Country Homes Company Just Recorded a Transaction in Its Books

question 224

Multiple Choice

Country Homes Company just recorded a transaction in its books.If this transaction increased the total liabilities by $16,000,then ________.

• A) assets must increase, or equity must decrease by $16,000
• B) either assets or equity must decrease by $16,000
• C) both assets and equity must each decrease by $8,000
• D) assets must decrease by $16,000

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Definitions:

Residual Value

The estimated value that an asset will have at the end of its useful life, after depreciation has been taken into account.

Double Declining Balance

A method of accelerated depreciation which doubles the depreciation rate of the straight-line method, resulting in higher depreciation expenses in the earlier years of an asset's life.

Intangible Assets

Non-physical assets that hold value, such as patents, trademarks, and goodwill.

Intangible Assets

Non-physical assets that possess value due to their intellectual or non-material nature, such as patents, trademarks, and goodwill.