11) If Prepaid Rent for the period is not adjusted:

A) assets will be overstated and expenses will be overstated.

B) assets will be overstated and expenses will be understated.

C) assets will be understated and expenses will be overstated.

D) assets will be understated and expenses will be understated.

 

12) If the Supplies account is not adjusted:

A) assets will be overstated and expenses will be understated.

B) assets will be overstated and expenses will be overstated.

C) assets will be understated and expenses will be overstated.

D) assets will be understated and expenses will be understated.

13) When historical cost is used to record equipment, it would appear as the:

A) original cost on the balance sheet.

B) residual value on the income statement.

C) residual value on the balance sheet.

D) original cost on the income statement.

 

14) When historical cost is used in the accounting records, the book value of the asset is:

A) the original cost.

B) the market value.

C) original cost less accumulated depreciation.

D) closed out.

 

15) The cost of an asset less accumulated depreciation equals:

A) residual value.

B) book value.

C) depreciation expense.

D) None of these answers are correct.

 

16) After the adjustment for depreciation has been made, the original cost of the equipment:

A) increases with a credit.

B) decreases with a debit.

C) remains the same.

D) None of these answers are correct.

17) The adjustment that is made to allocate the cost of a building over its expected life is called:

A) depreciation.

B) residual value.

C) accumulated depreciation.

D) None of these answers are correct.

 

18) Robert purchased a truck for $35,000 with a residual value of $10,000 and a life expectancy of 5 years; using straight-line depreciation, the amount of the depreciation adjustment for the first year would be:

A) $5,000.

B) $6,000.

C) $6,400.

D) $4,000.

 

19) Which of the following would be an example of a contra-asset?

A) Depreciation Expense

B) Residual Value

C) Accumulated Depreciation

D) Supplies

 

20) Residual value is the:

A) estimated value of the asset when it is purchased.

B) estimated value of the asset at the end of its useful life.

C) cost of the asset.

D) allocation of the cost.

 

 



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