Discussions Essay

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Discussion Questions Chapter 5 1. The adjusting entry for depreciation for a machinery with useful life of 10 years , no salvage life, and cost of $30,000, after one month is debiting the account depreciation expense-machinery by $250 and crediting the account accumulated depreciation-machinery by $250. 2. 3. Prepaid expenses are items that are acquired and paid for in advance of their use. 4. It is necessary to make adjustment entries for supplies used to track the use of supplies, machinery, or equipment. At first the equipment, supplies, and machinery are assets yet over time and use they become an expense. 5. a. no b. yes c. no d. yes e. no f. yes g. yes h. no i. yes 6. a. no b. yes, positive/credit fees income c. none d. none 7. a. decrease b. increase c. decrease d. none 8. It is necessary to journalize and post adjusting entries to provide a complete picture of the firms operating results and its financial position. 9. prepaid rent, supplies, accounts receivable 10. A contra asset account with a credit balance which is contrary to the normal balance of an asset account. 11. Book value the portion of an assets original cost that has not yet been depreciated. 12. An accumulated depreciation account is used when making adjustments for depreciation because you still own the item. Until you sell it, it is yours. 13. cost-salvage value Estimates useful life 14. Equipment, supplies, machinery, automobile Chapter 6 1. The work sheet provides the data needed to do the closing entries. 2. It is a temporary account Fees Income, expenses are closed and sent to this account and then this account is closed and sent to owner’s capital. 3. The accountant prepares the accounting records for the beginning of the next new accounting cycle. 4. The worksheet but also a calculation is needed. 5. Record adjusting

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