When a New Company Was Formed,one Partner Contributed Some Used

question 14

Multiple Choice

When a new company was formed,one partner contributed some used equipment he owned.The equipment was appraised at $44,000 and $50,000 by two different dealers.The accountant entered the equipment at $44,000 in the financial records of the partnership.This is an example of

• A) the materiality constraint.
• B) the conservatism constraint.
• C) the matching principle.
• D) industry practice constraint.

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Definitions:

Adjusted Trial Balance

A financial statement that lists all account balances in the general ledger after adjustments are made, ensuring the total credits equal total debits.

Statement of Cash Flows

The statement of cash flows is a financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Cash Collections

The process and amount of cash gathered from receivables or sales transactions over a certain period.

Long Term Assets

Assets that are expected to provide economic benefits to a company over a period longer than one year, like buildings and machinery.