Assume That a Governmental Entity Acquires a New Garbage Truck

question 50

Multiple Choice

Assume that a governmental entity acquires a new garbage truck. The garbage truck normally costs $189,000. The vendor allowed a $30,000 allowance with the trade-in of the entity's old garbage truck, which had a net book value of $42,000. The government financed the balance with a short-term bank note. The new garbage truck would be recorded in the General Capital Assets account at

• A) $147,000.
• B) $159,000.
• C) $189,000.
• D) $201,000.

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Definitions:

Net Income

The company's remaining earnings once all costs, taxes, and expenses are deducted from its total revenues.

Direct Method

A way of preparing the cash flow statement where actual cash receipts and payments are reported, rather than adjusting net income.

Net Cash Flow

The difference between a company's cash inflows and outflows in a given period.

Operating Activities

Activities that relate directly to the primary revenue-producing operations of an organization, such as sales and service delivery.