College Accounting 22e James A Heintz Robert W Parry - Test Bank

College Accounting 22e James A Heintz Robert W Parry – Test Bank

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Sample Questions Are Posted Below

1. The matching of assets and expenses of a business on a periodic basis is referred to as the matching concept.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Evaluating
NOTES: 1 min.
2. The balance sheet reports earnings on a specific date.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-09-Financial Statements
KEYWORDS: Bloom’s: Evaluating
NOTES: 1 min.
3. A 12-month fiscal year can end on any month of the calendar year.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Evaluating
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 1Chapter 5—Adjusting Entries and the Work Sheet
4. Accounting for revenue on a cash basis means that no entry of revenue is made in the account until the cash is
received for the services performed.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Evaluating
NOTES: 1 min.
5. Adjusting entries may affect the cash account.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Evaluating
NOTES: 1 min.
6. A contra-asset is deducted from the related asset on the balance sheet.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Evaluating
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 2Chapter 5—Adjusting Entries and the Work Sheet
7. The book value of a plant asset is determined by subtracting the accumulated depreciation from the cost of the
plant asset.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Evaluating
NOTES: 1 min.
8. Under the modified cash basis of accounting, cash payments for assets with lives longer than one accounting period
(buildings, equipment, insurance, etc.) are recorded as assets and adjustments are made each period.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Evaluating
NOTES: 1 min.
9. A manual work sheet is usually prepared in pencil.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-05-Accounting Cycle
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 3Chapter 5—Adjusting Entries and the Work Sheet
10. When an account balance is not affected by an adjusting entry, the amount shown in the Trial Balance columns is
extended directly to the Adjusted Trial Balance columns.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
11. Under the modified cash basis of accounting, adjustments are made only for prepaid items and depreciation on plant
and equipment.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
12. “Adjusting” is written in the Item column of the general ledger when posting adjusting entries.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.21 – LO: 5-5
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 4Chapter 5—Adjusting Entries and the Work Sheet
13. A contra-asset appears on the income statement.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-09-Financial Statements
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
14. The cost of plant assets less the accumulated depreciation is called the salvage value of the asset.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
15. If the total credits exceed total debits in the Income Statement columns of the work sheet, the business has had net
income.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-09-Financial Statements
KEYWORDS: Bloom’s: Understanding
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 5Chapter 5—Adjusting Entries and the Work Sheet
16. The original cost of an asset less the trade-in or salvage value of an asset equals the depreciable cost of that asset.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
17. Depreciable cost is the amount of depreciation expense recorded for each accounting period.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
18. The matching principle offers the best measure of net income.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 6Chapter 5—Adjusting Entries and the Work Sheet
19. A fiscal year is always the same as the calendar year.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
20. A contra-asset has a credit balance.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
21. The original cost of an asset added to its salvage value represents the depreciable cost of an asset.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 7Chapter 5—Adjusting Entries and the Work Sheet
22. The net income or loss for the year can be found on the work sheet as the balance item at the bottom of either the
Balance Sheet columns or the Income Statement columns.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-09-Financial Statements
KEYWORDS: Bloom’s: Understanding
NOTES: 1 min.
23. The modified cash basis of accounting combines aspects of the cash method of accounting and the accrual method
of accounting.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
24. It is not necessary to post adjusting entries.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.21 – LO: 5-5
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 8Chapter 5—Adjusting Entries and the Work Sheet
25. If the debits in the Income Statement columns of the work sheet total $50,000 and the credits total $60,000 before
net income or net loss has been determined, the business has a net income of $10,000.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-05-Accounting Cycle
KEYWORDS: Bloom’s: Understanding
NOTES: 1 min.
26. The only correct way to change the balance of a ledger account is to make a journal entry.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.22 – LO: 5-4
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
27. The 10-column work sheet is used to facilitate the preparation of the income statement, the statement of owner’s
equity, and the balance sheet.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-09-Financial Statements
KEYWORDS: Bloom’s: Understanding
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 9Chapter 5—Adjusting Entries and the Work Sheet
28. Depreciation expense is recorded for a specific period of time.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
29. The Income Statement columns of a work sheet include all revenue and expense accounts.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-09-Financial Statements
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
30. The owner’s capital account in the last two columns of the work sheet is not up-to-date because it does not yet
include net income and withdrawals of the current period.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-09-Financial Statements
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 10Chapter 5—Adjusting Entries and the Work Sheet
31. The balance sheet reports assets, liabilities, and owner’s equity for a specific period of time.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-09-Financial Statements
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
32. Adjusting entries does not always affect both the income statement and the balance sheet.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
33. Depreciation matches the cost of an asset against the revenues it will produce.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 11Chapter 5—Adjusting Entries and the Work Sheet
34. A contra-account is used with a related account to bring about an increase in the net amount of the two account
balances.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
35. The historical cost principle allows for assets to be recorded at actual cost.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
36. If the total of the Income Statement Credit column, before determining net income or net loss, exceeds the total of
the Income Statement Debit column, the result is a net loss for the year.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-05-Accounting Cycle
KEYWORDS: Bloom’s: Understanding
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 12Chapter 5—Adjusting Entries and the Work Sheet
37. Recording adjustments on the work sheet has no effect on the ledger accounts.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.22 – LO: 5-4
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
38. Plant assets provide benefits over a long period of time.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
39. The amount of depreciation taken each period will be the same using the straight-line method.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 13Chapter 5—Adjusting Entries and the Work Sheet
40. The formula to calculate straight-line depreciation is depreciable cost times the expected life of the asset.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
