Squirrel Co. records depreciation for the entire year, the adjusting entry would be recorded as
    Depreciation Expense $3,600 Equipment $3,600
    Depreciation Expense $3,600 Cash $3,600
    Depreciation Expense $3,600 Accumulated Depreciation $3,600
    Accumulated Depreciation $3,600 Depreciation Expense $3,600
    30s

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