An Analysis of Changes in Selected Statement of Financial Position

question 103

Multiple Choice

An analysis of changes in selected statement of financial position accounts of Hierarchy Corporation shows the following for the current year:
$\begin{array} { | c | l | } \hline \text { Property, Plant, and Equipment accounts: } & \\\hline \text { Debit entries to asset accounts } & \$ 504,000 \\\hline \text { Credit entries to asset accounts } & \$ 768,000 \\\hline \begin{array} { c } \text { Debit entries to accumulated depreciation accounts } \\\text { (resulting from sale of PPE assets) }\end{array} & \$ 72,000 \\\hline \begin{array} { c } \text { Credit entries to accumulated depreciation accounts } \\\text { (representing depreciation for the current year) }\end{array} & \$ 192,000 \\\hline\end{array}$ Hierarchy's income statement for the current year includes a $9,600 gain on disposal of property, plant, and equipment. All payments and proceeds relating to purchase or sale of property, plant, and equipment were in cash.

-The amount of cash paid by Hierarchy to acquire property, plant, and equipment during the current year was:

• A) $252,000.
• B) $504,000.
• C) $724,000.
• D) $768,000.

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Definitions:

Serious Harm

A significant or profound negative impact on an individual's physical, emotional, or psychological well-being.

Authority

A right or power assigned to an individual or organization to make decisions and enforce rules.

Confirmation Bias

Confirmation bias describes the tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses, while giving disproportionately less consideration to alternative possibilities.

Availability Heuristic

This is a mental shortcut that relies on immediate examples that come to a person's mind when evaluating a specific topic, concept, method, or decision.