Gce Model Questions Vol1 2018 Financial Accounting Question 1

Practice objective / multiple choice question 1 from the 2018 Gce Model Questions Vol1 Financial Accounting examination.

Gce Model Questions Vol1 2018 Financial Accounting Objective / Multiple Choice Easy Difficulty
Question 1 GCE_MODEL_QUESTIONS_VOL1 • 2018 • FINANCIAL_ACCOUNTING • objective

A company purchases equipment for \(\text{₦}120,000\) cash. The equipment has a residual value of \(\text{₦}20,000\) and a useful life of 5 years, and the company uses straight‑line depreciation. Explain the effect of this transaction on the accounting equation and state the amount of depreciation expense for the first year.

Answer Options

A. No net effect on the accounting equation; depreciation expense = \(\text{₦}15,000\)
Correct Answer B. No net effect on the accounting equation; depreciation expense = \(\text{₦}20,000\)
C. No net effect on the accounting equation; depreciation expense = \(\text{₦}25,000\)
D. No net effect on the accounting equation; depreciation expense = \(\text{₦}30,000\)
Correct Answer
B
Correct Option:
No net effect on the accounting equation; depreciation expense = \(\text{₦}20,000\)

About This Question

This is Gce Model Questions Vol1 2018 Financial Accounting Question 1. It is one of the objective questions from the 2018 Gce Model Questions Vol1 Financial Accounting examination.

Difficulty level: Easy .

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