41. A computer workstation cost $35,000, has an expected life of 7 years, and an expected salvage value of $7,000.
Depreciation expense using the straight-line method will be $5,000 per year.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
42. The business or professional person using the cash basis of accounting takes the view that there is no revenue until
it is received in such a form that it can be spent.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 14Chapter 5—Adjusting Entries and the Work Sheet
43. Accounting for expenses on the cash basis generally means that expenses are entered in the accounts even though
they may have been charged and not paid for in cash.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
44. The cash basis of accounting and the accrual basis of accounting result in the same measures of net income.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
45. Under the cash basis of accounting, a certain expense may be incurred in one period but not entered until the
following period.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 15Chapter 5—Adjusting Entries and the Work Sheet
46. The cash basis of accounting is used by some small businesses and by most individuals for tax purposes.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
47. While certain distinctive problems may arise in keeping the accounts of any specific enterprise, the principles of
accounting on the cash basis are generally the same.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
48. The balance sheet reports
a. liabilities.
b. revenue.
c. expenses.
d. net income.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-09-Financial Statements
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 16Chapter 5—Adjusting Entries and the Work Sheet
49. The fourth pair of columns on a 10-column work sheet prepared at the end of the period would be the
a. Income Statement columns.
b. Adjustments columns.
c. Balance Sheet columns.
d. Adjusted Trial Balance columns.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-05-Accounting Cycle
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
50. The third pair of columns on a 10-column work sheet prepared at the end of the period would be the
a. Income Statement columns.
b. Adjustments columns.
c. Balance Sheet columns.
d. Adjusted Trial Balance columns.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-05-Accounting Cycle
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 17Chapter 5—Adjusting Entries and the Work Sheet
51. The second pair of columns on a 10-column work sheet prepared at the end of the period would be the
a. Income Statement columns.
b. Trial Balance columns.
c. Adjustments columns.
d. Adjusted Trial Balance columns.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-05-Accounting Cycle
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
52. The time an asset is expected to last is called its
a. depreciation.
b. fiscal period.
c. net loss value.
d. useful life.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 18Chapter 5—Adjusting Entries and the Work Sheet
53. Matching the cost of an asset with the revenue it is expected to produce is called
a. adjusting.
b. expensing.
c. depreciation.
d. contra-valuing.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
54. The cost of an asset that is subject to depreciation is called
a. salvage value.
b. depreciable cost.
c. revenue.
d. trade-in value.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 19Chapter 5—Adjusting Entries and the Work Sheet
55. An account used with a related account to bring about a decrease in the net amount of the two account balances is
called a(n)
a. contra-account.
b. expense account.
c. adjusting account.
d. revenue account.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
56. If the book value of an asset is $12,500 and the accumulated depreciation is $3,500, the original cost of the asset is
a. $16,000.
b. $9,500.
c. $9,000.
d. $7,500.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Analytic
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 20Chapter 5—Adjusting Entries and the Work Sheet
57. To record wages earned but not paid under the modified cash accounting method,
a. debit Wages Payable and credit Wages Expense.
b. debit Cash and credit Wages Expense.
c. debit Wages Expense and credit Wages Payable.
d. no entry is required.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
58. When posting an adjusting entry to the general ledger, write
a. “adjusting” in the Posting Reference column.
b. “adjusting” in the Item column.
c. “ledger” in the general ledger.
d. “balance” in the work sheet.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.21 – LO: 5-5
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 21Chapter 5—Adjusting Entries and the Work Sheet
59. If a business records revenue when it is received and records the purchase of a building as an asset and makes
adjustments to allocate the cost of the building over many accounting periods, the business accounting system is
a(n)
a. accrual basis of accounting.
b. adjustment basis of accounting.
c. cash basis of accounting.
d. modified cash basis of accounting.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
60. Net income is shown on the work sheet as a(n)
a. debit in the Balance Sheet columns.
