03 quiz 2 - a - questions

03 quiz 2 - a - questions - HFT 2401: Quiz #2 Recording...

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HFT 2401: Quiz #2 Recording Procedure with Adjustment Fall 2011 1. To which category of the following, does Depreciation accountbelongs? 1) Assets 2) Liabilities 3) Equity 4) Revenues 5) Expenses 2. To which category of the following, does Accumulated Depreciation account belongs. 1) Assets 2) Liabilities 3) Equity 4) Revenues 5) Expenses 3 When an asset item is purchased, which side (Dr or CR) would it (the purchased Asset) be recorded? 1) Dr 2) Cr 3) It depends on how it was paid. 4) Either side is OK. 4. When your company’s liabilities increase, it is recorded on the one side. Then, what can happen on the other side? (This is a question about the impact.) 1) Assets may decrease on the other side. 2) Liability may decrease on the other side. 3) Sales (Revenues) may be recognized. 4) All of the above may take place. 5) None of the above will take place. 5. We learned that Accumulated Depreciation is called “Contra Asset” account. What is “Contra Asset ? 1) It is an expense account that represents the value of periodical deterioration (wear and tear) of long-term assets such as building or equipment. 2) It is an asset account that records in the credit side representing the accumulated value of the asset item deteriorated (through wear and tear) during one accounting cycle to offset its original value in 3) It is a liability account that accumulates the expenses of using asset items in the credit side until it is paid back to the company later. 4) It is an equity account that is recorded in the credit side to add the used amount of long-term assets to indicate the incremental amount of the owners’ equity. 5) None of the above 6. You took a loan from a local bank for your business. The entire loan was $400,000. The loan contract specifies the annual interest rate at 12%. No principal payment has been made yet. How much interest expense per month do you have to record? 7. The interest of the question #6 is recorded at the end of each month. However, if the actual payment of the annual interest will be made all at once at the end of the year, how would each monthly transaction impact your company’s financial position?
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03 quiz 2 - a - questions - HFT 2401: Quiz #2 Recording...

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