What Effect Does This Journal Entry Have on the Accounts

question 109

Multiple Choice

What effect does this journal entry have on the accounts?

• A) Increase to Cash and increase to Land
• B) Increase to Land and decrease to Cash
• C) Decrease to Cash and decrease to Land
• D) Increase to Cash and decrease to Land

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Definitions:

Selling Expense

Costs incurred to secure customer orders and deliver the finished product to the customer, including advertising and sales staff salaries.

Product Costs

Costs that are incurred to acquire or manufacture a product, including direct materials, direct labor, and manufacturing overhead.

Depreciation

The reduction in the value of an asset over time due to wear and tear, usage, or obsolescence, this concept is often used in accounting to allocate the cost of an asset over its useful life.

Factory Equipment

The machinery and tools used in the manufacturing process within a factory setting.