Download Section A

Chapter 5, TEST 5A
Name
Date
SCORING RECORD
_________________________
_________________________
Section
Total
Possible
A
B
C
D
Total
30
30
10
30
100
Deductions
Student
Score
Section A
DIRECTIONS: Each of the following statements is true or false. Indicate your
choice by writing in the Answers column T for a true answer or F for a false
answer. (2 points for each correct answer)
For
Answers
Scoring
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The matching principle matches assets and the
related revenues.
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A fiscal period always ends on December 31.
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The historical cost principle allows for assets
to be recorded at actual cost.
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Depreciable cost is the amount of depreciation
expense recorded for each accounting period.
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Plant assets provide benefits only in the year
of purchase.
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The current cost of an asset minus its salvage
value represents the depreciation expense of an
asset.
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A contra-asset is deducted from the related
asset on the balance sheet.
_____
Depreciation expense is recorded for a specific
period of time.
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The Income Statement columns of a work sheet
include all revenue and expense accounts.
_____
When an account balance is affected by an
adjusting entry, the amount shown in the Trial
Balance column is extended directly to the
Adjusted Trial Balance columns.
_____
The balance of the owner's capital account in the
last two columns on the work sheet does not
include the net income and withdrawals of the
current period.
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Errors in work sheets never result from
incorrectly extended adjustments.
_____
The work sheet is used to gather information needed
to calculate and enter adjusting entries
and prepare financial statements.
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"Adjusting" is written in the Item column of the
general ledger when posting adjusting entries.
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Adjusting entries must be entered in the
general journal.
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5-2
Section B
Directions: Complete each of the following statements by writing in the Answers
column the letter of the word or words that correctly completes each statement.
(3 points each)
For
Answers
Scoring
1. The income statement reports: (A) revenue;
(B) expenses; (C) net income or loss; (D) all
of these; (E) none of these.
_____
_____
2. A trial balance includes: (A) account names;
(B) totals of each column; (C) debit balances of
accounts; (D) credit balances of accounts;
(E) all of these.
_____
_____
3. Adjusting entries always affect: (A) assets
(B) the balance sheet; (C) revenues; (D) both
A and C; (E) all of these.
_____
_____
4. Depreciable cost is calculated by taking the
total cost of an asset and (A) dividing by useful
life; (B)adding salvage value; (C) subtracting
salvage value; (D) multiplying by useful life;
(E) subtracting the amount of cash paid to date. _____
_____
5. Prepaid insurance has a balance of $1,000 that
represents 4 months of insurance. Two months
of insurance has expired. The amount of the
adjustment is (A)$1,000; (B) $500; (C) $250;
(D) $100; (E) $0.
_____
_____
6. Wages earned but not yet paid amounted
to $500. The adjusting entry will:(A) debit
wage expense, credit wages payable; (B) debit
wages payable, credit wage expense; (C)debit
wages expense, credit cash; (D) debit wages
payable, credit cash;(E) debit owner’s equity
and credit wages payable.
_____
_____
7. Identify the main source of the information
needed to prepare the balance sheet:(A)the
Account Title column of the work sheet; (B) the
Statement of Owner's Equity; (C) the Balance
Sheet columns of the work sheet; (D) the Income
Statement accounts; (E) the Trial Balance.
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8. Supplies originally cost $600, but only $200
worth of supplies were used this period.
The adjusting entry would be: (A) debit
Supplies Expense, $200; credit Supplies, $200;
(B) debit Supplies Expense, $400; credit Supplies,
$400; (C)debit Supplies $200; credit Supplies
Expense, $200; (D) debit Supplies, $400; credit
Supplies Expense, $400; (E) none of these.
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9. Cost of an asset is $8,000. Salvage value is
$500. Useful life is 5 years. The amount of
annual depreciation is: (A) $8,000; (B) $1,600;
(C) $1,500; (D) $1,000; E) $500.
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10. When posting an adjusting entry to the general
5-3
ledger, write: (A) "Adjusting" in the Post Ref
column; (B) "Adjusting" in the Item column;
(C)"Change" in the general ledger; (D) "Balance"
on the work sheet; (E) "Adjusting" in the
general journal.
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Section C
DIRECTIONS:
Calculate the following exercises.
(10 points total)
1. Fantasia Company purchased a computer on January 1 for $2,400 with a
useful life of 3 years and no expected salvage value.
a.
Prepare the adjusting entry for depreciation for the year.
Date
Description
Post Ref
Debit
Credit
b. Compute the book value at the end of the second year
of the computer life.
Section D
DIRECTIONS:
Complete the worksheet on the next page. (30 points total)
Caren's Tax Service
Work Sheet
For the month ended April 30, 20__
5-4
Account
Title
Cash
Accounts Receivable
Adjusted
Trial Balance
Debit
Credit
14,100
2,000
Supplies
200
Prepaid Insurance
600
Computer Equipment
4,800
Accum. Deprec-C.E.
500
Accounts Payable
1,000
Wages Payable
500
A. Caren, Capital
A. Caren, Drawing
5,900
1,250
Tax Service Fees
Wages Expense
20,000
2,000
Advertising Expense
300
Rent Expense
650
Supplies Expense
250
Telephone Expense
100
Insurance Expense
300
Transportation Exp.
600
Deprec.Exp.- C. E.
120
Miscellaneous Exp.
630
27,900
Net Income/Loss
27,900
Income
Statement
Debit
Credit
Balance
Sheet
Debit
Credit