Accounting Chapter 15

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.

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• False

All accounts are listed on the unadjusted trial balance regardless of whether there is a balance or not.

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• False

The Income Summary account is one of the accounts used to adjust the Merchandise Inventory account at the end of the fiscal period.

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• False

The annual straight-line depreciation of equipment costing $7,000.00 with a salvage value of $1,000.00 and a useful life of 5 years would be $1,400.00.

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• False

The value of the insurance coverage used is recorded as a debit to Insurance Expense.

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• False

The value of the insurance coverage used is recorded as a debit to Insurance Expense.

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• False

The book value of a plant asset is its original cost minus accumulated depreciation.

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• False

The difference between an asset’s account balance and its related contra account is called book value.

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• False

 The tax rate associated with an income tax bracket is called the effective tax rate.

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• False

The Prepaid Insurance account must be adjusted at the end of a fiscal period because the account balance does not reflect the value of the insurance premiums that expired during the period.

• True
• False