Adjusting entries and Adjusted 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

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

• True

• False

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

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

• True

• 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

Accrued interest income on notes receivable is calculated using all of the following except the

• annual interest rate

• term of the note

• principal

• date of the note

The journal entry to adjust Merchandise Inventory when beginning merchandise inventory is $125,000.00 and ending merchandise inventory is $115,000.00 would be

• debit Merchandise Inventory, $10,000.00 and credit Income Summary, $10,000.00

• debit Income Summary, $10,000,00 and credit Merchandise Inventory, $10,000.00

• debit Merchandise Inventory, $115,000.00 and credit Income Summary, $115,000.00

• debit Income Summary, $115,000.00 and credit Merchandise Inventory, $115,000.00

Refer to the expenses that are already incurred, used, utilized or consumed but have not yeen been paid.

• Prepaid Expenses
• Unearned Expenses
• Accrued Expenses
• Accounts Expense

Refer to income or revenue already earned but has not yet been collected. 

• Unearned Revenue
• Accrued Income
• Prepaid Income
• Service Revenue