Double-Entry Accounting Records Exchanges in a Transaction with Debits and Credits

question 12

Multiple Choice

Double-entry accounting records exchanges in a transaction with debits and credits. Which of the following is recorded when a company purchases a desk and pays cash?

• A)The desk is recorded with a credit and the cash is recorded with a credit
• B)The desk is recorded with a debit and the cash is recorded with a debit
• C)The desk is recorded with a credit and the cash is recorded with a debit
• D)The desk is recorded with a debit and the cash is recorded with a credit

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Definitions:

Present Value

The worth at present of a sum of money expected in the future or of ongoing cash payments, when discounted at a specific rate of return.

Capital Cost Allowance (CCA)

A form of tax depreciation that allows a business to deduct the cost of a depreciable property, such as buildings or equipment, over a number of years.

Fixed Assets

Long-term tangible pieces of property or equipment that a firm owns and uses in its operations to generate income.

Required Rate Of Return

The minimum annual percentage earned by an investment that will induce individuals or companies to commit their money.