A Company Purchased a Computer on July 1, 2015 for $50,000

question 11

Multiple Choice

A company purchased a computer on July 1, 2015 for $50,000. Estimated useful life of the computer was 5 years and it has no residual value. Which of the following methods should be used to best match its expense against the revenue it produces?

• A)the units-of-production method
• B)the straight-line method
• C)the double-declining-balance method
• D)the first-in, first-out method

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Definitions:

Adjusting Entries

Journal entries made at the end of an accounting period to update account balances before preparing financial statements.

Financial Statements

Documents that provide an overview of a company's financial condition, including the balance sheet, income statement, and cash flow statement.

Journalized

The process of recording transactions in a journal before they are posted to the general ledger in accounting.

Income Summary Account

A temporary account used in the closing process that aggregates all income and expense accounts to determine net income or loss for a period.