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pav-90 [236]
3 years ago
11

During May 2020, a company spend $14,000 on ordinary maintenance of its delivery trucks. These maintenance costs should have bee

n recorded as debits to ‘Maintenance Expense’ but the company mistakenly capitalized these costs instead. Which of the following is true?
A. Total Assets are overstated as of May 31, 2020 and May 2020 Net Income is overstated.
B. Total Assets are overstated as of May 31, 2020 and May 2020 Net Income is properly stated.
C. Total Assets are understated as of May 31, 2020 and May 2020 Net Income is understated.
D. Both Total Assets as of May 31, 2020 and May 2020 Net Income are properly stated.
Business
1 answer:
dalvyx [7]3 years ago
5 0

Answer: A. Total Assets are overstated as of May 31, 2020 and May 2020 Net Income is overstated

Explanation:

Capitalizing the costs of the maintenance means that the $14,000 was taken to the Machinery Account which is an asset when in fact it should have been taken to the Maintenance Expense account which is an expense. This will increase the Asset account for May by $14,000 when it should not have meaning that the Asset account is now Overstated.

Net Income is acquired by deducting expenses from Sales/Revenue. The $14,000 which should never have been recorded as an Asset but instead as an expense, will mean that this Expense will not be deducted from the Net Income because it is being recognized as an Asset. This will mean that the Net Income for May will be Overstated by $14,000 which was supposed to be removed from it.

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Nadusha1986 [10]

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8 0
1 year ago
Which of the following is not included in the heading of a cover letter
eduard
Since no choices are presented, I'll just list down the parts of a cover letter.

A cover letter is a one page document that is attached to a resume. It has 5 parts.

1) The Salutation : Dear Hiring Manager,
2) The Grab - Opening Paragraph - introduction about yourself and your immediate qualification on the position you are applying
3) The Hook - Second Paragraph - examples of work performed and its results
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3 0
3 years ago
Read 2 more answers
An increase in the costs of resources or inputs of production would shift the ________.
nadya68 [22]

Answer:

C. short-run aggregate supply curve leftward

Explanation:

When the cost of production or inputs of production increase the short run supply curve shifts left because the producers are now willing to sell less at the same price because it is more expensive for them to produce, so at every price the production decreases because of which the supply curve shifts left. The long run supply curve isn't affected by an increase in costs of resources because it is the potential of the economy and an increase in costs of does not change the potential of the economy.

5 0
3 years ago
Context content and culture are
Black_prince [1.1K]

Complete Question:

Context, content and culture are:

O Important ethical concepts

O Important marketing concepts

O Corporate ethics policy

O Three dimensions of evaluating corporate gifts.

Answer:

Context, content and culture are:

O Three dimensions of evaluating corporate gifts.

Explanation:

Corporate gifts may turn out to be regarded as bribery if they are meant to induce the other party to alter their behaviors.  This is why in evaluating corporate gifts, the criteria have always included the context (the circumstances in which the gifts are given), the content (how much is given), and the culture (the accepted general practice in a particular industry, locality, or region).  Generally, corporate gifts are given either as means of showing appreciation, creating positive first impression, or returning some favors.

8 0
3 years ago
Hi-Tech, Inc., reports net income of $65.0 million. Included in that number are depreciation expense of $5.5 million and a loss
Greeley [361]

Answer:

Net Cash Flows from operating activities is $68.5 million.

Explanation:

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The net cash flows from operating activities can be calculated using the following method:

                                                                 Millions

1. Net Income                                                65

<u>Add Non Cash Deductions</u>

2. Depreciation                                             5.5

3. Loss on sale of Equipment                       1.5

<u>Add / (Less) the increase or </u>

<u>decrease in current Assets or </u>

<u>liabilities</u>

4. Increase in Trade Receivables                (2.5)

5. Increase in Trade Payables                      3.5

6. Increase in inventory                               <u> (4.5) </u>

Net Cash Flows from operating activities $68.5

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