Equipment That Had Been Acquired Several Years Ago by a Special

question 18

Multiple Choice

Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the special revenue fund will include:

• A) A debit to Cash for $15,000.
• B) A debit to Accumulated Depreciation for $30,000.
• C) A credit to Equipment for $40,000.
• D) A credit to Other Financing Sources for $5,000.

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Definitions:

Current Liabilities

Short-term financial obligations that are due within one year or within the normal business cycle of a company.

Consolidated Balance Sheet

A comprehensive financial statement presenting the total assets, liabilities, and shareholder equity of a parent company and its subsidiaries as a single entity.

Common Shares

Equity securities that represent ownership in a corporation, granting voting rights and a share in the company's profits through dividends.

Equity Method

An accounting technique used for recording investments in which the investor has significant influence over the investee, but not full control.