Assume That a Company Owns Machinery

question 28

Multiple Choice

Assume that a company owns machinery. When it bought the machinery, it recorded a reduction in cash, and an increase in an asset. At the end of the month, what entry, if any, should be recorded using accrual accounting to reflect the fact that the machinery is now older?

• A) No entry is needed, since no cash payment is being made at the end of the month.
• B) An entry recording an expense and reducing total assets and total equity
• C) An entry recording an expense, increasing a liability, and reducing total equity
• D) An entry recording an expense, increasing total assets, and reducing equity

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Definitions:

Motivational Theory

A concept or model that explains what motivates human behavior, often guiding strategies to increase motivation.

Maintenance Factors

In Herzberg's two-factor theory, aspects of the work environment that are necessary to prevent dissatisfaction but do not necessarily motivate employees.

Justified

Having a good reason or being shown to be right or reasonable.

Job Rotation

A workplace strategy where employees rotate between different tasks or roles to learn new skills and gain exposure to various aspects of an organization.