Depreciation Expense And Accumulated Depreciation Are Classified Respectively As

Depreciation Expense And Accumulated Depreciation Are Classified, Respectively, As

Question

Question 1. Question : Depreciation Expense and Accumulated Depreciation are classified, respectively, as

expense and contra asset

asset and contra liability

revenue and asset

contra asset and expense

Question 2. Question : Which type(s) of adjustments are the financial statements affected by?

Deferrals

Accruals

Both deferrals and accruals

Neither deferrals nor accruals

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Question 3. Question : Accumulated depreciation is __________ to get the carrying value.

added to equipment

subtracted from equipment

added to accounts payable

subtracted from accounts payable

Question 4. Question : The accounting equation is the basis for analyzing, summarizing, and recording transactions in accounting. The accounting equation is:

Assets =Liabilities

Assets = Liabilities + Stockholders Equity

Liabilities = Assets + Stockholders Equity

Stockholders Equity = Liabilities + Assets

Question 5. Question : Accrual accounting records revenue when:

Earned

Cash is received

Products are completed

Salaries are paid

Question 6. Question : On the balance sheet, Accrued expenses are ordinarily reported as:

Fixed assets

Prepaid expenses

Assets

Liabilities

Question 7. Question : What are the four timing differences between recognizing revenues and expenses between accrual basis and cash basis accounting?

Accrued revenue, accrued expenses, deferred revenue, deferred expenses

Cash, revenue, expenses and liabilities

Accounts receivable, accounts payable, long term liabilities, intangible assets

Revenue, expenses, assets, retained earnings

Question 8. Question : When cash is received in payment of an account receivable, which section of the Statement of Cash Flows is affected?

Cash Flow from Operating Activities

Cash Flow from Investing Activities

Cash Flow from Financing Activities

There is no effect on the Statement of Cash Flows.

Points Received: 0 of 2

Question 9. Question : After recording transactions for the accounting period, which financial statement does a company prepares statement first?

Income statement

Balance sheet

Retained earnings statement

Statement of cash flows

Question 10. Question : X&M Co. provided services of $2,000,000 to clients on account. How does this transaction affect A&M’s accounts?

Increase accounts receivable and cash by $2,000,000 each

Increase accounts receivable and unearned revenues by $2,000,000 each

Increase cash and decrease accounts receivable by $2,000,000 each

Increase accounts receivable and revenues by $2,000,000 each

Question 11. Question : Cash receipts from interest and dividends are classified as

investing activities

operating activities

either financing or investing activities

financing activities

Question 12. Question : ___________ is an example of a deferred expense.

Unearned revenue

Accounts payable

Prepaid advertising

Accounts receivable

Question 13. Question : Using accrual accounting, expenses are recorded and reported only

When they are incurred and paid at the same time

When they are incurred, whether or not cash is paid

If they are paid before they are incurred

If they are paid after they are incurred

Question 14. Question : Which of the following is an example of a deferred expense?

Prepaid advertising

Unearned revenue

Accounts payable

Accounts receivable

Question 15. Question : Which transaction would be recorded in a cash basis system of accounting?

Purchase of equipment on credit

Purchase of supplies on credit

Sale of goods on credit

Sale of goods for cash

Question 16. Question : Accrued revenues would appear on the balance sheet as

assets

liabilities

stockholders’ equity

prepaid expenses

Question 17. Question : Using accrual accounting, expenses are recorded and reported only when they are incurred, whether or not cash is paid, under the cash basis expenses are recorded:

When they are incurred and paid at the same time

If they are paid before they are incurred

If they are paid after they are incurred

When they are paid

Depreciation Expense And Accumulated Depreciation Are Classified Respectively As

Question 18. Question : When preparing an adjustment under accrual accounting, what would be the proper amount of the adjusting entry if the end of the period balance in the supply account is $4,000 and the amount of supplies on hand is $1650?

3,350

2,350

3,050

5,650

Points Received: 0 of 2

Question 19. Question : __________ is/are created when a revenue or expense has NOT been recorded by the end of the accounting period.

