True/False
Indicate whether the sentence or statement is true
or false.
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1.
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Prepaid expenses, such as prepaid rent and prepaid insurance, represent assets for a
business until they are used.
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2.
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The
cost of a long-term asset, such as equipment, is transferred to expense as it is used during its
life.
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3.
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Net
income is recorded on the worksheet in the Income Statement Debit column and the Balance Sheet Credit
column.
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4.
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If
adjustments are entered on a worksheet, it is not necessary to record them in the journal or the
ledger.
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5.
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If an
adjustment for expired rent is not recorded, the firm's expenses will be overstated.
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6.
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Generally accepted accounting principles require that the original cost of a long-term
asset continue to appear in the asset account until the disposition of the asset.
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7.
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The
book value of a long-term asset is reduced each year as depreciation is recorded.
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8.
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The
normal balance of a contra asset account is a debit.
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9.
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Buildings and trucks are examples of long-term assets.
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10.
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The
balance of a liability account is extended to the Balance Sheet Credit column of the
worksheet.
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11.
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The
statement of owner's equity is prepared from the data in the Income Statement section of the
worksheet.
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Multiple Choice
Identify the
letter of the choice that best completes the statement or answers the question.
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12.
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On a
worksheet, the adjusted balance of the Prepaid Rent account is extended to a. | the Income
Statement Debit column. | c. | the Balance
Sheet Debit column. | b. | the Income Statement Credit
column. | d. | the Balance
Sheet Credit column. | | | | |
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13.
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Equipment cost $36,000 and is expected to be useful for 5 years and have no salvage
value. Under the straight-line method, monthly depreciation will be a. | $600. | c. | $60. | b. | $720. | d. | $12. | | | | |
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14.
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On a
worksheet, the adjusting entry to account for depreciation of equipment consists of a. | a debit to
Depreciation Expense and a credit to Equipment. | b. | a debit to
Depreciation Expense and a credit to Accumulated Depreciation. | c. | a debit to
Equipment and a credit to Accumulated Depreciation. | d. | a debit to
Accumulated Depreciation and a credit to Equipment. | | |
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15.
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The
adjustments made on the worksheet a. | are posted to the ledger but are not recorded in the
journal. | b. | are recorded in the journal but are not posted to the
ledger. | c. | need not be entered in the journal or the
ledger. | d. | are recorded in the journal and then posted to the
ledger. | | |
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16.
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On a
worksheet, the adjusted balance of a contra asset account would be extended to a. | the Balance
Sheet Debit column. | c. | the Income
Statement Debit column. | b. | the Balance Sheet Credit
column. | d. | the Income
Statement Credit column. | | | | |
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Numeric Response From the following Trial Balance and adjustment data
answer the following 8 questions:
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17.
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For
what amount would Prepaid Insurance be adjusted?
Cash | 2,410 | | Adjustment Data | Supplies | 1,476 | | a) Insurance expired, $400 | Prepaid Insurance | 2,400 | | b) Depreciation on the equipment this period is
$408 | Equipment | 40,320 | | c) Accrued wages are $550 | Accum. Deprec.--Equip. | | 19,592 | d) Supplies on hand, $300 | Accounts Payable | | 1.435 | | Capital | | 22,130 | | Drawing | 15,033 | | | Income from
Services | | 42,020 | | Wages Expense | 16,512 | | | Rent
Expense | 4,200 | | | Utilities
Expense | 1,780 | | | Advertising
Expense | 621 | | | Miscellaneous
Expense | 425 | | | Totals | 85,177 | 85,177 | | | | | |
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18.
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After
adjustment "b," what would be the balance of the Accum. Deprec.--Equipment
account?
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19.
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In
adjustment "c," what amount would be debited to Wages Expense?
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20.
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In
adjustment "d," how much would the Supplies account be credited for?
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21.
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What
would be the balance of the Prepaid Insurance account after the
adjustment?
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22.
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What
would be the balance of the Equipment account after adjustment
"b,"?
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23.
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What
would be the balance of the Wages Payable account after adjustment
"c,"?
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24.
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What
would be the balance of the Supplies Expense account after adjustment
"d,"?
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Matching
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Use these choices to answer the next 12 questions: a. | Current
Asset | e. | Owner's
Equity | b. | Plant (Fixed) Asset | f. | Revenue | c. | Current
Liability | g. | Selling
Expense | d. | Long-term Liability | h. | General Expense | | | | |
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25.
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How
is the Prepaid Insurance account sub-classified?
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26.
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How
is the Fares Earned account sub-classified?
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27.
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How
is the Mortgage Note Payable account sub-classified?
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28.
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How
is the Drawing account sub-classified?
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29.
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How
is the Advertising Expense account sub-classified?
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30.
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How
is the Accounts Payable account sub-classified?
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31.
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How
is the Accumulated Depreciation account sub-classified?
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32.
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How
is the Capital account sub-classified?
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33.
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How
is the Salaries Payable account sub-classified?
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34.
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How
is the Utilities Expense account sub-classified?
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35.
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How
is the Supplies account sub-classified?
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36.
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How
is the Interest Income account sub-classified?
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Use these choices to answer the next 8 questions: a. | Income
Statement | c. | Balance
Sheet | b. | Statement of Owner's Equity | | | | |
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37.
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In
which statement is the Cash account found?
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38.
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In
which statement is the Notes Payable account found?
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39.
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In
which statement is the Fees Earned account found?
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40.
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In
which statement is the Drawing account found?
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41.
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In
which statement is the Rent Expense account found?
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42.
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In
which statement is the Accumulated Depreciation account found?
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43.
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In
which statement is the Land account found?
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44.
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In
which statement is the Depreciation Expense account found?
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