A Transaction Completed by Norton Company Caused a $10,000 Increase

question 22

Multiple Choice

A transaction completed by Norton Company caused a $10,000 increase in both the total assets and the total liabilities. This transaction could have been:

• A) purchase of office equipment for $16,000, paying $6,000 cash, with the rest on account.
• B) investment by the owner of an additional $10,000.
• C) purchase of office equipment, paying $10,000 cash, and $6,000 on account.
• D) a loan of $2,000, on a $12,000 purchase of equipment with $10,000 down payment.

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Definitions:

Unit Product Cost

The total cost associated with producing one unit of a product, including direct materials, direct labor, and allocated overhead.

Net Operating Income

A business's income after deducting operating costs, not including taxes or interest.

Break-even Points

The level of sales at which total revenues equal total costs, resulting in no profit or loss.

Break-even Sales

Break-even sales represent the amount of revenue needed to cover all fixed and variable costs, indicating the point at which a business neither makes a profit nor incurs a loss.