Answered

What would happen if I were to buy a truck for $50,000 and expense all of it during that period, rather than handle it the way the book recommends? What would it do to my Income Statement and Balance Sheet?

Answer :

Answer:

Income from operation will decrease by $50,000

Explanation:

given data

inventory of a manufactured = 5,000 units

to find out

effect on income from operations

solution

as we know that in the absorption costing both variable cost and fixed cost are included in the cost of production

so that as under variable costing only the variable manufacturing cost are included in the cost

and

if absorption costing is used the inventory level that will be increased  by10 ×  5000 =  $50,000

so Income from operation will decrease by $50,000

so correct option is c.$50,000 decrease

Cricetus

Balance sheet as what that might be will indeed be underestimated. A further explanation is provided below.

A $50,000 automobile has been purchased. This is a level of investment. Throughout acquisition, it should not be recognized as an expense. Yearly trucking depreciation would be to be determined employing the truck's anticipated lifespan.

  • Depreciation costs, therefore, should have been computed annually and should be reported throughout the statement of financial position. The truck must be reflected minus cumulative depreciation at such market rates somewhere in the accounting records. If somehow the truck gets charged for the purchasing year as well, then the operating earnings of the reporting quarter of the company would decrease dramatically.
  • The truck wouldn't have been reflected on the balance sheet even though it stated at the cost the year of the acquisition.

So the preceding response is correct.

Learn more about the income statement here:

https://brainly.com/question/14088212

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