Dr: Mohammed Safwat
: 01099114517
Choose The Correct Answer
1. Accumulated Depreciation is:
an expense account.
an owner's equity account.
a liability account.
a contra asset account.
2. The balance in the Prepaid_Rent account before adjustment at the end of the
year is $42,000, which represents three months' rent paid on December 1.
The adjusting entry required on December 31 is to
debit Rent Expense, $14,000; credit Prepaid Rent, $14,000.
debit Rent Expense, $28,000; credit Prepaid Rent $28,000.
debit Prepaid Rent, $14,000; credit Rent Expense, $14,000.
debit Prepaid Rent, $28,000; credit Rent Expense, $28,000.
3. Hamza Company acquires real estate at a cash cost of $400,000. The
property contains an old warehouse that is razed at a net cost of $24,000
($31,000 in costs less $7,000 proceeds from salvaged materials). Additional
expenditures are the attorney's fee, $6,000, and the real estate broker's
commission, $20,000. The reported cost of land will be.....
400,000
420,000
450,000
424,000
4. Maged Bus Lines uses the units-of-activity method in depreciating its buses.
One bus was purchased on January 1, 2019, at a cost of 336,000 EGP. Over
its 4-year useful life, the bus is expected to be driven 200,000 miles. Salvage
value is expected to be 8,000 EGP. assuming that the actual mileage for
2019 was 52,000 mile at the end of 2019,
the depreciation expense will be debited by 87,360
the depreciation expense will be debited by 85,280
the depreciation expense will be credited by 85,280
the depreciation expense will be credited by 87,360
5. Adam gifts signs a three-month note payable to help finance increases in
inventory for the Christmas shopping season. The note is signed on
November 1 in the amount of $75,000 with annual interest of 12%. What is
the adjusting entry to be made on December 31 for the interest expense
accrued to that date, if no entries have been made previously for the
interest?
Interest Expense (Dr) 1,500 & Interest Payable (Cr)1,500
Interest Expense (Dr) 2,250 & Interest payable (Cr)2,250
Interest Expense (Dr)1,500 & Cash (Dr) 1,500
Interest Expense1,500(Dr) &Notes Payable (Dr)1,500
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Dr: Mohammed Safwat
: 01099114517
6. On July 1, 2020, Wright Company sells office furniture for $8,000 cash. The
office furniture originally cost $30,000. As of January 1, 2020, it had
accumulated depreciation of $20,500. Depreciation for the first six months of
2020 is $4,000, the sale of furniture results in
No gain or loss on disposal of plant assets
2500 loss on disposal of plant assets
4000 gain on disposal of plant assets
2500 gain on disposal of plant assets
7. All of the following are permanent accounts except
Assets accounts
revenue accounts
liabilities accounts
capital Accounts
8. If you know that, on May 31, the company owed its employees L.E 15000 in
salaries and wages that will be paid on June 1, which of the following
adjustments is correct
expenses decreased by 15000 and liabilities decreased by 15000
expenses increased by 15000 and liabilities increased by 15000
expenses decreased by 15000 and liabilities increased by 15000
expenses increased by 15000 and liabilities decreased by 15000
9. ……………….. is a method in which the annual depreciation expense
Decreases over the asset's useful life.
Straight line method
Units of activity method
Declining balance method
All of the above
10. At December 31, 2020, before any year-end adjustments, Al-Nour
Company's Insurance Expense account had a balance of $2,450 and its
Prepaid Insurance account had a balance of $3,800. It was determined that
$2,800 of the Prepaid Insurance had expired. The adjusted balance for
Insurance Expense for the year would be
$2,450.
$3,450.
$2,800.
$5,250.
11. If the total revenue of company A 200000 and the total expenses is
150,000 the balance of the income summary account will be closed as
follows......
Income summary (Dr)200000 & revenues (Cr) 200000 50000
Income summary (Dr)50000 & capital (Cr)
Capital (Dr)50000 & income summary (Cr) 50000
Expenses (Dr)150000 & income summary (Cr) 150000
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Dr: Mohammed Safwat
: 01099114517
12. If there are bills of $30000 for services performed but haven't been
recorded until the end of the month the adjusting entry will be.....
service revenue (Dr) 30000 and cash (Cr)30000
Accounts Receivable (Dr) 30000 and service revenue (Cr) 30000
No entry should be made
service revenue (Dr) 30000 and Accounts Receivable (Cr)30000
13. Future Real Estate Company received a check for $54,000 on July 1
which represents a 6 month advance payment of rent on a building it rents to
a client. Unearned Rent Revenue was credited for the full $54,000. Financial
statements will be prepared on July 31. Future Real Estate Company should
make the following adjusting entry on July 31:
Debit Unearned Rent Revenue, $9,000; Credit Rent Revenue, $9,000.
Debit Rent Revenue, $9,000; Credit Unearned Rent Revenue, $9,000.
Debit Unearned Rent Revenue, $54,000; Credit Rent Revenue, $54,000.
Debit Cash, $54,000; Credit Rent Revenue, $54,000.
14. The difference between the cost of a depreciable asset and its related
accumulated depreciation is referred to as the
Market value of the asset
Blue book value of the asset.
Book value of the asset.
Depreciated difference of the asset.
15. Ahmed purchased a small delivery truck on January 1, 2020. At a Cost
of $26,000, and the expected salvage value $2,000, if you know that the
estimated useful life is 5 years, the annual depreciation according to the
straight line method will be.....
4800
24000
5200
6000
16. On January 1, 2020, super Marwan Company purchased equipment for
$40,000. The company is depreciating the equipment at the rate of $800 per
month. The book value of the equipment at December 31, 2020 is
$0.
$9,600.
$30,400.
$40,000.
17. SA Company discards delivery equipment that cost $36,000 and has
accumulated depreciation of $28,000, The journal entry is?
(A) Accumulated Depreciation (Dr)28,000, equipment (Cr) 28000.
Accumulated Depreciation (Dr)28,000, loss on disposal (Dr)8000, equipment
(Cr) 36000.
equipment (Dr)36000, Accumulated Depreciation (Cr)28,000, loss on disposal
(Cr)8000.
Accumulated Depreciation (Dr)36,000, equipment (Cr) 36,000.
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Dr: Mohammed Safwat
: 01099114517
18. At the end of the accounting period the drawing account is closed to.....
the income summary account
the expenses account
the capital account
the revenues account
19. A payment of Salaries and Wages Expense of $14000 was debited to
Supplies and credited to Cash, both for $14000, the entry that corrects the
error without reversing the incorrect entry is:
salaries expense debited by 14000 and supplies credited by 14000
Cash debited by 14000 and salaries expense credited by 14000
supplies debited by 14000 and salaries expense credited by 14000 (2) salaries
expense debited by 14000 and cash credited by 14000
20. Unearned Service Revenue shows a balance of L.E 6,400 in the October
31 trial balance. Analysis reveals that the company performed L.E 1800 of
services in October, the entry will be...
service revenue debited by 6400 and unearned service revenue credited by
6400
service revenue debited by 4600 and unearned service revenue credited by
4600
unearned service revenue debited by 1800 and service revenue credited by
1800
service revenue debited by 1800 and unearned service revenue credited by
1800
21. If the balance of supplies in may's trial balance is 50000, and a count
of supplies shows that the used supplies on May 31 is 20000, then the
adjusting entry will be.......
(Supplies expense (Dr) 20000 Supplies (Cr) 20000
Supplies expense (Dr) 30000 Supplies (Cr) 30000
Supplies (Dr) 20000 Supplies expense (Cr) 20000
Supplies (Dr) 30000 Supplies expense (Cr) 30000
22. Unearned revenues are
Revenue for services performed and recorded as liabilities before they are
received.
Cash received and a liability recorded before services are performed.
Revenue for services performed but not yet received in cash or recorded.
Revenue for services performed and already received in cash and recorded
23. The purchase of supplies on account for $9800 was debited to Supplies
$8900 and credited to Accounts Payable $8900. To correct the error without
reversing the incorrect entry
debit supplies by 900 and credit accounts payable by 900
debit accounts payable by 900 and credit supplies by 900
debit supplies by 9800 and credit accounts payable by 9800
debit accounts payable by 9800 and credit supplies by 9800
24. Expenses incurred but not yet paid or recorded are called....
prepaid expenses.
accrued expenses.
interim expenses.
unearned expenses.
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Dr: Mohammed Safwat
: 01099114517
25. Lake of Fire Company purchased supplies costing $14,000 and debited
Supplies for the full amount. At the end of the accounting period, a physical
count of supplies revealed $3,800 still on hand. The appropriate adjusting
journal entry to be made at the end of the period would be
Debit Supplies Expense, $3,800; Credit Supplies, $3,800.
Debit Supplies, $10,200; Credit Supplies Expense, $10,200.
Debit Supplies Expense, $10,200; Credit Supplies, $10,200.
Debit Supplies, $3,800; Credit Supplies Expense, $3,800.
True Or False
Question Answ
er
1) The objective of financial statements is to provide information about the
financial position, financial performance and cash flows of an entity that
is useful to a wide range of users in making economic decisions.
2) The book value of a depreciable asset is always equal to its market value
because depreciation is a valuation technique.
3) A contra asset account is subtracted from a related account in the
balance sheet.
4) Historical Cost Principle requires that companies record plant assets at
fair value.
5) In a merchandising firm net sales = sales revenue + sales returns and
allowances sales discount
6) If prepaid costs are initially recorded as an asset, no adjusting entries
will be required in the future.
7) In sale of a plant asset, if the book value is greater than the proceeds
received from sale the company record a loss on disposal of plant asset
8) The balances of the Depreciation Expense and the Accumulated
Depreciation accounts should always be the same.
9) The cash basis of accounting is not in accordance with generally
accepted accounting principles.
10) Adjusting entries are not necessary if the trial balance debit and
credit column balances are equal.
11) Unearned revenue is a prepayment that requires an adjusting entry
when services are performed.
12) When a prepaid expense is initially debited to an expense account,
expenses and assets are both overstated prior to adjustment.
13) Under the allowance method for uncollectible amount, companies
often record bad debts expense in a period different from the period in
which they record the revenue.
14) The economic entity assumption states that economic events can be
identified with a particular unit of accountability.
15) Under straight line depreciation method the annual depreciation
expense Decreases over the asset's useful life.
16) The prepaid insurance is considered an item of assets and appears in
the assets side in balance sheet
17) Adjusting entries are recorded in the general journal but are not
posted to the accounts in the general ledger.
18) For accounting purposes, business transactions should be kept
separate from the personal transactions of the owners of the business.
19) The time period assumption is often referred to as the expense
recognition principle.
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Dr: Mohammed Safwat
: 01099114517
20) Many business transactions affect more than one time period.
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