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College Accounting Chapters 1-15 22nd Edition Heintz Test Bank 1
College Accounting Chapters 1-15 22nd Edition Heintz Test Bank 1
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.
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.
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.
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.
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
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Chapter 5—Adjusting Entries and the Work Sheet
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.
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
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Chapter 5—Adjusting Entries and the Work Sheet
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.
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.
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.
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Chapter 5—Adjusting Entries and the Work Sheet
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.
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
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.
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
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.
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.
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Chapter 5—Adjusting Entries and the Work Sheet
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.
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
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.
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
Cengage Learning Testing, Powered by Cognero Page 12
Chapter 5—Adjusting Entries and the Work Sheet
TOPICS: ACBSP: APC-07-Adjusting Entries
KEYWORDS: Bloom's: Remembering
NOTES: 1 min.
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.
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.
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
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Chapter 5—Adjusting Entries and the Work Sheet
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.
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
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Chapter 5—Adjusting Entries and the Work Sheet
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.
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.
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.
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.
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Chapter 5—Adjusting Entries and the Work Sheet
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.
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.
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.
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.
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Chapter 5—Adjusting Entries and the Work Sheet
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.
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.
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.
67. The adjusting entry for the depreciation of office equipment for the period includes
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Chapter 5—Adjusting Entries and the Work Sheet
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.
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
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.
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
Cengage Learning Testing, Powered by Cognero Page 24
Chapter 5—Adjusting Entries and the Work Sheet
KEYWORDS: Bloom's: Remembering
NOTES: 1 min.
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 Balance
Statement 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 Balance
Statement 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 1,500
Equipment 50,000
Cengage Learning Testing, Powered by Cognero Page 25
Chapter 5—Adjusting Entries and the Work Sheet
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--
Adjusted Trial
Trial Balance Adjustments Balance
Account Debit Credit Debit Credit Debit Credit
Title
Cash 15,700 15,700
Accounts 9,400 9,400
Receivable
Supplies 6,000 (a) 5,580 420
Prepaid 1,500 (c) 250 1,250
Insurance
Equipment 50,000 50,000
Accum. 10,000 (b) 20,000
Depr.— 10,000
Equip.
Accounts 5,400 5,400
Payable
Wages (d) 900 900
Payable
Vilardi, 29,460 29,460
Capital
Vilardi, 1,500 1,500
Drawing
Service Fees 63,000 63,000
Wages 15,100 (d) 900 16,000
Expense
Rent 7,800 7,800
Expense
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.
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
Cengage Learning Testing, Powered by Cognero Page 27
Chapter 5—Adjusting Entries and the Work Sheet
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.
The 4-month insurance premium of $1,800 was purchased on December 1, 20-
b.
-.
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
79. The trial balance and information for year-end adjustments for Litton Company are as follows:
Litton Company
Trial Balance
December 31, 20--
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
Cengage Learning Testing, Powered by Cognero Page 28
Chapter 5—Adjusting Entries and the Work Sheet
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--
Adjusted Trial
Trial Balance Adjustments Balance
Account Title Debit Credit Debit Credit Debit Credit
Cash 19,780 19,780
Accounts 5,500 5,500
Receivable
Supplies 1,500 (a) 700 800
Prepaid 2,400 (b) 1,800 600
Insurance
Equipment 30,200 30,200
Accum. 5,000 (c) 5,000 10,000
Depr.—Equip.
Accounts 5,520 5,520
Payable
Wages Payable (d) 1,700 1,700
Litton, Capital 44,000 44,000
Litton, 4,000 4,000
Drawing
Service Fees 20,000 20,000
Wages Expense 10,000 (d) 11,700
1,700
Rent Expense 900 900
Supplies (a) 700 700
Expense
Utilities 240 240
Expense
Insurance (b) 1,800
Expense 1,800
Depr. Exp.— ______ ______ (c) _____ 5,000 ______
Equip. 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
Cengage Learning Testing, Powered by Cognero Page 29
Chapter 5—Adjusting Entries and the Work Sheet
Prepaid Insurance 600
Equipment 30,200
Accum. Depr.— 10,000
Equip.
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.
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--
Adjusted Trial
Trial Balance Adjustments Balance
Account Title Debit Credit Debit Credit Debit Credit
Cash 15,000
Accounts 8,750
Receivable
Office Supplies 1,000
Prepaid 1,400
Insurance
Computer 27,300
Equipment
Cengage Learning Testing, Powered by Cognero Page 30
Chapter 5—Adjusting Entries and the Work Sheet
Accum. Depr.—
Comp. Equip.
Accounts 11,550
Payable
Wages Payable
J. Olsen, Capital 28,000
J. Olsen, 2,800
Drawing
Client Fees 40,000
Rent Expense 6,000
Wages Expense 14,000
Telephone 1,100
Expense
Office Supplies
Expense
Insurance
Expense
Depr. Exp.—
Comp. Equip.
Utilities Expense 2,200 _____
79,550 79,550
ANSWER:
Jan Olsen, Attorney
Work Sheet (partial)
For Year Ended December 31, 20--
Adjusted Trial
Trial Balance Adjustments Balance
Account Title Debit Credit Debit Credit Debit Credit
Cash 15,000 15,000
Accounts 8,750 8,750
Receivable
Office Supplies 1,000 (a) 350 650
Prepaid 1,400 (b) 900 500
Insurance
Computer 27,300 27,300
Equipment
Depr. Exp.—Comp.
31 1,150.00
Equip.
Accum. Depr.—Comp.
1,150.00
Equip.
Equipment $40,000
Less: Accumulated Depreciation ($8,000 × 2) 16,000
Book Value $24,000
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 Modified Accrual
Basis Cash Basis Basis
1.
2.
3.
5.
6.
7.
8.
9.
10.
Equipment $24,000
Less: Accumulated Depreciation ($3,000 × 2) 6,000
Book Value $18,000
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.
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.
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.
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 Modified Accrual
Basis Cash Basis Basis
1.
2.
3.
4.
5.
7.
8.
9.
10.
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
Cengage Learning Testing, Powered by Cognero Page 37
Chapter 5—Adjusting Entries and the Work Sheet
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.
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.
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.
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
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.
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
103. A method of matching an asset's original cost against the revenues produced over its useful life.
ANSWER: g
POINTS: 1
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
107. A form used to pull together all of the information needed to enter adjusting entries and prepare the financial
statements.
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: 1