b. credit in the Balance Sheet columns.
c. debit and a credit in the Balance Sheet columns.
d. adjustment to owner’s equity.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-05-Accounting Cycle
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 22Chapter 5—Adjusting Entries and the Work Sheet
61. The fifth pair of columns on a 10-column work sheet prepared at the end of the period would be the
a. Income Statement columns.
b. Adjustments columns.
c. Balance Sheet columns.
d. Adjusted Trial Balance columns.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-05-Accounting Cycle
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
62. In completing the work sheet, what is the reason for adding the net income for the year to the Balance Sheet Credit
column?
a. Owner’s equity is not up-to-date.
b. Cash is not up-to-date.
c. Owner’s withdrawal is not up-to-date.
d. Sales is not up-to-date.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-05-Accounting Cycle
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 23Chapter 5—Adjusting Entries and the Work Sheet
63. Supplies originally cost $600, but only $150 worth of supplies were used this period. The adjusting entry would be
a. debit Supplies Expense, $150; credit Supplies, $150.
b. debit Supplies Expense, $450; credit Supplies, $450.
c. debit Supplies, $150; credit Supplies Expense, $150.
d. debit Supplies, $450; credit Supplies Expense, $450.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
64. Net income is shown on the work sheet as a
a. debit in the Balance Sheet column.
b. credit in the Income Statement column.
c. debit in the Income Statement column.
d. debit in the Adjustments column.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-05-Accounting Cycle
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 24Chapter 5—Adjusting Entries and the Work Sheet
65. Owner’s equity at the start of the period is $35,000; net income for the period is $30,000; the total investments by
the owner is $15,000; and total withdrawals by the owner is $5,000. The owner’s equity at the end of the period is
a. $80,000.
b. $75,000.
c. $85,000.
d. $40,000.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Analytic
TOPICS: ACBSP: APC-09-Financial Statements
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
66. What does the credit balance in the Accumulated Depreciation account represent?
a. the cost of additional equipment purchased this year
b. the amount of depreciation taken in past years
c. the cost of existing equipment sold during the year
d. the amount of depreciation taken in the current year
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 25Chapter 5—Adjusting Entries and the Work Sheet
67. The adjusting entry for the depreciation of office equipment for the period includes
a. debiting Depreciation Expense—Office Equipment and crediting Office Equipment.
b. debiting Office Equipment and crediting Accumulated Depreciation—Office Equipment.
c. debiting Depreciation Expense—Office Equipment and crediting Accumulated Depreciation—Office
Equipment.
d. debiting Office Equipment and crediting Depreciation Expense—Office Equipment.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
68. The first pair of columns on a 10-column work sheet would be the
a. Income Statement columns.
b. Balance Sheet columns.
c. Adjusted Trial Balance columns.
d. Trial Balance columns.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-05-Accounting Cycle
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 26Chapter 5—Adjusting Entries and the Work Sheet
69. A typical account number for a contra-account would be
a. 185.
b. 185.c.
c. 185.1.
d. 185.contra.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
70. If a business records revenues when earned, regardless of whether cash has been received, and records expenses
when they are incurred, the accounting system is a(n)
a. accrual basis of accounting.
b. cash basis of accounting.
c. modified cash basis of accounting.
d. revenue basis of accounting.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 27Chapter 5—Adjusting Entries and the Work Sheet
71. To record the purchase of assets on account under the modified cash basis of accounting method,
a. debit the asset and credit Accounts Payable.
b. debit the asset and credit Cash.
c. debit Accounts Receivable and credit Accounts Payable.
d. debit Accounts Payable and credit the asset.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
72. When assets are recorded at original value, they are recorded under the
a. historical cost principle.
b. original principle.
c. current principle.
d. value principle.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 28Chapter 5—Adjusting Entries and the Work Sheet
73. The matching principle in accounting requires the matching of
a. revenue earned with the expenses incurred to produce the revenue.
b. revenue earned with the assets used to produce the revenue.
c. revenue earned with the liabilities incurred to produce the revenue.
d. revenue earned with the assets used less the liabilities incurred.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
74. The depreciation system used by many businesses for tax purposes is the
a. Accelerated Cost Recovery System.
b. Modified Adjusted Cost Recovery System.
c. Modified Actual Cost Recovery System.
d. Modified Accelerated Cost Recovery System.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.22 – LO: 5-4
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 29Chapter 5—Adjusting Entries and the Work Sheet
75. An asset cost $33,000. It has an expected useful life of 5 years and an expected salvage value of $3,000.
Depreciation expense for the first year of the asset’s life using the straight-line method is
a. $6,000.
b. $6,600.
c. $10,000.
d. $13,200.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Analytic
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 30Chapter 5—Adjusting Entries and the Work Sheet
76. The Income Statement and Balance Sheet columns of a work sheet are produced below. Indicate with an “X” the
specific Income Statement or Balance Sheet column(s) in which each amount transferred from the Adjusted Trial
Balance columns should be placed, if at all.
