When Making Adjustments to Plant Asset Accounts

question 17

Multiple Choice

When making adjustments to plant asset accounts,

• A)the total dollar amount in the accumulated depreciation account will determine the amount of depreciation expense for the current accounting period.
• B)depreciation expense is added to the plant asset account.
• C)depreciation expense reduces net income.
• D)the current market value of the long-lived asset determines the amount of depreciation expense.

Understand the advantages of promissory notes receivable over accounts receivable.

Apply the correct formula for calculating interest over different periods and using a standard 360-day year.

Record transactions involving promissory notes correctly in financial statements.

Evaluate the reasons behind using promissory notes in financial transactions.

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Definitions:

Business Transaction

An economic event with a third party that is recorded in an organization's accounting system.

Accounting Records

Documents and books that keep track of the financial operations and transactions of an entity or individual, serving as evidence of financial performance and position.

Computer

An electronic device capable of processing, storing, and retrieving data, used for a wide range of tasks from computing to entertainment.

Double-Entry Bookkeeping System

An accounting technique which records each transaction in two accounts, ensuring the total debits equal total credits.