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Steve Is in Charge of Accounting for the Purchase of Equipment

question 45

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Steve is in charge of accounting for the purchase of equipment at Cal Works, Inc. The company has a policy that all expenditures greater than $1,000 (1% of total expenditures) have to be capitalized; less than $1,000 expensed. Steve is under pressure to report high earnings. He takes one $600 and $900 expenditure, adds them together, and records a capital expenditure for $1,500. Which of the following reasons and rationalizations might Steve use for his action:

Analyze situations where actual performance deviates from standards and decide on appropriate corrective actions.
Understand the concept and application of Production Possibilities Frontiers (PPF) in illustrating trade-offs and opportunity costs.
Grasp the foundational assumptions of the PPF model including fixed technology and resources.
Comprehend the definition and calculation of opportunity cost and its significance in economic decision-making.

Definitions:

Extern

The extern keyword in C and C++ is used to declare a variable or function in another file, indicating that its definition will be found elsewhere.

Source Code

The original code written by a programmer in a high-level programming language before it is compiled into machine code.

Declaration Statement

A statement in programming that specifies the type and possibly the initial value of one or more variables or constants.

Extern

A keyword in C and C++ programming languages used to declare a variable or function in another file.

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