Week 5

Depreciation is a method of allocating the cost of a long lived asset to an expense over the life of the asset.

• True

• False

Straight-line depreciation allocates the cost of a long-lived asset in equal units of time over the life of the asset.

• True

• False

The debit side of a ledger account is always the left column. It is used to post debit values of a transaction.

• True

• False

A sales revenue account is debit balanced.

• True

• False

A five-year depreciable asset cost $10,000 and had a residual value of $1,000.  What is the balance of its accumulated depreciation account at the end of two years using straight-line depreciation?

• $6,000

• $4,000

• $5,400

• $3,600

The inflow of assets as a result of business operations occurs from the sale of goods and services

• True

• False

The outflow of assets as a result of business operations are called:

• Sales Revenue

• Expenses

• Ownership Equity

• Receivables

A ledger shows:

• A chronological record of all accounting transactions

• A balance of all balance sheet accounts

• A balance of all income statement accounts

• A balance of all accounts

Some

form of objective evidence or documentation must exist to support a transaction

before it can be entered into the accounting records.

• Full Disclosure Principle

• Materiality Principle

• Consistency Principle

• Objectivity Principle