Which of the following is correct when land costing $23,000 is sold for $31,000? The land was a component of property and equipment on the balance sheet.
Which of the following is correct when land costing $23,000 is sold for $31,000? The land was a component of property and equipment on the balance sheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Which of the following is correct when land costing $23,000 is sold for $31,000? The land was a component of property and equipment on the
![### Multiple Choice Question for Accounting Students
#### Select the Best Answer from the Options Below:
1. **Cost of goods sold is credited for $23,000.**
- [ ]
2. **Gain on sale of land is credited for $8,000.**
- [ ]
3. **Operating income increases $31,000.**
- [ ]
4. **Revenues are debited for $31,000.**
- [ ]
**Instructions for Students:**
- Please read each option carefully before selecting your answer.
- Ensure you understand the accounting principles behind credits and debits.
- Consider how each transaction affects the accounting equation and financial statements.
**Detailed Explanation:**
- **Option 1:** Consider whether the cost of goods sold is typically a debit or credit in journal entries.
- **Option 2:** Reflect on how a gain from the sale of land would impact the income statement and whether it should be credited or debited.
- **Option 3:** Think about the nature of operating income and how it affects the company's total income.
- **Option 4:** Review the concept of revenues and why a debit might occur for the indicated amount.
Make sure to review your accounting principles and how different types of transactions are recorded. Good luck!](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd960bb05-f8e9-458e-8dc8-ba896c5de05d%2F978c2adc-293b-47c4-ae54-340feac0474d%2F6wgarn_processed.png&w=3840&q=75)
Transcribed Image Text:### Multiple Choice Question for Accounting Students
#### Select the Best Answer from the Options Below:
1. **Cost of goods sold is credited for $23,000.**
- [ ]
2. **Gain on sale of land is credited for $8,000.**
- [ ]
3. **Operating income increases $31,000.**
- [ ]
4. **Revenues are debited for $31,000.**
- [ ]
**Instructions for Students:**
- Please read each option carefully before selecting your answer.
- Ensure you understand the accounting principles behind credits and debits.
- Consider how each transaction affects the accounting equation and financial statements.
**Detailed Explanation:**
- **Option 1:** Consider whether the cost of goods sold is typically a debit or credit in journal entries.
- **Option 2:** Reflect on how a gain from the sale of land would impact the income statement and whether it should be credited or debited.
- **Option 3:** Think about the nature of operating income and how it affects the company's total income.
- **Option 4:** Review the concept of revenues and why a debit might occur for the indicated amount.
Make sure to review your accounting principles and how different types of transactions are recorded. Good luck!
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