11 the value of a depreciable asset at the end of its

This preview shows page 2 - 4 out of 95 pages.

We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
College Accounting, Chapters 1-27
The document you are viewing contains questions related to this textbook.
Chapter 5 / Exercise 1
College Accounting, Chapters 1-27
Heintz/Parry
Expert Verified
11. The value of a depreciable asset at the end of its useful life is called the residual value. 12. A depreciation method that allocates an equal amount of depreciation each year. (Cost − Residual value) / Useful life. 13. Accumulated depreciation is the sum of all depreciation expense recorded to date for a depreciable asset. 14. Book value is a depreciable asset’s cost minus accumulated depreciation. Book value represents the cost invested in the asset that the company has not yet expensed. 15. Deferred revenue is a liability created when a company collects cash from customers in advance of doing work. For example, the collection of cash for services to be provided by the company in the future. 16. An accrued expense is an expense that a company has incurred but not yet paid. For example, salaries expense is incurred by a company as employees work, even though the company might not pay the employees until a later period. 17. An accrued revenue is a revenue that a company has earned but not yet collected in cash. For example, service revenue is earned by a company as it provides services to a customer, even though the company might not collect cash from the customer until a later period. 18. The two rules to remember about adjusting entries are: 1. Adjusting entries never involve the Cash account. 2. Adjusting entries either a. Increase a revenue account (credit revenue) or b. Increase an expense account (debit expense). 19. An adjusted trial balance is prepared after adjustments have been journalized and posted. An adjusted trial balance is a list of all of the accounts with their adjusted balances, and its purpose is to ensure that total debits equal total credits of all accounts. The adjusted trial balance is used to prepare the final financial statements. 20. If an accrued expense is not recorded at the end of the year, the financial statements will be inaccurate. On the balance sheet, liabilities will be understated and equity will be overstated. On the income statement, expenses will be understated (thus net income will be overstated). 21. A worksheet is an internal document that helps summarize data for the preparation of the Horngren’s Accounting   10/e    Solutions Manual 3-2
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
College Accounting, Chapters 1-27
The document you are viewing contains questions related to this textbook.
Chapter 5 / Exercise 1
College Accounting, Chapters 1-27
Heintz/Parry
Expert Verified
financial statements. As a summary device, it helps identify the accounts that need adjustments. On a worksheet, accounts are listed, the unadjusted balances in the accounts are copied directly from the ledger (the unadjusted trial balance), adjustments are entered, and the adjusted trial balance is completed (from which the financial statements can be prepared). 22A. If a payment of a prepaid expense was recorded under the alternative treatment, an expense account would be debited at the time of payment. 23A. If a payment of a prepaid expense was recorded under the alternative treatment, an asset account would be debited in the adjusting entry.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture