Hsu Company Incurred $90,000 of Depreciation for the Year

question 6

Multiple Choice

Hsu Company incurred $90,000 of depreciation for the year. Eighty percent relates to the firm's production facilities, and 20% relates to sales and administrative offices. If all items are handled in the proper manner, a review of the company's accounting records should reveal a:

• A) debit to Depreciation Expense for $90,000.
• B) debit to Manufacturing Overhead for $90,000.
• C) debit to Manufacturing Overhead for $72,000.
• D) debit to Work-in-Process Inventory for $18,000.
• E) credit to Cash for $90,000.

---

Definitions:

Balance Sheet Accounts

Balance Sheet Accounts represent the accounts that are reported on the balance sheet and include assets, liabilities, and shareholders' equity accounts.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate revenue and expenses to the period in which they actually occurred, ensuring compliance with the accrual basis of accounting.

Time Period Assumption

An assumption that accountants can divide the economic life of a business into artificial time periods.

Economic Life

The expected period over which an asset remains useful to its owner or contributes to an enterprise's cash flows.