A New Accountant Working for Unitas Company Records $800 Depreciation

question 135

Multiple Choice

A new accountant working for Unitas Company records $800 Depreciation Expense on store equipment as follows: The effect of this entry is to

• A) adjust the accounts to their proper amounts on December 31.
• B) understate total assets on the statement of financial position as of December 31.
• C) overstate the book value of the depreciable assets at December 31.
• D) understate the book value of the depreciable assets as of December 31.

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Definitions:

Reverse Stock Split

A corporate action in which a company decreases the number of its outstanding shares to increase the share price without changing the company's market capitalization.

Market Value

The ongoing cost at which a service or asset is being exchanged in the market.

Extra Dividend

A one-time special payment made by a company to its shareholders, in addition to any regular dividends.

NPV Projects

Projects evaluated based on the Net Present Value method, a valuation technique that discounts the expected future cash flows to the present using a specific rate, to determine the profitability and viability.