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Exam 5: Adjustments and the Worksheet

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Question 1

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Adjusting Entries are

A) corrections of errors.
B) updating entries for previously unrecorded expenses or revenues.
C) not required.
D) will always affect cash.

E) A) and B)
F) A) and C)

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Question 2

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Prepaid expenses,such as prepaid rent and prepaid insurance,represent assets for a business until they are used.

A) True
B) False

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Question 3

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The normal balance of a contra asset account is a debit.

For each of the accounts listed below,enter the words,Increase or Decrease,in the Debit and Credit columns to indicate the effects of each on the account balance.

The balances of the ledger accounts for Buffet Services on September 30,2016,and the information needed for adjustments are shown below.Prepare the Trial Balance section,record the adjustments,and complete the worksheet. Adjustment information: (a)The supplies were purchased on September 1,2016.An inventory of supplies showed $1,200 on hand on September 30,2016. (b)The amount of Prepaid Insurance represents a payment made September 1,2016,for a six-month insurance policy. (c)The equipment,purchased September 1,2016,has an estimated useful life of 5 years with no salvage value.The firm uses the straight-line method of depreciation.

On a worksheet,the adjusted balance of Supplies is extended from the Adjusted Trial Balance Debit column to the ____________________ Debit column.

The balances of the ledger accounts for Oleman Services on January 31,2016,and the information needed for adjustments are shown below.Prepare the Trial Balance section,record the adjustments,and complete the worksheet. Adjustment information: (a)The supplies were purchased on January 1,2016.An inventory of supplies showed $600 on hand on January 31,2016. (b)The amount of Prepaid Insurance represents a payment made January 1,2016,for a six-month insurance policy. (c)The equipment,purchased January 1,2016,has an estimated useful life of 5 years with no salvage value.The firm uses the straight-line method of depreciation.

The account credited in the adjusting entry made to record the expiration of a portion of prepaid rent is the ____________________ account.

The process of allocating the cost of a long-term asset as an expense of operations during the asset's expected useful life is known as ____________________.

On a balance sheet,Accumulated Depreciation-Equipment is reported

On November 25,2016,the company paid $24,000 rent in advance for a six-month period (December 2016 through May 2017) .On December 31,2016,the adjustment for expired rent would include

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

On a worksheet,a net loss is

On Jan.1,2016 Johnson Consulting purchased a truck for $12,000.The truck was expected to last 60 months and have no salvage value.Calculate the book value of the truck after two years?

Land is a long-term asset that is not subject to depreciation.

The book value of long-term assets is reported on

On a worksheet,the adjusted balance of the Supplies Expense account is extended to:

Equipment costing $13,500 with an estimated salvage value of $1,020 and an estimated life of 4 years was purchased on November 1,2016.Using the straight-line depreciation method,what is the amount of depreciation expense to be recorded at December 31,2016?

During its first year of business,XYZ Inc.purchased $2,400 of supplies.By the end of the year,only $500 of supplies remain in the supply cabinet.Determine the amount to be reported in the Supplies account in the Adjusted Trial Balance section of the worksheet prepared on December 31.

The statement of owner's equity is prepared from the data in the Income Statement section of the worksheet.