Ch#16 Accounting

The Prepaid Insurance account must be adjusted at the end of a fiscal period because the account balance does not reflect the value of the insurance premiums that expired during the period.

• True

• False

The annual straight-line depreciation of equipment costing $7,000 with a salvage value of $1,000 and a useful life of 5 years would be? [(7000-1000)/5]

• $2000

• $1,400

• $600

• $1,250

The total amount of depreciation expense that has been recorded since the purchase of a plant asset is called

• accumulated depreciation

• total depreciation

• realized depreciation

Estimated federal income tax must be paid

• quarterly

• monthly

• annually

• semi-annually

The Income Summary account is used to help adjust the ________________ account

• Merchandise Inventory

• Supplies

• Prepaid Insurance

• Notes Payable

Depreciation expense is calculated using all of the following amounts except

• fair market value

• estimated salvage value

• estimated useful life

• original cost

The adjustment unique to a merchandising business adjusts ____________

[Hint: service businesses would not need this account]

• Accounts Receivable

• Accumulated Depreciation

• Merchandise Inventory

• Prepaid Insurance

The journal entry to adjust Merchandise Inventory when beginning merchandise inventory is $125,000 and ending merchandise inventory is $115,000 would be

• Merchandise Inventory (debit) $10,000 and Income Summary (credit) $10,000.

• Income Summary (debit) $10,000 and Merchandise Inventory (credit) $10,000.

• Merchandise Inventory (debit) $115,000 and Income Summary (credit) $115,000.

• Income Summary (debit) $115,000 and Merchandise Inventory (credit) $115,000.

Recording depreciation expenses is an application of the accounting concept

• Accounting Period Cycle

• 
  Adequate Disclosure

• Matching Expenses with Revenue

• Historical Cost

The adjustment for unpaid federal income tax includes a(n)

• expense and a liability account

• expense account only

• expense account and a temporary equity account

• liability account only