An Owner Investment of Land Valued at $20,000 and a Building

question 4

Multiple Choice

An owner investment of land valued at $20,000 and a building valued at $55,000 into the business would include a:

• A)debit to the land account for $55,000 and building account for $20,000.
• B)debit to the land account for $75,000.
• C)debit to the land account for $20,000 and building account for $55,000.
• D)debit to the building account for $75,000.

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Definitions:

Debit Balance

A condition where the sum of debits in an account exceeds the sum of credits, implying assets or expenses.

Allowance for Doubtful Accounts

An estimation of the amount of accounts receivable that may not be collected, which is used to adjust the gross accounts receivable to its net realizable value.

Estimate

An approximate calculation or judgment of the value, number, quantity, or extent of something, often used in planning and decision-making.

Balance Sheet Approach

A method used to calculate the amount required in the Allowance for Doubtful Accounts to cover expected uncollectibles. This method is based on the Accounts Receivable amount and the aging process. The adjustment to the Allowance for Doubtful Accounts will bring the new balance of that account to the new required level.