Prepaid advertising

Premiums received in advance

Unearned revenue

Accruals

Question 20. Question : If prepaid insurance expires over time, this asset account becomes a (n)

liability

another asset

revenue

expense

 

Accumulated depreciation is the aggregate sum an organization deteriorates its advantages, while devaluation cost(depreciation expense) is the sum an organization’s benefits are devalued for a solitary period. Basically, aggregated deterioration is the aggregate sum of an organization’s cost that has been designated to devaluation cost since the advantage was placed into utilization.

 

What Is Accumulated Depreciation?

 

The gathered deterioration account is a contra resource account on an organization’s asset report, which means it has a credit balance. It shows up on the monetary record as a decrease from the gross measure of fixed resources detailed.

 

The measure of aggregated devaluation for an advantage or gathering of benefits will increment after some time as deterioration costs keep on being credited against the benefits. At the point when an advantage is in the long run sold or put out of utilization, the measure of the amassed devaluation that is related with that benefit will be switched, disposing of all record of the benefit from the organization’s asset report.

 

What Are Depreciation Expenses?

 

Devaluation costs, then again, are the allotted part of the expense of an organization’s fixed resources that are suitable for the period. Deterioration cost is perceived on the salary articulation as a non-money cost that decreases the organization’s overall gain. For bookkeeping purposes, the devaluation cost is charged, and the amassed deterioration is credited.

 

It is viewed as a non-money cost in light of the fact that the common month to month deterioration passage doesn’t include a money exchange. Along these lines, the announcement of incomes arranged under the aberrant strategy adds the devaluation cost back to compute income from tasks. Run of the mill deterioration techniques can incorporate straight line, twofold declining equalization, and units of creation.

 

Devaluation and Accumulated Depreciation Example

 

For instance, Company ABC purchased a bit of hardware for $250,000 toward the beginning of the year. The hardware’s lingering esteem is $25,000, with a normal valuable existence of 10 years. The yearly devaluation cost utilizing straight-line deterioration would be $22,500 every year.

 

Every year, $22,500 is added to the aggregated deterioration account. Toward the finish of year five, the aggregated deterioration sum would rise to $112,500, or $22,500 in yearly devaluation increased by five years.

 

Collected Depreciation and Book Value

 

Collected deterioration is utilized in computing an advantage’s net book esteem. This is the sum an organization conveys a benefit on its monetary record. Net book esteem is the expense of an advantage deducted by its collected deterioration. For instance, an organization bought a bit of printing hardware for $100,000 and the amassed deterioration is $35,000, at that point the net book estimation of the printing gear is $65,000.

 

Aggregated deterioration can’t surpass a benefit’s expense. In the event that an advantage is sold or discarded, the benefit’s collected deterioration is expelled from the monetary record. Net book esteem, be that as it may, isn’t really intelligent of the market estimation of a benefit.

 

Deterioration Method Examples

 

Past the straight-line technique, there’s additionally the declining balance strategy. This is the main other devaluation technique permitted by the Internal Revenue Service (IRS) for charge purposes.

 

On the off chance that utilizing the twofold declining balance strategy (DDB), which is apparently the most mainstream, the devaluation rate in the above equation is 2. For instance, an organization buys a bit of printing gear for $100,000. The rescue esteem is $20,000 and its valuable life is 10 years.

 

Year 1 devaluation cost utilizing the DDB technique would be: ($100,000 – $20,000) x (1/10) x 2 = $16,000. Year 2 deterioration cost would be: ($84,000 – $20,000) x (1/10) x 2 = $12,800.

 

In the interim, under the straight-line technique, the deterioration cost in the above model would be $8,000 every year, or ($100,000 – $20,000)/10. Toward the finish of Year 2, the gathered devaluation under the DDB technique would be $28,800 while under the straight-line strategy it would be $16,000. In any case, the yearly devaluation sum under the DDB technique is littler in later years. It’s commonly utilized for resources that lose their worth rapidly, for example, PCs.

 

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