Steve Is in Charge of Accounting for the Purchase of Equipment

question 45

Multiple Choice

Steve is in charge of accounting for the purchase of equipment at Cal Works, Inc. The company has a policy that all expenditures greater than $1,000 (1% of total expenditures) have to be capitalized; less than $1,000 expensed. Steve is under pressure to report high earnings. He takes one $600 and $900 expenditure, adds them together, and records a capital expenditure for $1,500. Which of the following reasons and rationalizations might Steve use for his action:

• A) One-time request
• B) Standard Practice
• C) Representational faithfulness
• D) Materiality

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Definitions:

Slope

The measure of the steepness or incline of a line, typically represented as the ratio of the change in the y-coordinate to the change in the x-coordinate between two points on the line.

Consumption of Pizza and Tacos

Consumption of Pizza and Tacos refers to the act of eating or using pizza and tacos, often studied to understand dietary habits, consumer behavior, or economic demand for these foods.

Factor of Production

Resources used in the creation of goods and services, traditionally categorized into land, labor, and capital.

Input

A good or service used to produce another good or service.