Income
Statement
Balance
Sheet
Account Title Debit Credit Debit Credit
1. Assets ____ ____ ____ ____
2. Contra-Asset ____ ____ ____ ____
3. Liabilities ____ ____ ____ ____
4. Owner, Capital ____ ____ ____ ____
5. Owner, Drawing ____ ____ ____ ____
6. Revenue ____ ____ ____ ____
7. Expense ____ ____ ____ ____
8. Net Income ____ ____ ____ ____
9. Net Loss ____ ____ ____ ____
ANSWER:
Income
Statement
Balance
Sheet
Account Title Debit Credit Debit Credit
1. Assets X
2. Contra-Asset X
3. Liabilities X
4. Owner, Capital X
5. Owner, Drawing X
6. Revenue X
7. Expense X
8. Net Income X X
9. Net Loss X X
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Understanding
NOTES: 3 min.
77. The trial balance and information for year-end adjustments for Vilardi Company are as follows:
Vilardi Company
Trial Balance
December 31, 20–
Account Title Debit Credit
Cash 15,700
Accounts Receivable 9,400
Supplies 6,000
Prepaid Insurance 1,500Cengage Learning Testing, Powered by Cognero Page 31Chapter 5—Adjusting Entries and the Work Sheet
Equipment 50,000
Accumulated Depreciation—Equipment 10,000
Accounts Payable 5,400
Wages Payable
Vilardi, Capital 29,460
Vilardi, Drawing 1,500
Service Fees 63,000
Wages Expense 15,100
Rent Expense 7,800
Supplies Expense
Utilities Expense 860
Insurance Expense
Depreciation Expense—Equipment _______ _______
107,860 107,860
a. Supplies on hand at year-end amounted to $420.
b. The equipment costing $50,000 has an expected life of five years and no salvage value.
Vilardi uses straight-line depreciation.
c. A premium of $1,500 for a one-year insurance policy was paid on November 1.
d. Wages earned by employees but not paid by year-end amounted to $900.
Prepare the necessary year-end adjustments on a 10-column work sheet (identify each adjustment by letter), and
complete the work sheet.
ANSWER:
Vilardi Company
Trial Balance (left side)
December 31, 20–
Trial Balance Adjustments
Adjusted Trial
Balance
Account Title Debit Credit Debit Credit Debit Credit
Cash 15,700 15,700
Accounts
Receivable
9,400 9,400
Supplies 6,000 (a) 5,580 420
Prepaid
Insurance
1,500 (c) 250 1,250
Equipment 50,000 50,000
Accum.
Depr.—Equip.
10,000 (b)
10,000
20,000
Accounts
Payable
5,400 5,400
Wages
Payable
(d) 900 900
Vilardi, Capital 29,460 29,460
Vilardi,
Drawing
1,500 1,500
Service Fees 63,000 63,000
Wages 15,100 (d) 900 16,000Cengage Learning Testing, Powered by Cognero Page 32Chapter 5—Adjusting Entries and the Work Sheet
Expense
Rent Expense 7,800 7,800
Supplies
Expense
(a)
5,580
5,580
Utilities
Expense
860 860
Insurance
Expense
(c) 250 250
Depr.
Exp.—Equip.
_______ _______ (b)
10,000
______ 10,000 _______
107,860 107,860 16,730 16,730 118,760 118,760
(right side) Income Statement Balance Sheet
Account Title Debit Credit Debit Credit
Cash 15,700
Accounts Receivable 9,400
Supplies 420
Prepaid Insurance 1,250
Equipment 50,000
Accum. Depr.—Equip 20,000
Accounts Payable 5,400
Wages Payable 900
Vilardi, Capital 29,460
Vilardi, Drawing 1,500
Service Fees 63,000
Wages Expense 16,000
Rent Expense 7,800
Supplies Expense 5,580
Utilities Expense 860
Insurance Expense 250
Depr. Exp.—Equip. 10,000 ______ ______ ______
40,490 63,000 78,270 55,760
Net Income 22,510 ______ ______ 22,510
63,000 63,000 78,270 78,270
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Reporting
BUSPROG: Analytic
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Understanding
NOTES: 25 min.Cengage Learning Testing, Powered by Cognero Page 33Chapter 5—Adjusting Entries and the Work Sheet
78. Journalize the necessary year-end adjusting entries based on the following account balances before adjustments.
Trial Balance (partial)
December 31, 20–
Account Title Debit Credit
Cash 12,340
Supplies 2,100
Prepaid Insurance 1,800
Equipment 34,000
Accumulated Depreciation—Equipment 8,000
Accounts Payable 6,430
Wages Expense 17,333
Insurance Expense 3,800
a. The inventory of supplies on hand at December 31, 20–, was $230.
b. The 4-month insurance premium of $1,800 was purchased on December 1, 20–
.
c. The $34,000 of equipment was purchased on January 1, two years ago. It has a
salvage value of $2,000. Straight-line depreciation was used to compute
depreciation at the end of last year.
d. Wages accrued at December 31, 20–, were $3,700.
