On January 2, 2004 a Repair Cost of $2,000 Was

question 39

Multiple Choice

On January 2, 2004 a repair cost of $2,000 was incorrectly debited to the equipment account. Equipment is being depreciated on a straight-line basis over a 10-year life with salvage value of 10 percent. The correcting entry for the calendar year end company, on January 20, 2007 (the date the error was discovered, after closing entries had been recorded for 2006) would include a:

• A) credit to accumulated depreciation for $1,080.
• B) credit to retained earnings for $2,000.
• C) debit to equipment for $2,000.
• D) debit to retained earnings for $1,460.

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Definitions:

Conservation Of Matter

A fundamental principle of classical physics that states that matter cannot be created or destroyed in an isolated system.

Abstract Terms

Words that represent ideas, concepts, or qualities that are not directly linked to sensory experiences.

Perspective

The art of delineating solid objects on a two-dimensional surface to give the right impression of their height, width, depth, and position in relation to each other.

Imaginative Play

A form of play in which children use their imagination to create scenarios and roles, often involving make-believe.