Consider Each of the Items Below

question 38

Multiple Choice

Consider each of the items below. Place the proper letter in the blank space provided to indicate the nature of the account or accounts to be debited when recording each transaction using the preferred accounting treatment. Prepayments should be recorded in balance sheet accounts. Disregard income tax considerations unless instructed otherwise.
-Jantzen Company traded its old machine with a net book value of $3,000 plus cash of $7,000 for a new one which had a fair market value of $9,000.

• A)asset(s) only
• B)accumulated amortization, depletion, or depreciation only
• C)expense only
• D)asset(s) and expense
• E)some other account or combination of accounts

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Definitions:

Sell the Stock

An action where an investor disposes of their ownership in a corporation through the sale of its shares.

Maintenance Margin

The minimum equity amount that must be maintained in a margin account after a purchase has been made, to cover the risk of the investment.

Margin Call

A demand by a broker that an investor deposit further cash or securities to cover possible losses.

Initial Margin

The minimum amount of equity required to enter into a position as security for performance, used in futures and margin trading.