Which of the Following Is an Appropriate Journal Entry for the Initial

question 25

Multiple Choice

Which of the following is an appropriate journal entry for the initial recognition by a lessee of a finance lease arrangement?

• A) DR Leased asset: CR Bank loan
• B) DR Cash: CR Leased asset
• C) DR Lease liability: CR Leased asset
• D) DR Leased asset: CR Lease liability

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Definitions:

Average Cost Retail Inventory Method

An inventory costing method that values inventory at the average cost of goods available for sale during the period, used to estimate the inventory's cost and ending inventory value.

Cost-to-retail Percentage

A method used to estimate the ending inventory value under the retail inventory method, calculated by dividing the cost of goods available for sale by the retail price of the goods.

Employee Discounts

Reductions in price offered to employees of a company as a benefit or perk, which can apply to products or services offered by the employer.

Net Markups

The amount by which the cost of a product is increased to arrive at the selling price, after accounting for any discounts or additional charges.