A Firm Purchases an Asset for $50,000 and Estimates That

question 9

Multiple Choice

A firm purchases an asset for $50,000 and estimates that it will have a useful life of five years and a salvage value of $5,000. Under the straight-line method, the balance in the accumulated deprecation account, after the second year, will be

• A) $9,000.
• B) $18,000.
• C) $10,000.
• D) $20,000. 18000 = 9000 x 2.

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Definitions:

Adjusting Journal Entry

An accounting record entered at the closing of a financial period to distribute profits and losses to the correct period.

Five-Day Week

A work schedule that typically consists of five eight-hour days, totaling 40 hours, usually from Monday to Friday.

Biweekly Salaries

Salaries that are paid every two weeks, totaling 26 payments over the course of a year.

Payday

Payday refers to the specific day on which an employer distributes wages or salaries to employees.