Accounting One Quiz Four Essay

Accounting One Quiz Four

Question 1

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The cost of a plant asset less its accumulated depreciation is referred to as book value

True
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Question 2

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Unearned revenue shows a beginning balance of $4,700 and an ending balance of $3,400. An adjusting entry was made crediting service revenues for $10,200. How much cash was received during the accounting period as unearned revenue? Hint: T-accounts make this easier.

$8,900
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Question 3

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A prepaid expense recorded initially as an expense is adjusted by debiting the asset account

False
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Question 4

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On October 31, 2000, A company paid $8,400 in advance for two years rent and debited prepaid rent for the total. The December 31, 2000 adjusting entry should include:

A debit to rent expense for $700
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Question 5

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On Sept 1, the Mythical Company pays $27,000 in cash that represents a payment in advance for six months rent. The balance in the prepaid rent account on December 31, 1999 after adjustment would be

$9,000
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Question 6

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Mythical Company purchased equipment costing $5,000 at the beginning of 1999. Depreciation expense on the 1999 income statement amounts to $400. What is the balance in the accumulated depreciation account at the end of 1999?

$400
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Question 7

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When an expense is incurred prior to cash payment, the adjustment is referred to as a (n)

Accrued expense
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Question 8

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The matching principle requires that expenses be matched with revenues that they helped earn in the appropriate period

True
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Question 9

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An adjusting entry will always involve:

An income statement account and a balance sheet account
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Question 10

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The process of allocating the cost of a plant asset to expense is referred to as:

Depreciation
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Question 11

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Unearned Revenues is a _____________ account

Liability

Question 12

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Mythical Travel Company records $35,000 of unearned service revenue during the current year. The correct balance in the unearnded revenue is determined to be $18,500. The correct adjusting entry will involve a:

Credit to service revenues for $16,500
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Question 13

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A company accepted $6,000 on June 1 for services to be performed evenly over the next 12 months. the adjusting entry on December 31 would include a:

Debit to unearned revenue for $3,500
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Question 14

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An accrual is an adjuting entry that recognizes an expense that has been incurred but not yet recorded

True
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Question 15

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Mthical Services Company records a payment of $500 cash for a previously accrued expense and the accrual of $825 for another expense. The impact of these two journal entries on total expenses and net income is: (Be very careful with this one)

Expenses increase by $825 Net income decreases by $825
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Question 16

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The adjusting entry to record $400 of earned revenue received in advance would include a debit to unearned revenue

True

Question 17

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Prepaid insurance had a beginning balance of $4,500. At the end of the accounting period it has a balance of $1,300. Accumulated depreciation had a beginning balance of $9,500 and an ending balance of $10,300. The change in these two account balances resulte in total expenses:

Increasing by $4,000
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Question 18

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The adjusting entry to record accrued salaries includes a debit to

Salaries expense
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Question 19

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If an adjustment to decrease prepaid insurance is not made at year-end, net income will be:

Overstated
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Question 20

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Prepaid rent shows a beginning balance of $500 and an ending balance of $2,800. The rent expense account was debited during the adjustment process for $1,200. How much cash was paid for rent?

$3,500

Reference:

Warren, C.S.,  Reeve, J.M. &  Duchac, J.(2008). Accounting. South-Western College Pub

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