Question : 41.Accumulated Depreciation is: A. An asset account. B. A revenue account. C.&# : 1237599

 

 

41.Accumulated Depreciation is:   

A. An asset account.

 

B. A revenue account.

 

C. A contra-asset account.

 

D. An expense account.

 

 

 

 

42.Which of the following statements regarding depreciation is correct?   

A. Depreciation is an exact calculation of the decline in value of an asset.

 

B. Depreciation is only an estimate of the decline in value of an asset.

 

C. Depreciation is only recorded at the end of a year and never over a shorter time period.

 

D. Management must know the exact life of an asset in order to calculate an acceptable depreciation expense.

 

 

 

 

43.The entry to record depreciation is an example of an adjusting entry:   

A. To apportion a recorded cost.

 

B. To apportion unearned revenue.

 

C. To convert a liability to revenue.

 

D. To record unrecorded revenue.

 

 

 

 

44.Prepaid expenses are:   

A. Assets.

 

B. Income.

 

C. Liabilities.

 

D. Expenses.

 

 

 

 

45.Colonial Systems prepares monthly financial statements. Colonial would record a prepaid expense in each of the following situations except:   

A. Colonial Systems purchased a two-year fire insurance policy.

 

B. Colonial Systems paid for six months’ gardening services in advance.

 

C. A tenant paid Colonial Systems three months’ rent in advance.

 

D. Colonial Systems purchased enough office supplies to last several months.

 

 

 

 

46.Which of the following statements is not true regarding prepaid expenses?   

A. Prepaid expenses represent assets.

 

B. Prepaid expenses are shown in a special section of the income statement.

 

C. Prepaid expenses become expenses only as goods or services are used up.

 

D. Prepaid expenses appear in the balance sheet.

 

 

 

 

47.Recently, Bon Appetite Café contracted and paid for a relatively expensive advertisement in Haute Cuisine magazine. Despite the fact that the ad will appear in Haute Cuisine three months after the end of Bon Appetite Café’s current fiscal year, the Cafe’s accountant recorded the disbursement to advertising expense. If no adjusting entry is made, how will this year’s financial statements of Bon Appetite Café be affected?   

A. Net income will be overstated and total assets will be understated.

 

B. Net income will be overstated and total assets will be overstated.

 

C. Net income will be understated and total assets will be understated.

 

D. Net income will be understated and total assets will be overstated.

 

 

 

 

48.An example of a contra-asset account is:   

A. Depreciation Expense.

 

B. Accumulated Depreciation.

 

C. Prepaid expenses.

 

D. Unearned revenue.

 

 

 

 

49.Which of the following entries causes an immediate decrease in assets and in net income?   

A. The entry to record depreciation expense.

 

B. The entry to record revenue earned but not yet received.

 

C. The entry to record the earned portion of rent received in advance.

 

D. The entry to record accrued wages payable.

 

 

 

 

50.Prepaid expenses appear:   

A. As an expense on the income statement.

 

B. As an asset on the balance sheet.

 

C. As a liability on the balance sheet.

 

D. As a reduction to retained earnings.