Accounting Ch. 3

Refers to the allocation of the cost of the asset over its estimated useful life.

• Consumption
• Deterioration
• Contra Asset
• Depreciation

Adjusting entries are necessary to

• Update and correct the accounts at the end of the period
• balance the books at the end of the period
• record the sales of the period
• ensure the equality of the debits and credits

The adjusting entry to record an accrued expense results in which of the following types of accounts being debited and credited?

• Asset/Revenue
• Asset/Liability
• Expense/Asset
• Expense/Liability

The adjusting entry to record an accrued revenue results in which of the following types of accounts being debited and credited?

• Asset/Revenue
• Asset/Liability
• Expense/Asset
• Expense/Liability

On January 1 a company purchased billboard advertising for 12 months for $6,000. On January 31, an adjusting credit was made to the __________account for $__________.

• Prepaid Advertising/$500

• Advertising Expense/$500

• Cash/$1,000

• Accrued Advertising/$500

$3,000 worth of service has been provided to a customer who paid advance amount of $4,000. The accounting period has come to an end with 25% of the work undone. The following debit/credit is required:

• service revenue/unearned revenue

• unearned revenue/service revenue

• accrued revenue/cash

• service expense/services

Equipment costing $60,000 has useful life of 5 years and its estimated salvage value is $10,000. Depreciation is provided using the straight line depreciation method. At the end of one year which accounts will be debited/credited

• Depreciation Expense/Equipment

• Prepaid Equipment/Depreciation expense

• Depreciation expense/accumulated depreciation

• None of these

At the end of the month Shop Rong owes salaries which will not be paid until the next accounting period. Which account should receive an adjusting debit entry?

• Salaries Payable

• Salaries expense

• Accounts payable

• Accounts receivable

Whenever supplies are used (like a paper clip from a supply drawer), the Supplies Expense should immediately be debited.

• True

• False

The Accumulated Depreciation account is decreased when it is credited.

• True

• False