Your Company Owned Equipment with a Book Value of $120,000

question 119

Multiple Choice

Your company owned equipment with a book value of $120,000 that was sold during this accounting period for $30,500 in cash,and purchased new equipment for cash of $148,000.Your company would record:

• A)a debit of $148,000 and a credit of $30,500 to the cash account for a net cash inflow of $117,500.
• B)a debit of $148,000 and a credit of $89,500 to the cash account for a net cash inflow of $58,500.
• C)a debit of $30,500 and a credit of $148,000 to the cash account for a net cash outflow of $117,500.
• D)a debit of $89,500 and a credit of $148,000 to the cash account for a net cash outflow of $58,500.

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Definitions:

Earnings Per Share

A financial ratio that measures the amount of net income earned per share of stock outstanding.

Current Ratio

A liquidity ratio that measures a company’s ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.

Inventory Turnover

A ratio that measures the number of times inventory is sold and replaced over a certain period, indicating the efficiency of inventory management.

Return on Assets

A financial ratio that measures the profitability of a company in relation to its total assets.