ANSWER: a. Supplies Expense 1,870
Supplies 1,870
b. Insurance Expense 450
Prepaid Insurance 450
c. Depreciation Expense—Equipment 4,000
Accumulated Depreciation—Equipment 4,000
d. Wages Expense 3,700
Wages Payable 3,700
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
COLL.HEIN.17.22 – LO: 5-4
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Analytic
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Understanding
NOTES: 4 min.
79. The trial balance and information for year-end adjustments for Litton Company are as follows:
Litton Company
Trial Balance
December 31, 20–Cengage Learning Testing, Powered by Cognero Page 34Chapter 5—Adjusting Entries and the Work Sheet
Account Title Debit Credit
Cash 19,780
Accounts Receivable 5,500
Supplies 1,500
Prepaid Insurance 2,400
Equipment 30,200
Accumulated Depreciation—Equipment 5,000
Accounts Payable 5,520
Wages Payable
Litton, Capital 44,000
Litton, Drawing 4,000
Service Fees 20,000
Wages Expense 10,000
Rent Expense 900
Supplies Expense
Utilities Expense 240
Insurance Expense
Depreciation Expense—Equipment ______ ______
74,520 74,520
a. Ending inventory of supplies is $800 at December 31, 20–.
b. Unexpired insurance as of year-end is $600.
c. Depreciation of equipment is $5,000.
d. Wages earned but not paid as of year-end are $1,700.
Prepare the necessary year-end adjustments on a 10-column work sheet (identify each adjustment by letter), and
complete the work sheet.
ANSWER:
Litton Company
Trial Balance
December 31, 20–
Trial Balance Adjustments
Adjusted Trial
Balance
Account Title Debit Credit Debit Credit Debit Credit
Cash 19,780 19,780
Accounts
Receivable
5,500 5,500
Supplies 1,500 (a) 700 800
Prepaid
Insurance
2,400 (b) 1,800 600
Equipment 30,200 30,200
Accum.
Depr.—Equip.
5,000 (c) 5,000 10,000
Accounts
Payable
5,520 5,520
Wages Payable (d) 1,700 1,700
Litton, Capital 44,000 44,000
Litton, Drawing 4,000 4,000
Service Fees 20,000 20,000Cengage Learning Testing, Powered by Cognero Page 35Chapter 5—Adjusting Entries and the Work Sheet
Wages Expense 10,000 (d)
1,700
11,700
Rent Expense 900 900
Supplies
Expense
(a) 700 700
Utilities Expense 240 240
Insurance
Expense
(b)
1,800
1,800
Depr.
Exp.—Equip.
______ ______ (c)
5,000
_____ 5,000 ______
74,520 74,520 9,200 9,200 81,220 81,220
Income Statement Balance Sheet
Account Title Debit Credit Debit Credit
Cash 19,780
Accounts Receivable 5,500
Supplies 800
Prepaid Insurance 600
Equipment 30,200
Accum.
Depr.—Equip.
10,000
Accounts Payable 5,520
Wages Payable 1,700
Litton, Capital 44,000
Litton, Drawing 4,000
Service Fees 20,000
Wages Expense 11,700
Rent Expense 900
Supplies Expense 700
Utilities Expense 240
Insurance Expense 1,800
Depr. Exp.—Equip. 5,000 ______ ______ ______
20,340 20,000 60,880 61,220
Net Loss ______ 340 340 ______
20,340 20,340 61,220 61,220
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Analytic
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Understanding
NOTES: 25 min.
80. Jan Olsen is a lawyer specializing in estate law. A trial balance was taken on December 31, 20–. Complete the year-
end adjusting entries and extend the appropriate balances to the Adjusted Trial Balance columns of the work sheet.Cengage Learning Testing, Powered by Cognero Page 36Chapter 5—Adjusting Entries and the Work Sheet
Journalize the four adjusting entries exactly as shown in the Adjustments column of the work sheet. Entries should be
in proper journal form and dated December 31.
a. Office supplies on hand at year-end amounted to $650.
b. Expired insurance amounted to $900.
c. Depreciation on the computer equipment, $1,150.
d. Wages earned but not paid as of December 31, $1,230.
