If a Fixed Asset with an Original Cost of $18,000

question 27

Multiple Choice

If a fixed asset with an original cost of $18,000 and accumulated depreciation of $2,000 is sold for $15,000, the company must:

• A) recognize a loss on the income statement under other expenses.
• B) recognize a loss on the income statement under operating expenses.
• C) recognize a gain on the income statement under other revenues.
• D) recognize a gain on the income statement under revenues.

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Definitions:

Personnel Costs

Personnel costs refer to the expenses associated with employing staff, including wages, benefits, training, and other related costs.

Weighted-Average Method

An inventory valuation method that calculates the cost of goods sold and ending inventory based on the average cost of all units available for sale.

Process Costing

An accounting method used to allocate costs to units of product in processes where the products are indistinguishable from each other, such as in chemical processing or food production.

Conversion Costs

The total of direct labor costs plus manufacturing overhead costs, indicating the expenditures involved in transforming raw materials into completed products.