Which of the Following Is Allowed Under Generally Accepted Accounting

question 35

Multiple Choice

Which of the following is allowed under generally accepted accounting principles?

• A) A company was offered $60,000 for land that it had purchased for $15,000.The company did not sell the land but increased the Land account to $60,000.
• B) An owner lists the full cost of his or her personal automobile,which is occasionally used for business purposes,on the company's balance sheet.
• C) A large company recorded the $20 cost of a tool as an expense,although the item is expected to be used for 3 years.
• D) The Equipment account shows a balance of $55,000.This amount represents the original cost of $75,000 less the accumulated depreciation of $20,000.

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Definitions:

Variances

Differences between planned or expected financial performance and the actual performance.

Budgeted Amounts

Projected financial allocations set for a specific time period, intended to guide spending and investment decisions.

Payroll Costs

The total amount of wages, salaries, and other compensation a business pays to its employees.

Accounting Costs

Costs recognized in the financial statements, consisting of both explicit costs like wages and materials, and allocated costs such as depreciation.