Chapter 3—The Adjusting Process

MULTIPLE CHOICE
31.A business pays weekly salaries of $20,000 on Friday for a five-day week ending on that day. The adjusting
entry necessary at the end of the fiscal period ending on Tuesday is
a debit Salaries Payable, $8,000; credit Cash, $8,000
.
b debit Salary Expense, $8,000; credit Drawing, $8,000
.
c debit Salary Expense, $8,000; credit Salaries Payable, $8,000
.
d debit Drawing, $8,000; credit Cash, $8,000
.
ANS: C PTS: 1 DIF: Difficult OBJ: 03-02
NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

32. The difference between the balance of a fixed asset account and the related accumulated depreciation
account is termed
a historical cost
.
b contra asset
.
c book value
.
d market value
.
ANS: C PTS: 1 DIF: Easy OBJ: 03-02
NAT: AACSB Analytic | AICPA FN-Measurement

33. The adjusting entry to record the depreciation of equipment for the fiscal period is
a debit Depreciation Expense; credit Equipment
.
b debit Depreciation Expense; credit Accumulated Depreciation
.
c debit Accumulated Depreciation; credit Depreciation Expense
.
d debit Equipment; credit Depreciation Expense
.
ANS: B PTS: 1 DIF: Moderate OBJ: 03-02
NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

34. As time passes, fixed assets other than land lose their capacity to provide useful services. To account for
this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a
process called
a equipment allocation
.
b depreciation
.
 c accumulation
.
d matching
.
ANS: B PTS: 1 DIF: Easy OBJ: 03-02
NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries

35. The entry to adjust the accounts for wages accrued at the end of the accounting period is
a debit Wages Payable; credit Wages Income
.
b debit Wages Income; credit Wages Payable
.
c debit Wages Payable; credit Wages Expense
.
d debit Wages Expense; credit Wages Payable
.
ANS: D PTS: 1 DIF: Moderate OBJ: 03-02
NAT: AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-07-Adjusting Entries