Question 1

to its monthly magazine Minks Stink.The company should report $12,000 of revenue on its income statement for the year ended December 31,2012.

Accepted Answer

The statement is missing necessary information, such as the amount of revenue generated each month from the magazine, to accurately determine the total revenue for the year.

Question 2

Explain the matching principle.

Accepted Answer

The answer of Explain the matching principle....

Question 3

What is depreciation?

Accepted Answer

The answer of What is depreciation?...

Question 4

Enoch,Inc.began operations on July 1,2011.On August 1,it received $12,000 in advance for services to be performed evenly over the next 12 months.How much unearned revenue should the company report on its balance sheet at December 31,2011?

Accepted Answer

By December 31, 2011, Enoch, Inc. would have earned 5 months of the service revenue (August to December), which is $5,000 ($12,000/12 months * 5 months). Therefore, the unearned revenue remaining would be $7,000 ($12,000 - $5,000).

Question 5

The Unearned revenue account represents the cash collected from customers in advance of performing the service or delivering the goods.

Accepted Answer

Unearned revenue is a liability account and represents the obligation to deliver the service or goods. The cash received is not yet earned and hence cannot be recorded as revenue.

Question 6

On January 1,2010,We Haul,Inc.bought a $48,000 truck,which has no residual value and an expected life of 6 years.What is the book value of the truck at December 31,2010?

Accepted Answer

The book value of the truck at December 31, 2010, is calculated by subtracting one year's worth of depreciation from the original cost. The annual depreciation is $48,000 / 6 = $8,000. Therefore, the book value after one year is $48,000 - $8,000 = $40,000.

Question 7

Toys for Boys,Inc.had prepaid insurance of $7,200 on January 1,2011.This amount relates to a 12-month insurance policy purchased on July 1,2010 for $14,400.On July 1,2011,Toys for Boys purchased more insurance coverage by paying $9,000 for a new one-year policy.The company's year ends on December 31,2011 and all adjustments for the whole year are made on that date so that financial statements can be prepared.What amount should appear on the December 31,2011 balance sheet as prepaid insurance? What amount should be reported on the year ended December 31,2011 income statement as insurance expense?

Accepted Answer

The answer of Toys for Boys,Inc.had prepaid insurance of $7,200...

Question 8

If a one-year insurance policy is purchased,an asset should be recorded.

Accepted Answer

A one-year insurance policy represents a prepaid expense, which is an asset. The expense is recognized over the course of the policy period.

Question 9

Avatar,Inc.began operations on July 1,2011.On August 1,it received $24,000 in advance for services to be performed evenly over the next 12 months.How much of this revenue should the company report on its income statement for the year ended December 31,2012?

Accepted Answer

Since the company received the $24,000 in advance, it should initially record it as a liability on the balance sheet. As services are performed, the company can recognize revenue for the portion of the advance that corresponds with the services rendered. Since the advance was for services to be performed evenly over 12 months, the company should recognize 1/12th, or $2,000, of the advance as revenue for each month. For the year ended December 31, 2012, the company would have performed services for 5 months (August through December), so it should recognize $2,000 x 5 months = $10,000 as revenue on its income statement. Therefore, the correct answer is C.

Question 10

Depreciating an asset means recognizing the cost of the asset as an expense over more than one accounting period.

Accepted Answer

Depreciation allows for the cost of an asset to be spread out over its useful life rather than expensed all at once. This is typically done to better match expenses with revenue, as the asset is providing value over multiple periods.

Question 11

On January 1,2010,We Haul,Inc.bought a $48,000 truck,which has no residual value and an expected life of 6 years.What is the book value of the truck at December 31,2011?

Accepted Answer

The truck was bought on January 1, 2010, and has an expected life of 6 years. Therefore, its depreciation will be $48,000 ÷ 6 = $8,000 per year. At December 31, 2011, the truck will have completed 2 years, so its accumulated depreciation will be $8,000 × 2 = $16,000. The book value of the truck at December 31, 2011 will be $48,000 - $16,000 = $32,000. Therefore, the correct answer is choice C.

Question 12

The entry to record the purchase of a truck is to increase Truck expense and decrease Cash.

Accepted Answer

The entry to record the purchase of a truck is to increase Truck asset (not expense) and decrease Cash.

Question 13

Enoch,Inc.began operations on July 1,2011.On August 1,it received $12,000 in advance for services to be performed evenly over the next 12 months.How much of this revenue should the company report on its income statement for the YEAR ended December 31,2011?

Accepted Answer

The company should recognize revenue as it is earned. Since the services are to be performed evenly over 12 months and the advance was received on August 1, for the year ended December 31, 2011 (5 months), the company should recognize 5/12 of the $12,000, which is $5,000.

Question 14

On January 1,2011,We Haul,Inc.bought a $48,000 truck,which has no residual value and an expected life of 6 years.How much depreciation expense should the company report for the year ended December 31,2012?

Accepted Answer

The depreciation expense for a year is calculated by dividing the cost of the asset by its useful life. For a $48,000 truck with a 6-year life and no residual value, annual depreciation is $48,000 / 6 = $8,000.

Question 15

On January 1,2011,We Haul,Inc.bought a $48,000 truck,which has no residual value and an expected life of 6 years.How much depreciation expense should the company report for the year ended December 31,2011?

Accepted Answer

The depreciation expense for the year is calculated using the straight-line method: $48,000 / 6 years = $8,000 per year.

Question 16

On January 1,2010,We Haul,Inc.bought a $48,000 truck,which has no residual value and an expected life of 6 years.What is the book value of the truck at December 31,2012?

Accepted Answer

The truck depreciates $8,000 per year ($48,000 / 6 years). After 3 years (2010, 2011, 2012), it has depreciated $24,000 (3 * $8,000), leaving a book value of $24,000 ($48,000 - $24,000).

Question 17

What is book or carrying value?

Accepted Answer

The answer of What is book or carrying value?...

Question 18

Adjustments are usually made ________.

Accepted Answer

The answer of Adjustments are usually made ________.
...

Question 19

Identify the effects of each of the following items on the accounting equation.Show the correct dollar amount.Account titles are not required.The first entry has been done for you.
a.Prepaid rent used up,$400
b.Only $500 remains unearned of the $3,500 recognized as unearned revenue at the beginning of the period
c.Of the $700 in office supplies on hand at the beginning of the period,only $100 remained at the end of the period
d.Interest accrued but unpaid on a note payable amounts to $120
e.Depreciation of the long-term assets amounts to $12,000
f.Wages and salaries earned by employees but unpaid amount to $10,000

Accepted Answer

The answer of Identify the effects of each of the...

Question 20

Which financial statement shows Cash paid for interest?

Accepted Answer

The answer of Which financial statement shows Cash paid for...

Quiz 3: Accruals and Deferrals: Timing Is Everything in Accounting