Jan Olsen, Attorney
Work Sheet (partial)
For Year Ended December 31, 20–
Trial Balance Adjustments
Adjusted Trial
Balance
Account Title Debit Credit Debit Credit Debit Credit
Cash 15,000
Accounts
Receivable
8,750
Office Supplies 1,000
Prepaid Insurance 1,400
Computer
Equipment
27,300
Accum.
Depr.—Comp.
Equip.
Accounts Payable 11,550
Wages Payable
J. Olsen, Capital 28,000
J. Olsen, Drawing 2,800
Client Fees 40,000
Rent Expense 6,000
Wages Expense 14,000
Telephone
Expense
1,100
Office Supplies
Expense
Insurance Expense
Depr.
Exp.—Comp.
Equip.
Utilities Expense 2,200 _____
79,550 79,550
GENERAL JOURNAL
Page 1
Date Description
Post
Ref. Debit Credit
Adjusting EntriesCengage Learning Testing, Powered by Cognero Page 37Chapter 5—Adjusting Entries and the Work Sheet
ANSWER:
Jan Olsen, Attorney
Work Sheet (partial)
For Year Ended December 31, 20–
Trial Balance Adjustments
Adjusted Trial
Balance
Account Title Debit Credit Debit Credit Debit Credit
Cash 15,000 15,000
Accounts
Receivable
8,750 8,750
Office Supplies 1,000 (a) 350 650
Prepaid Insurance 1,400 (b) 900 500
Computer
Equipment
27,300 27,300
Accum.
Depr.—Comp.
Equip.
(c)
1,150
1,150
Accounts Payable 11,550 11,550
Wages Payable (d)
1,230
1,230
J. Olsen, Capital 28,000 28,000
J. Olsen, Drawing 2,800 2,800
Client Fees 40,000 40,000
Rent Expense 6,000 6,000
Wages Expense 14,000 (d)
1,230
15,230
Telephone
Expense
1,100 1,100
Office Supplies
Expense
(a)
350
350
Insurance
Expense
(b)
900
900
Depr.
Exp.—Comp.
Equip.
(c)
1,150
1,150
Utilities Expense 2,200 _____ _____ _____ 2,200 _____
79,550 79,550 3,630 3,630 81,930 81,930Cengage Learning Testing, Powered by Cognero Page 38Chapter 5—Adjusting Entries and the Work Sheet
GENERAL JOURNAL Page 1
Date Description
Post
Ref. Debit Credit
20– Adjusting Entries
Dec. 31 Supplies Expense 350.00
Office Supplies 350.00
31 Insurance Expense 900.00
Prepaid Insurance 900.00
31 Depr. Exp.—Comp. Equip. 1,150.00
Accum. Depr.—Comp.
Equip. 1,150.00
31 Wages Expense 1,230.00
Wages Payable 1,230.00
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
COLL.HEIN.17.20 – LO: 5-2
COLL.HEIN.17.22 – LO: 5-4
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Analytic
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Understanding
NOTES: 10 min.Cengage Learning Testing, Powered by Cognero Page 39Chapter 5—Adjusting Entries and the Work Sheet
81. Compute the following:
a. Lobo Company purchased equipment for $40,000 with a useful life of five years and no
expected salvage value. Prepare the adjusting entry for the first year using the straight-line
depreciation method and compute the book value at the end of the second year of the
equipment’s life.
b. Zip Company pays its employees every Friday. On January 4, 20–, the Company paid
$2,200 for the 5 days beginning the previous December 31. Prepare the adjusting entry on
December 31.
ANSWER: a. Depreciation Expense—Equipment 8,000
Accumulated Depreciation—Equipment 8,000
Equipment $40,000
Less: Accumulated Depreciation ($8,000 × 2) 16,000
Book Value $24,000
b. Wages Expense 440
Wages Payable 440
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
COLL.HEIN.17.22 – LO: 5-4
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Analytic
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Understanding
NOTES: 2 min.
82. In the columns below, insert the entry that would be made for each transaction under each accounting basis, using
appropriate debit and credit account titles.
1. Performed services on account.
2. Supplies are partly used.
3. Purchased one-year insurance policy for cash.
4. Received bill for electricity.
5. Depreciation on equipment.
6. Purchased equipment on account.
7. Paid cash for wages.
8. Paid for equipment purchased on account.
9. Performed services for cash.
10. Paid cash for new equipment.
Cash
Basis
Modified
Cash Basis
Accrual
Basis
1.
2.Cengage Learning Testing, Powered by Cognero Page 40Chapter 5—Adjusting Entries and the Work Sheet
3.
4.
5.
6.
7.
8.
9.
10.
