Accounting Chapter 14

The value of the insurance coverage used is recorded as a debit to Insurance Expense. (15-1)

• True

• False

A business can use any twelve-month period for reporting its financial performance. (15-1)

• True

• False

Revenue earned in one fiscal period but not received until a later fiscal period is called accrued revenue. (15-2)

• True

• False

The Income Summary account is one of the accounts used to adjust the Merchandise Inventory account at the end of the fiscal period. (15-2)

• True

• False

For a business using the periodic inventory method, purchases are recorded in the Merchandise Inventory account. (15-2)

• True

• False

Functional depreciation should be considered in estimating the useful life of computer equipment. (15-3)

• True

• False

Depreciation expense is recorded on all plant assets. (15-3)

• True

• False

The book value of a plant asset is its original cost minus accumulated depreciation. (15-3)

• True

• False

Cash and other assets expected to be exchanged for cash or consumed within a year are called liquid assets. (15-3)

• True

• False

Annual straight-line depreciation expense of a plant asset is calculated as the original cost of the plant asset divided by the years of estimated useful life. (15-3)

• True

• False