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Accounting Cycle Quiz: Practice Journal Entries and Depreciation
This quiz helps you check your understanding of the accounting cycle and depreciation, from journal entries to reporting. Get instant results, review explanations, and keep building skills with the depreciation methods quiz, an accounting practice test, and an online financial accounting quiz. Great for quick study or exam prep.
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1What is the first step in the accounting cycle?
2Which document lists all ledger account balances at a specific date?
3Which of the following best defines depreciation?
4What is the straight-line depreciation expense per year for an asset costing $50,000 with a $5,000 salvage value and a nine-year useful life?
5What is the correct journal entry to record monthly depreciation?
6A company purchases equipment for $60,000 with an estimated $6,000 salvage value and a five-year useful life. What is the annual straight-line depreciation expense?
7How does depreciation expense affect the income statement?
8Using the double-declining-balance method, what is the first-year depreciation expense on an asset costing $100,000 with a five-year life and no salvage value?
9What is the book value at the end of the second year using double-declining-balance for an asset costing $100,000, no salvage, and five-year life?
10Which account is credited when recording depreciation expense?
11An asset purchased on April 1 has a year-end of December 31. What fraction of the annual depreciation is recorded for that fiscal year?
12How is depreciation expense closed at year-end?
13Which step comes immediately after posting journal entries to the ledger?
14Which depreciation method produces decreasing expense amounts each year?
15When equipment is sold for cash greater than its book value, how is the excess amount recorded?
16At the start of year 4, a machine's useful life is changed from 10 years to 8 years. Cost was $80,000, salvage $8,000, and straight-line depreciation was used. What is the new annual depreciation?
17Five identical machines, each costing $10,000 with no salvage value and a 5-year life, are depreciated on a composite basis. What is the annual composite depreciation rate?
18Using the sum-of-the-years'-digits method, what is the first-year depreciation for an asset costing $45,000 with no salvage and a five-year life?
19Equipment cost $50,000 with accumulated depreciation of $38,000 is sold for $15,000 cash. What is the gain or loss on sale?
20When a company changes from straight-line to an accelerated depreciation method, how is the change applied?
Learning Goals
Learning Outcomes
- Analyse each step of the accounting cycle from journalizing to closing entries
- Calculate depreciation using straight-line and declining-balance methods
- Identify how depreciation affects balance sheets and income statements
- Apply correct journal entries for asset acquisition and depreciation adjustments
- Evaluate book values and useful lives of assets over time
Study Guide
Cheat Sheet
- Master the Accounting Cycle - Dive into the 8 action-packed steps from spotting transactions to closing the books, and become the financial detective every business needs! Understanding each phase ensures you'll never miss a beat in accurate reporting. Accounting Cycle - 8 Steps in the Accounting Cycle, Diagram, Guide
- Navigate Straight-Line Depreciation - Picture an asset wearing the same expense "shirt" every year - simple, steady, and predictable! Use the formula (Cost - Salvage Value) / Useful Life to spread expenses evenly and keep your numbers crystal clear. Depreciation Methods - 4 Types of Depreciation You Must Know!
- Unlock Double-Declining Balance Depreciation - Want to front-load costs like a blockbuster movie? This accelerated method charges more depreciation early on using (2 / Useful Life) × Book Value. It's perfect for fast-aging assets and dramatic accounting effects! Depreciation Methods - 4 Types of Depreciation You Must Know!
- See How Depreciation Shapes Financial Statements - Depreciation doesn't just vanish - it reduces net income and shrinks asset values on your balance sheet. Grasping this impact helps you evaluate true company health and make savvy decisions! Depreciation: Straight-Line Vs. Double-Declining Methods
- Practice Depreciation Journal Entries - Journal wizards unite! Debit your depreciation expense and credit accumulated depreciation to mirror asset wear and tear. Mastering these entries keeps your ledgers impeccable and your audit worries at bay. Depreciation Methods - 4 Types of Depreciation You Must Know!
- Calculate and Interpret Book Value - Book Value = Cost - Accumulated Depreciation, your secret formula for tracking an asset's on-paper worth. Regularly checking this number helps you gauge when it's time for an upgrade - or a retirement party! Depreciation Methods - 4 Types of Depreciation You Must Know!
- Estimate Useful Life & Salvage Value Accurately - Guess too low or too high, and your depreciation dance falls offbeat! Researching usage patterns and market values ensures your estimates lock in realistic expense schedules. Depreciation Methods - 4 Types of Depreciation You Must Know!
- Compare Depreciation Methods for Smart Choices - Straight-line keeps it even, double-declining presses the gas early, and units-of-production ties costs to actual use. Picking the right rhythm aligns expense timing with how assets boost revenue. Depreciation Methods - 4 Types of Depreciation You Must Know!
- Leverage Depreciation in Tax Planning - More depreciation today can mean less taxable income tomorrow, giving you a strategic edge on tax liabilities. Understanding rules and limits helps you play the tax game like a pro. Depreciation Methods - 4 Types of Depreciation You Must Know!
- Perfect Adjusting Entries for Depreciation - Fine-tune your records at period-end by matching expenses to the correct timeframe. Timely adjustments keep your financials compliant, accurate, and audit-ready - no last-minute panic required! Accounting Cycle - 8 Steps in the Accounting Cycle, Diagram, Guide
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Updated Feb 21, 2026