Karuna Consulting Leased a Building on January 2, 2013

question 149

Multiple Choice

Karuna Consulting leased a building on January 2, 2013. The lease qualifies as an operating lease. The annual payments are $25,000 at the beginning of each year, and the life of the lease is 10 years. What entry would the company make on January 2, 2013?

• A)Machine 250,000 Lease Obligation 250,000
• B)Prepaid Rent 250,000 Lease Obligation 250,000
• C)Prepaid Rent 25,000 Lease Obligation 25,000
• D)No entry is necessary.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a given price.

Quantity Supplied

The cumulative volume of a specific good or service that suppliers are enthusiastic and able to sell at a given price within a set timeframe.

Price Floor

A government- or authority-set minimum price for certain goods or services, aimed at preventing prices from falling below a certain level.

Black Markets

Illegal trading of goods and services that occurs outside the official channels sanctioned by authorities.