On January 1 (The Beginning of the Year), a Company

question 186

Multiple Choice

On January 1 (the beginning of the year) , a company sold a piece of equipment for $30,000 which it had used for several years. The equipment had cost $45,000, and its accumulated depreciation amounted to $20,000 at the time of the sale. What are the net effects on the accounting equation of selling the equipment for the year?

• A)Assets and Shareholders' Equity increase $30,000
• B)Assets decrease and Shareholders' Equity increases $5,000.
• C)Assets and Shareholders' Equity increase $5,000.
• D)Assets and Shareholders' Equity decrease $5,000.

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Definitions:

Semivariable Cost

Expenses that have both fixed and variable components, changing in total with activity level but not proportionally.

Total Cost

The sum of all costs associated with the production or acquisition of goods or services, including fixed and variable costs.

Cost Driver Rate

A rate that identifies the cost per unit of activity for a particular cost driver, aiding in the allocation of overhead costs based on actual usage or consumption.

Fixed Cost

Expenses that do not vary with the level of production or sales over a short period, such as rent, salaries, and insurance.