1 ) A company purchased $6,000 worth of supplies in August. On August 31, the balance in the Supplies account was $3,200. The adjusting entry includes a: Debit to Supplies Expense for $3,200. Credit to Supplies for $2,800. Debit to Supplies for $2,800. Credit to Cash for $2,800. Credit to Supplies Expense for $2,800. 2 ) PPW Co. leased a portion of its store to another company for eight months beginning on October 1, 2010, at a monthly rate of $800. This other company paid the entire $6,400 cash on October 1, which PPW Co. recorded as unearned revenue. The journal entry made by PPW Co. at year-end on December 31, 2010 would include: A debit to Rent Earned for $2,400. A debit to Cash for $6,400. A debit to Unearned Rent for $4,000. A credit to Unearned Rent for $2,400. A credit to Rent Earned for $2,400. 3 ) A company's Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period? $2,700. $3,500. $3,300. $2,900. $3,700 4) The total amount of depreciation recorded against an asset or group of assets during the entire time the asset or assets have been owned: Is referred to as accumulated depreciation. Is referred to as depreciation expense. Is only recorded when the asset is disposed of. Is referred to as an accrued asset. Is shown on the income statement of the final period. 5) Accrued revenues: Are also called unearned revenues. At the end of one accounting period often result in cash receipts from customers in the next period. Are listed on the balance sheet as liabilities. Are recorded at the end of an accounting period because cash has already been received for revenues earned. At the end of one accounting period often result in cash payments in the next period. 6 ) The usual accounting term for revenues from selling merchandise is: Expenses. Profits. Cost of Goods Sold. Costs. Sales. 7) A company purchased new computers at a cost of $14,000 on September 30, 2010. The computers are estimated to have a useful life of 4 years and a salvage value of $2,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the computers for the year ended December 31, 2010? $875 $250 $3,000 $750 $1,000 8 ) The accounting principle that requires revenue to be reported when earned is the: Time period principle. Revenue recognition principle. Going-concern principle. Matching principle. Accrual reporting principle. 9 ) Gross Profit is also called: Gross Sales. Gross Equity. Gross Revenue. Gross Assets. Gross Margin. 10 ) The adjusting entry to record the earned sales that are both unrecorded and not yet received in cash at the end of an accounting period is: Debit Accounts Receivable and credit Sales. Debit Cash and credit Sales. Debit Accounts Receivable and credit Unearned Revenue. Debit Sales and credit Accounts Receivable. Debit Sales and credit Cash. 11 ) Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that period. True False 12 ) Recording the adjusting entry for Equipment depreciation involves a debit to Depreciation Expense and a credit to Equipment. True False 13 ) Sales returns and allowances and Sales discounts are permanent accounts and therefore are not closed during the closing process. True False 14 ) The cost of unused supplies is reflected in the Supplies account. True False 15 ) Merchandisers, using a periodic inventory system, use accounts such as purchases, purchases returns and allowances, an transportation-in to track the costs associated with inventory. True False 16 )Using the straight-line depreciation method, the annual depreciation expense on a machine that was purchased for $26,000 having a 4-year life and salvage value of $2,000 would be $6,500. True False 17 ) A company entered into a 2-month contract for $50,000 on April 1. It earned $25,000 of the contract services in April and billed the customer. The company should recognize the revenue when it receives the customer's check. True False 18) When the cost of prepaid insurance benefits expire, the cost must be transferred to the prepaid insurance account. True False 19 ) Cost of Goods sold is usually the largest single expense on a merchandiser's income statement. True False 20) In a service company, revenues minus expenses equals net income. True False