For Each Entry Below Make a Correcting Entry If Necessary

question 51

Essay

For each entry below make a correcting entry if necessary. If the entry given is correct, then state "No entry required."
(a) The $70 cost of repairing a printer was charged to Equipment.
(b) The $5,500 cost of a major engine overhaul was debited to Maintenance and Repairs Expense. The overhaul is expected to increase the operating efficiency of the truck.
(c) The $6,000 closing costs associated with the acquisition of land were debited to Operating Expenses.
(d) A $300 charge for transportation expenses on new equipment purchased was debited to Freight-In.

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Definitions:

Short Run

A period of time in which at least one input (typically capital) is fixed, affecting the firm's capacity to adjust its production levels.

Efficient Use

The optimization of resources to achieve the highest possible output or benefit with the least amount of input or waste.

P > MC

A situation in which price is greater than marginal cost, indicating potential profit opportunities for firms.

Profits Equal Zero

A situation in which a firm's total revenue is exactly equal to its total costs, resulting in no net profit.