On August 1, Central Computers, Inc

question 57

Multiple Choice

On August 1, Central Computers, Inc. purchased thirty computer chips, on account, from a company located in Taiwan for 500,000 Taiwan dollars. On that date the Taiwan dollar is worth $0.040. On September 1, when the Taiwan dollar was worth $0.038, payment was made. The journal entry to record the payment on September 1 would include a:

• A) debit to Accounts Payable $19,000.
• B) debit to Foreign-Currency Transaction Loss $1,000.
• C) credit to Foreign-Currency Transaction Gain $1,000.
• D) credit to Cash $20,000.

---

Definitions:

Accumulated Depreciation

Accumulated depreciation represents the total depreciation expense that has been recorded against a fixed asset from the time it was acquired until the present day.

Current Year

The period of time from January 1 to December 31 of the present calendar year.

Depreciation Expense

The distribution of a tangible asset's cost throughout its lifespan.

Operating Activities

Business activities related directly to the production and delivery of goods and services.