Grant Exchanges an Old Pizza Oven from His Business for a New

question 71

Multiple Choice

Grant exchanges an old pizza oven from his business for a new oven. In addition to the old oven, which has a basis of $10,000, Grant pays $10,000 cash. The new oven is valued at $22,000. What is Grant's recognized gain or loss due on this transaction?

• A)$- 0 -
• B)$2,000
• C)$12,000
• D)$16,000
• E)$22,000

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Definitions:

Internal Control Procedures

Systems and policies put in place by a company to ensure the accuracy and integrity of financial and accounting information, prevent fraud, and comply with laws.

Cash Receipts

Money received by a business during a set accounting period, including revenue from sales, interest, dividends, and other cash inflows.

Voucher System

A control mechanism in accounting to ensure all business transactions are properly authorized and recorded.

Liabilities

A company's legal financial debts or obligations that arise during the course of business operations, to be settled over time through the transfer of economic benefits including money, goods, or services.