The Following Information Has Been Gathered for Major Properties Co

question 165

Essay

The following information has been gathered for Major Properties Co. to assist in preparing its year-end adjusting entries at December 31:
(a) The company has earned $2,500 of rental revenue that has not yet been received or recorded.
(b) Major had previously recorded $3,200 of unearned rental revenue. At year-end, $1,500 of this amount has been earned.
(c) Depreciation on equipment for the year is $7,800.
(d) Employees have earned but have not yet been paid $2,750 in salaries.
Identify which of the above accounting adjustment would be reversed assuming Major Properties Co. uses reversing entries.

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Definitions:

NPV

Net Present Value, a method used in capital budgeting to assess the profitability of an investment or project, calculated by subtracting the present values of cash outflows from the present values of cash inflows over a period of time.

Break-Even Analysis

A calculation to determine the point at which revenue received equals the costs associated with receiving the revenue.

Capital Budgeting

The process of planning and managing a company's long-term investments in projects and assets.

What-If Questions

Hypothetical questions used to explore the effects of changes in variables or conditions, often used in planning and decision making.