Chapter 15: Preparing Adjusting Entries and a Trial Balance

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.

• True

• False

Estimated federal income tax must be paid in monthly installments.

• True

• False

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

• True

• False

Functional depreciation should be considered in estimating the useful life of computer equipment.

• True

• False

For a business using the periodic inventory method, purchases are recorded in the Merchandise Inventory account.

• 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.

• True

• False

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

• True

• False

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

• True

• False

For a business using the periodic inventory method, the balance of Merchandise Inventory in the unadjusted trial balance represents the beginning balance plus all purchases of merchandise made in the fiscal period.

• True

• False

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

• True

• False