Robert Rogers,CPA Owns a Computer Used for the Company's Business

question 115

Multiple Choice

Robert Rogers,CPA owns a computer used for the company's business.The matching principle would require that which of the following accounts appear on the income statement for the year ended December 31?

• A) Depreciation expense
• B) Service revenue
• C) Accumulated depreciation
• D) Equipment expense

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Definitions:

Valid Consideration

An essential element in the formation of a contract, referring to something of value (such as goods, services, or money) exchanged by the parties that induces them to enter into the agreement.

Illusory Consideration

An apparent promise or agreement that lacks a real commitment and therefore does not form a binding contract.

Adequacy of Consideration

An evaluation of whether something of legally sufficient value has been given in exchange for a promise or action, as part of a contract.

Fair Market Value

An estimate of the market value of a property, based upon what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the market.