An Equipment Was Purchased for $15,000

question 56

Multiple Choice

An equipment was purchased for $15,000.It has a useful life of 5 years and a residual value of $4,000.Determine the depreciation expense for the first year using the double-declining-balance method?

• A) $5,400
• B) $6,000
• C) $2,200
• D) $2,600

Understand and apply the shutdown rule in the context of firm production decisions.

Analyze the impact of external costs (such as taxes) on a firm’s optimal production and profitability in a competitive market.

Calculate the profit-maximizing level of output for firms in various competitive scenarios and determine the presence of economic profits or losses.

Interpret and analyze the behavior of firms under different cost conditions, including responses to changes in market prices.

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Definitions:

Calendar Year-End

The end of the annual accounting period that coincides with the end of the calendar year, typically December 31.

Post-Closing Trial Balance

A financial statement listing all the accounts and their balances after closing entries are made, ensuring the accounts are ready for the next accounting period.

Adjusted Trial Balance

A report that lists all accounts and their balances after adjusting entries are made, ensuring that debits equal credits.

Closing Entries

The journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts.