Question

Burr Publishers purchased a building on March 20, 20Y1, for $160,000. Other amounts related to this purchase are as follows:

Answer 1

Answer:

1. Which amount related to this purchase should be recorded in the accounting records?

• d. 160,000.

According to the historical cost principle, assets must be recorded at their original purchase price, only accumulated depreciation can adjust their value.

2. The resources owned by a business are its _____.

• c. assets.

Assets are all the resources a business uses to carry out their normal business activities and operations.

3. The rights and claims of creditors on a company's assets are represented by _____.

• a. liabilities.

Liabilities represent all the debts that a company has.

4. Which element of the accounting equation represents the rights of owners?

• b. owner's equity.

Equity refers to the part of a company owned by its stockholders or owners. A company can finance itself through all equity, or it can have a mixed financing structure with equity and debt (liabilities). The investment made by the owners of a company is represented by the equity part of the balance sheet.