A Business Acquires Equipment Costing $10,000 by Making a $2,000

question 45

Multiple Choice

A business acquires equipment costing $10,000 by making a $2,000 down payment and issuing a note for the balance. This transaction will cause:

• A)equipment to be debited for $10,000.
• B)notes payable to be debited for $8,000.
• C)cash to be credited for $8,000.
• D)equipment to be credited for $8,000.

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Definitions:

Expense Deduction

An expenditure that is subtracted from gross income to reduce the amount of income that is subject to taxation.

Airfare

The cost or price of a ticket for travel by airplane.

Social Security Tax Rate

The tax rate applied to both employers and employees to fund the Social Security program.

Income Limit

The maximum amount of income that allows for eligibility for certain tax benefits or programs.