Question

9- An accrued expense amounting to $18,000 was overlooked when ascertaining the profit for the year. The effect of this error is that: a. net profit is overstated and liability understated. b.net profit as well as liability are understated. c. net profit as well as liability are overstated. d. net profit is not affected but liability is understated. 10- Staff salary remaining unpaid at year-end should be accounted for as: a. debit Pre-paid Salary account and credit Staff salary account. b. debit Staff salary account and credit Salary accrued account. c. debit Salary accrued account and credit Staff salary account. d. debit Staff salary account and credit Cash account. 11- Which of the following describes the balance in the Accumulated Depreciation account? a. An equity account b. The sum of all depreciation expenses from the date of asset's acquisition to the present date c. A liability account d. Depreciation expense written off in an accounting period 12- An asset has an initial cost of $65,000 and an estimated salvage value of $5,000 after 12 years. The amount of accumulated depreciation after 5 years if straight-line depreciation is used is closest to: a. $15,000 b. $25.000 c. $37,500 d. $12,500

Answer 1

9. A. Wer Profit overstated, Liability understand Entry Expense Accrued Expense As expense overlooked, Ne Propit are wigherty $ 18 ooo, and liability loved by $ 18000 Dei coi $ 18000 & 18000 LL B. debit Stall salary and credit salary accrued As the stage salary is an Expense of the current accounting year, and is lepaid So will be accrued @ Year End B. sume of all depreciation Expense from date of acquisition to fresent date Accuwlated depeodation Meane defecation for all heriods starting with acquisition, and are added till date. 12. B. $25ooo Repreciation fee year $65000 - $5000 $ sooo Peer year 12 year Accuulated depreciation = $5000 (x) 5 years Cefter steare > $25ooo