At the Beginning of the Year, AAA-1 Towing Owns Trucks

question 240

Multiple Choice

At the beginning of the year, AAA-1 Towing owns trucks and buildings for a total value of $1 million.During the year, it invests $250,000 to replace towing trucks worth $230,000 destroyed in a flood and to cover $50,000 worth of depreciation.AAA-1 Towing's capital stock at the end of the year was

• A) $970,000.
• B) $1,250,000.
• C) $950,000.
• D) $1,280,000.
• E) $1,020,000.

---

Definitions:

Purchase

The acquisition of goods or services in exchange for money, representing a transaction that increases inventory or assets for a business.

Process Costing System

An accounting method used to assign production costs to units of output, typically used in manufacturing environments where products are indistinguishable from one another.

Maintenance Workers

Individuals responsible for the upkeep, repair, and maintenance of buildings, equipment, and machinery to ensure efficient operations.

Direct Labor Costs

Expenses that are directly attributable to the production of goods or services, including wages and salaries of employees directly involved in manufacturing.