Amanda Company Purchased a Computer That Cost $10,000

question 114

Multiple Choice

Amanda Company purchased a computer that cost $10,000.It had an estimated useful life of five years and a residual value of $1,000.The computer was depreciated by the straight-line method and was sold at the end of the third year of use for $5,000 cash. Which of the following statements correctly describes the computer sale?

• A)Assets and stockholders' equity both increase by $5,000.
• B)Assets decrease $5,000 and stockholders' equity is not affected.
• C)Assets and stockholders' equity both decrease by $400.
• D)Assets and stockholders' equity both increase by $400.

---

Definitions:

Bureaucratic

Pertaining to the administration of organizations with a rigid hierarchy, fixed rules, and a focus on procedure over effectiveness.

Human Resources

The department within an organization that focuses on recruiting, managing, and providing direction for the people who work in the organization.

Technological Changes

Adjustments or advancements in technology that affect industries, workplaces, and society.

Delivering Health Care

The process of providing medical services to individuals or communities.