Quiz 4.pdf - Module 4 Quiz 4. Adjusting Journal Entries 1)...

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Module 4 Quiz4. Adjusting Journal Entries1)Which of the following items is an explicit transaction?Recognizing expense as equipment is usedRecognizing the revenue for inventory soldcorrectRecognizing expense for prepaid insurance consumptionAccruing for audit fees at the end of the yearThis is an explicit transaction because the inventory being sold is the trigger forrecording the transaction.
2)Which of the following items is an implicit transaction?
3)A company purchased a piece of equipment for $350,000 in 2008. As of12/31/2015, $215,000 of depreciation expense had been recognized against thispiece of equipment.What is the equipment's net book value on 12/31/2015?
4)Suppose a manufacturing plant purchased a new heating system in December,2015 and, after installing and testing the equipment, it was put into service onJanuary 1, 2016. The total cost to put the equipment into service was $55,000; itis expected to have a useful life of 5 years and a salvage value of $5,000.Using the straight-line method of depreciation, what will the entry be to record depreciation forthe 6 months ending June 30, 2016?
5)West Corp. purchased a piece of equipment in January 2014. The accountant ofWest Corp. decided to use double declining balance method to depreciate thisequipment.For 2014, compared with using straight-line depreciation method, the company will have:A higher net income and a higher accumulated depreciation.A lower net income and a higher accumulated depreciation.A higher net income and a lower accumulated depreciation.
correctA lower net income and a lower accumulated depreciation.The correct answer is lower net income and a higher accumulated depreciation.Using an accelerated depreciation method as compared to the straight-line methodmeans that a higher depreciation expense will be recognized in the early years so the

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Term
Fall
Professor
haselkorn
Tags
Depreciation, Generally Accepted Accounting Principles, Luster Consulting Company, Flathound Properties

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