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The correct options of this multiple choice question (mcq) are C, D, E and F as for the calculation of Depreciation, we need the following: (i). Cost of the Asset Assets are recorded on balance sheet at Historical Cost i.e., the cost at which the fixed asset was, firstly purchased. This cost includes any additions or any cost incurred to bring the assets into its useable conditions so that these can be used for business operations. For example, If a machinery purchased at the initial cost of $4,000. Wages paid $1,000 for the installation of machinery, then the cost of machinery is equal to $5,000 ($4,000 + $1,000). (ii). Useful Life The life of non-current asset during which it is in its usable condition to operate the business operations efficiently and effectively. For example, if the plant & machinery has useful life of 10 years, then, we say that it is usable for business activities and operations for 10 years. (iii) Residual or Salvage Value The value of fixed asset which...

The option A is not related with Plant Assets (PA) as the useful life of office equipment is less than one year while plant assets are used in the business operations for more than one year. The option B shows office equipment used in the business which is classified under PA. The option C is also correct as Land held for expansion purpose is considered under PA, as it will be utilized for business operations i.e., in the extended area of land, it is used for business operations for long-term benefits or for more than one year, so land is a PA. The option D is also correct choice here as Building used during the business operations to generate revenue is classified as PA. The option E is also correct one as anything, such as warehouse, situated on land is treated as PA as it becomes the part of it. The option F is incorrect choice as land held for investment purposes is not used in the business operations but to get a return of investments on it i.e., land is used for rental inco...

The correct answer of this multiple choice question (mcq) is E, as proved below: On 31 st December, the company is liable to pay salary of $1,200 to its employees as these are earned by the employees by rendering / performing the services to the company / corporation for the current accounting period according to Accrual Basis of Accounting . So, the following adjusting entry is recorded as shown below:                                   Salaries Expense (SE) a/c $1,200                                                                            Salaries Payable a/c $1,200                                          ...

Initially, On July 1 of the current calendar year, when the Olive Company paid cash for management services, it is recorded as a Prepaid Expense (Management Fee Paid In Advance) and as an asset as it is the company’s policy to do so. The journal entry to management fee paid in advance is shown below:           Prepaid Expense a/c / Management Fee Paid In Advance a/c $7,500                                                                                                               Cash a/c $7,500                                (Expense Paid In Advance For Two Year Management Services) Calculation Of E...

Here, we are required to calculate Net Income (NI) of the business of Grace company for the current accounting period Under Cash Basis Of Accounting And Accrual Basis Of Accounting . (i). Net Income Under Cash Basis Of Accounting (CBA) Given: Total Revenues = $52,000 Total Expenses = $31,000 As we know that formula used for the calculation of Net Income is:   Net Income - Total Revenues - Total Expenses By Putting the Values, we have: Net Income = $52,000 - $31,000 = $21,000 So, the correct answer under cash basis of accounting is $21,000, i.e., the correct option of this multiple choice question is B.

The correct answer of this multiple choice question (mcq) is C, as Rent Expense (RE) for two months is $7200 i.e., $3,600 + $3,600 = $7,200. Explanation: Rent (R) for 1 Month = Total Amount of R / 3 = $10,800 / 3 = $3,600 Here, we need to find out RE for 2 months from 1 st September to 31 st October, so RE for 2 months = $3,600 X 2 = $7,20

The correct options of this multiple choice question are D and H, as Accrued Expenses or Expenses Owing are current liabilities which shows those Expenses (Exp.) which are incurred by the business but the payment is still not paid. So, the business is liable to pay for the benefits or services received. Accrued expenses are shown on liabilities & equity side on balance sheet under current liabilities heading. When the company paid the full payment, accrued expenses are closed and it will no longer to be shown on balance sheet. Dividend is not an expense for the business as it is not used for conducting or operating the daily business activities. It is paid out of the profits which the business earned during the period. It is a share of return of the investments of shareholders who invested in the business, so it is a Contra Equity Account. Once announced in Annual General Meeting (AGM), the company is liable to pay to its shareholders. It is shown in the statement of retaine...