Ben George, Inc

question 24

Multiple Choice

Ben George, Inc. has an unadjusted balance in Accumulated Depreciation─Truck of $9,000 as of December 31, 2010. This relates to a Truck purchased for $15,000 with an expected useful life of 5 years that is depreciated using the straight line method. After recording the depreciation expense for 2011, the adjusted balance in the Accumulated Depreciation─Truck account as of December 31, 2011 is:

• A)$15,000.
• B)$12,000.
• C)$3,000.
• D)$1,000.

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Definitions:

Accrual Basis

An accounting method where revenue is recorded when earned and expenses are recorded when incurred, regardless of when cash transactions occur.

Prepaid Expenses

Future expenses that have been paid in advance and are recorded as assets until they are actually incurred.

Unearned Revenues

Unearned revenues are funds received by a company for goods or services yet to be delivered or performed, recognized as a liability on the balance sheet until the obligation is fulfilled.

Unearned Consulting Revenue

Revenue received for services that have not yet been performed or delivered and is recorded as a liability until the service is provided.