Question

The types of resources needed by a business are financial, physical, and labor resources.

            ⊚        true
            ⊚        false

17)       Which of the following statements about the entry to record depreciation is true?

           
            A)    The entry involves a credit to a contra-asset account.  
            B)    The entry involves a credit to Depreciation Expense.
            C)    The entry involves a credit to the asset being depreciated.
            D)    The entry involves a credit to a liability.

18)       A $200 credit to Interest Payable was instead recorded in error as a $200 credit to Cash in an adjusting entry, which has been posted to the ledger accounts. Which of the following is the result of this error?

            A)    Net income is overstated by $200.        
            B)    Total assets are understated by $200.
            C)    The trial balance is out of balance by $200.
            D)    Total liabilities are overstated by $200.
           

19)       What is the term that is used to describe the difference between the total debit and credit amounts in a T-account?

            A)    Net income         
            B)    Trial balance
            C)    Account balance
            D)    Equality
           

Answer 1

Answer:

True

Explanations:

- A business needs all the 3 main resources i.e. Financial, Physical and Labour

- Physical resources represent the assets needed to carry out the business.

- Financial resources are needed for funding for the operations of the business.

- Labour resources represents the workforce that will carry the operations of the business.

Answer-17

C)    The entry involves a credit to the asset being depreciated.

Explanations:

The basic journal entry for depreciation is to debit the Depreciation Expense and credit the Fixed assets account.

Answer-18

B)    Total assets are understated by $200.

Explanations:

This error decreases the Cash Balance, hence ultimately it reduces the assets and thus the assets are understated by $200.

Answer-19

C)    Account balance

Explanations:

When the total of debits in an account exceeds the total of credits, the account is said to have a net debit balance equal to the difference between the debit and credit and vice versa. Thus the difference between the Debit and Credit Balance is said to be the account balance.