Select the Entry Which Correctly Records the Purchase of a Building

question 12

Multiple Choice

Select the entry which correctly records the purchase of a building for $300 000 financed by a $100 000 cash deposit with the balance payable via a 20 year, 8% mortgage. Ignore GST.

• A) DR buildings $100 000; CR bank $100 000
• B) DR buildings $300 000; CR bank $300 000
• C) DR buildings $300 000; CR bank $100 000; CR mortgage $200 000
• D) DR buildings $300 000; CR capital $300 000

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Definitions:

Large Firms

Refers to companies with a high market capitalization, indicating their large size in terms of total asset value and overall market presence.

Reversal Effect

The tendency of poorly performing stocks and well-performing stocks in one period to experience reversals in following periods.

Buy Bonds

The act of purchasing bonds, which are debt securities, as a form of investment.

Buy Stocks

The action of purchasing shares in a company, thereby gaining a portion of ownership in that company.