TransAm Mail Service Purchased Equipment for $2,500

question 154

Multiple Choice

TransAm Mail Service purchased equipment for $2,500. TransAm paid $400 in cash and signed a note for the balance. TransAm debited the Equipment account, credited Cash and

• A) nothing further must be done.
• B) debited the retained earnings account for $2,100.
• C) credited another asset account for $400.
• D) credited a liability account for $2,100.

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Definitions:

Trend Balance Sheet

A financial statement that presents a company's financial position over multiple periods, highlighting trends in assets, liabilities, and equity.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership interest.

Earnings Before Interest

A financial metric that calculates a company's profitability before interest expenses are deducted; however, it is more commonly referred to as EBIT (Earnings Before Interest and Taxes).

Nonrecurring Items

Expenses or incomes that are not expected to happen regularly in a company's financial operations, often excluded for analysis purposes.