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Fundamentals of Financial Accounting Questions 151–155 (page: 32)

Refer to the Exhibit.



Your organization bought a machine for $50,000 at the beginning of year 1, which had an expected useful life of four years and an expected residual value of $10,000; the machine was depreciated on the straight-line basis.

At the beginning of year 4, the machine was sold for $13,000

The total amount of depreciation charged to the income statement over the life of the machine, and the amount of profit or loss on disposal was:

The answer is:

Which of the following statements about revenue is CORRECT?

Refer to the Exhibit.



At the beginning of the year, the balance on the allowances for receivables account was $5000, representing 2% of receivables. At the end of the year, receivables amounted to $150000, but it was decided that the provision should be increased to 3% of receivables.

Which of the following set of figures would result?

The answer is:

CORRECT TEXT

A business buys a new production line at a cost of $100,000. After using the line for one year a more advanced version of the line is marketed by the manufacturer. As a result the production line in operation has a market value of $ 50,000. The line is being depreciated straight line over five years.
The charge to the income statement for impairment of the production line will be

Internal controls are used to prevent errors occurring, as well as to detect errors which may have already occurred.

Which one of the following is an example of a 'prevent' control?