9) The periodic expense created by allocating the cost of plant and equipment to

Question

9) The periodic expense created by allocating the cost of plant and equipment to the periods 9 in which they are used, representing the expense of using the assets, is called B) A contra account C) Depreciation expense. D) The expense recognition (matching) principle. E) An accrued account. 10) In its first year of operations, Grace Company reports the following: Earned revenues of 60,000 (S52,000 cash received from customers); Incured expenses of $35,000 (S31,000 cash paid toward them) Prepaid S8,000 cash for costs that will not be expensed until next year. Net income under the cash basis of accounting is: A) S21,000. B) S17,000. C) $13,000. D) S25,000 E) None of the answer choices is correct 11) A company made no adjusting entry for accrued and unpaid employee wages of $28,000 on December 31. This oversight would: A) Overstate net income by $28,000. B) Understate net income by $28,000. C) Have no effect on net income. D) Overstate assets by $28,000. E) Understate assets by $28,000. 12) If a company failed to make the end-of-period adjustment to move the amount of 12) management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account, this omission would cause A) An overstatement of net income. B) An overstatement of equity C) An overstatement of liabilities. D) An overstatement of assets. E) An understatement of liabilities. 13) Prior to recording adjusting entries, the Office Supplies account had a $359 debit 13) balance. A physical count of the supplics showed S105 of unused supplies available. The required adjusting entry is: A) Debit Office Supplies Expense S105 and credit Office Supplies $105 B) Debit Office Supplies $105 and credit Supplies Expense $254 C) Debit Office Supplies S105 and credit Office Supplies Expense S105 D) Debit Office Supplies Expense $254 and credit Office Supplies $254. E) Debit Office Supplies S254 and credit Office Supplies Expense S254.

Explanation / Answer

9) The periodic expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called

So answer is c) Depreciation expense

10) Net income = Revenue - expense

= 52000-(31000+8000)

Net income = 13000

So answer is c) $13000

11) A company made no adjusting entry for accured and unpaid wages of $28000 on december 31 the oversight would :

So answer is a) Overstated net income by $28000

12) If a company fails to make the end of period adjustments to move the amount of management fees that were earned from the unearned management fees account to the management fees revenue account the omission would be :

So answer is c) An overstatement of liabilities

13) Journal entry :

So answer is d) Debit office supplies expense $254 and credit office supplies $254

Date account and explanation debit credit Supplies expense (359-105) 254 Supplies 254

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