Author: Anonymous

Depreciation measures the decline in market value of an asset.

A company purchased new furniture at a cost of $14,000 on September 30. The furniture is estimated to have a useful life of 8 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 furniture for the first year ended December 31?

Adjusting entries always affect the cash account.

The accounting equation for Dog Bed Company shows an increase in its assets and an increase in its liabilities. Which of the following transactions could have caused that effect?

A piece of equipment with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported in the operating activities section reported under the direct method is:

It is acceptable to record cash received in advance of providing products or services to revenue accounts if an adjusting entry is made at the end of the period to bring the liability account balance to the correct unearned amount.

An employer’s federal unemployment taxes (FUTA) are reported:

Jezebel Inc is a wholesaler that buys merchandise in large quantities. Its supplier’s catalog indicates a list price of $500 per unit on merchandise Jezebel intends to purchase, and offers a 30% trade discount for large quantity purchases. The cost of shipping for the merchandise is $7 per unit. Jezebel’s total purchase price per unit will be:

Carter Services paid K. Carter, the sole shareholder of Carter Services, $5,700 in dividends  during the current year. The entry to close the dividends account at the end of the year is:

Rodriguez owns an asset that cost $87,000 with accumulated depreciation of $40,000. The company sells the equipment for cash of $42,000. At the time of sale, the company should record: