An Asset with an Original Cost of $75,000,a Residual Value

question 56

Multiple Choice

An asset with an original cost of $75,000,a residual value of $7,500,and a useful life of 5 years is given away without any consideration at the end of year five.The entry to record this is

• A)Dr.Accumulated depreciation,Dr.Loss on disposal,Cr.Long-Term asset.
• B)Dr.Accumulated depreciation,Cr.Gain on disposal,Cr.Long-Term asset.
• C)Dr.Long-Term asset,Cr.Accumulated depreciation.
• D)Dr.Accumulated depreciation,Cr.Long-Term Asset.

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Definitions:

AVC Curve

A graphical depiction of the average variable costs incurred by a firm in the short run, illustrating how costs vary with output levels.

AFC Curve

A graph representing Average Fixed Costs, which shows how fixed costs per unit of output decrease as production increases.

Total Cost Function

An equation that expresses the total cost of producing a given quantity of output, considering both fixed and variable costs.