ANSWER:
Cash
Basis
Modified
Cash Basis
Accrual
Basis
1. no entry no entry Accounts Receivable
Professional Fees
2. no entry Supplies Expense Supplies Expense
Supplies Supplies
3. Insurance Expense Prepaid Insurance Prepaid Insurance
Cash Cash Cash
4. no entry no entry Utilities Expense
Accounts Payable
5. no entry Depr. Exp.—Equip. Depr. Exp.—Equipment
Accum. Depr.—Equip. Accum. Depr.—Equip.
6. no entry Equipment Equipment
Accounts Payable Accounts Payable
7. Wages Expense Wages Expense Wages Expense
Cash Cash Cash
8. Equipment Expense Accounts Payable Accounts Payable
Cash Cash Cash
9. Cash Cash Cash
Professional Fees Professional Fees Professional Fees
10. Equipment Expense Equipment Equipment
Cash Cash Cash
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Analytic
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Understanding
NOTES: 10 min.Cengage Learning Testing, Powered by Cognero Page 41Chapter 5—Adjusting Entries and the Work Sheet
83. Compute the following:
a. Carder & Company purchased equipment for $24,000 with a useful life of eight years and
no expected salvage value. Prepare the adjusting entry for the first year using the straight-
line depreciation method and compute the book value at the end of the second year of theequipment’s life.
b. DAC Company pays its employees every Friday. On January 2, 20–, the Company paid
$6,000 for the 5 days beginning the previous December 29. Prepare the adjusting entry on
December 31.
ANSWER: a. Depreciation Expense—Equipment 3,000
Accumulated Depreciation—Equipment 3,000
Equipment $24,000
Less: Accumulated Depreciation ($3,000 × 2) 6,000
Book Value $18,000
b. Wages Expense 3,600
Wages Payable 3,600
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
COLL.HEIN.17.22 – LO: 5-4
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Analytic
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Understanding
NOTES: 2 min.
84. The work sheet columns that show the amounts that will be reported in the statement of owner’s equity and the
balance sheet are the ____________________.
ANSWER: Balance Sheet columns
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Understanding
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 42Chapter 5—Adjusting Entries and the Work Sheet
85. ____________________ is a method of matching an asset’s original cost against the revenues produced over its
useful life.
ANSWER: Depreciation
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
86. The ____________________ is a method of accounting that combines aspects of the cash and accrual methods.
It uses the cash basis for recording revenues and most expenses. Exceptions are made when cash is paid for assets
with useful lives greater than one accounting period.
ANSWER: modified cash basis
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
87. The amount an item can be sold for under normal economic conditions is the ____________________.
ANSWER: market value
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-06-Recording Transactions
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
88. In the columns below, insert the entry that would be made for each transaction under each accounting basis, using
appropriate debit and credit account titles.
1. Purchased equipment on account
2. Paid cash for new equipment.
3. Purchased one-year insurance policy for cash.
4. Received bill for electricity.
5. Performed services for cash.Cengage Learning Testing, Powered by Cognero Page 43Chapter 5—Adjusting Entries and the Work Sheet
6. Performed services on account.
7. Paid cash for wages.
8. Paid for equipment purchased on account.
9. Depreciation on equipment.
10. Supplies are partly used.
Cash
Basis
Modified
Cash Basis
Accrual
Basis
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
ANSWER:
Cash
Basis
Modified
Cash Basis
Accrual
Basis
1. no entry Equipment Equipment
Accounts Payable Accounts Payable
2. Equipment Expense Equipment Equipment
Cash Cash Cash
3. Insurance Expense Prepaid Insurance Prepaid Insurance
Cash Cash Cash
4. no entry no entry Utilities Expense
Accounts Payable
5. Cash Cash Cash
Service Fees Service Fees Service Fees
6. no entry no entry Accounts Receivable
Service Fees
7. Wages Expense Wages Expense Wages Expense
Cash Cash Cash
8. Equipment Expense Accounts Payable Accounts Payable
Cash Cash Cash
9. no entry Depr. Exp.—Equip. Depr. Exp.—Equip.
Accum. Depr.—Equip. Accum. Depr.—Equip.
10. no entry Supplies Expense Supplies ExpenseCengage Learning Testing, Powered by Cognero Page 44Chapter 5—Adjusting Entries and the Work Sheet
Supplies Supplies
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Analytic
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Understanding
NOTES: 10 min.
89. The ____________________ method is a depreciation method in which the depreciable cost is divided by the
estimated useful life.
