110 Multiple Choice Chapter 5 Homework Handout Instructions: Choose the best word or phrase that completes each of the following statements Type the letter that corresponds to your answer choice in the column to the right of the statement. 1 The income statement does not report (A) revenues; (B) expense; (C) withdrawals; (D) net incomes (E) net loss. 2 For the straight-line method of calculating depreciation, depreciable cost is calculated by taking the total cost of an asset and (A) dividing by useful life: (B) adding salvage value; (C) subtracting salvage value; (D) multiplying by the useful life: (E) subtracting the amount of cash paid to date. 3 Prepaid insurance has a balance of $1,200 that represents 6 months of insurance. One month of insurance has expired. The amount of the adjustment is (A) $1,200; (B) $600; (C) $200; (D) $100; (E) 50. 4 Wages earned but not yet paid amounted to $500. The adjusting entry will (A) debit Wages Expense and credit Wages Payable; (B) debit Wages Payable and credit Wages Expense; (C) debit Wages Expense and credit Cash: (D) debit Wages Payable and credit Cash; (E) debit Income and credit Wages Payable. Supplies originally cost $500, but only $50 worth of supplies remain on hand at the end of the month. The adjusting entry would be (A) debit Supplies Expense, $50; credit Supplies, $50; (B) debit Supplies Expense, $450; credit Supplies, $450, (C) debit Supplies, $50; credit Supplies Expense, $50; (D) debit Supplies, $450; credit Supplies Expense, $450; (E) none of these. Letter The cost of an asset is $6,000. Salvage value is $200. Estimated useful life is 10 years. The amount of annual depreciation using the straight-line method is (A) $6,000; (B) $5,800: (C) $600; (D) $580; (E) $200