ANSWER: straight-line
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
90. The columns of the work sheet that report the adjusted balances for only revenue and expense accounts are the
____________________ columns.
ANSWER: Income Statement
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Understanding
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 45Chapter 5—Adjusting Entries and the Work Sheet
91. The period of time that an asset is expected to help produce revenues is called its ____________________.
ANSWER: useful life
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
92. The expected market value or selling price of the asset at the end of its useful life is called the
____________________.
ANSWER: salvage value
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
93. Accumulated Depreciation-Delivery Equipment is an example of a(n) ____________________ account.
ANSWER: contra-asset
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 46Chapter 5—Adjusting Entries and the Work Sheet
94. The difference between the asset account and the contra-asset account is known as the
____________________.
ANSWER: book value
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
95. Under the ____________________ principle, assets are recorded at their actual cost, and this cost remains on
the books as long as the business owns an asset.
ANSWER: historical cost
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
96. The ____________________ is a form used to pull together all of the information needed to enter adjusting
entries and prepare the financial statements.
ANSWER: work sheet
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.Cengage Learning Testing, Powered by Cognero Page 47Chapter 5—Adjusting Entries and the Work Sheet
97. ____________________ are assets of a durable nature that are expected to provide benefit to the business over
several years.
ANSWER: Plant assets
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
98. A method of accounting under which revenues are recorded when cash is received and expenses are recorded
when cash is paid is known as ____________________.
ANSWER: cash basis accounting
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
99. The ____________________ is a method of accounting under which revenues are recorded when paid by
customers and expenses are recorded when cash is paid.
ANSWER: cash basis of accounting
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.19 – LO: 5-6
ACCREDITING STANDARDS: AICPA FN-Measurement
BUSPROG: Communication
TOPICS: ACBSP: APC-04-Cash vs. Accrual
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
Match the terms with the definitions.
a. Adjusted Trial Balance columns
b. Adjusting entries
c. Balance Sheet columns
d. book value
e. contra-assetCengage Learning Testing, Powered by Cognero Page 48Chapter 5—Adjusting Entries and the Work Sheet
f. depreciable cost
g. depreciation
h. fiscal year
i. historical cost principle
j. Income Statement columns
k. market value
l. matching principle
m. plant assets
n. salvage value
o. straight-line method
p. undepreciated cost
q. useful life
r. work sheet
DIFFICULTY: Easy
LEARNING OBJECTIVES: COLL.HEIN.17.18 – LO: 5-1
COLL.HEIN.17.20 – LO: 5-2
ACCREDITING STANDARDS: AICPA FN-Measurement
AICPA FN-Reporting
BUSPROG: Communication
TOPICS: ACBSP: APC-07-Adjusting Entries
ACBSP: APC-02-GAAP
KEYWORDS: Bloom’s: Remembering
NOTES: 1 min.
100. The work sheet columns that show the amounts that will be reported in the statement of owner’s equity and balance
sheet.
ANSWER: c
POINTS: 1
101. A principle that requires the matching of revenues earned during an accounting period with the expenses incurred
to produce the revenues.
ANSWER: l
POINTS: 1
102. A principle that requires assets to be recorded at their actual cost.
ANSWER: i
POINTS: 1
103. A method of matching an asset’s original cost against the revenues produced over its useful life.
ANSWER: g
POINTS: 1Cengage Learning Testing, Powered by Cognero Page 49Chapter 5—Adjusting Entries and the Work Sheet
104. The period of time that an asset is expected to help produce revenues.
ANSWER: q
POINTS: 1
105. The expected market value of an asset at the end of its useful life.
ANSWER: n
POINTS: 1
106. A twelve-month period for which financial reports are prepared.
ANSWER: h
POINTS: 1
107. A form used to pull together all of the information needed to enter adjusting entries and prepare the financial
statements.
ANSWER: r
POINTS: 1
108. The cost of an asset that is subject to depreciation.
ANSWER: f
POINTS: 1
109. The amount an item can be sold for under normal economic conditions.
ANSWER: k
POINTS: 1
110. An account with a credit balance that is deducted from the related asset account on the balance sheet.
ANSWER: e
POINTS: 1
111. A depreciation method in which the depreciable cost is divided by the estimated useful life.
ANSWER: o
POINTS: 1
112. Journal entries made at the end of the accounting period to reflect changes in account balances that are not the
direct result of an exchange with an outside party.
ANSWER: b
POINTS: 1
113. Assets of a durable nature that will be used for operations over several years.
ANSWER: m
POINTS: 1
114. The third pair of amount columns on the work sheet. Used to prove the equality of the debits and credits in the
general ledger accounts after making all end-of-period adjustments.
ANSWER: a
POINTS: 1Cengage Learning Testing, Powered by Cognero Page 50Chapter 5—Adjusting Entries and the Work Sheet
Cengage Learning Testing, Powered by Cognero Page 51Chapter 5—Adjusting Entries and the Work Sheet