1) Indicate how each event affects the elements of financial statements. Use the
following letters to record your answer in the box shown below each element. You do
not need to enter amounts.
An asset purchased for $14,000 that had a $4,000 salvage and a 4-year life was
depreciated using straight line depreciation for two years. At the beginning of the third
year, the total useful life of the asset is revised to 5 years. Show how the revised
depreciation expense will affect the financial statements.
2) Indicate how each event affects the elements of financial statements. Use the
following letters to record your answer in the box shown below each element. You do
not need to enter amounts.
On November 1, 2012, Hardin Company accepted a credit card as payment for $2,000
of services rendered to one of its customers. Assume the credit card fee of 3% is
recorded on the date of the sale. Show the effect of the sale and credit card fee on
Ulmer’s financial statements.
3) Describe how the unadjusted rate of return for a capital investment is calculated.
Should it be based on the net cost of the investment or the average investment?
4) Matching. Select the term from the list provided that bests matches each of the
following descriptions or definitions:
5) What are outsourcing decisions? What are the potential pitfalls or dangers from
deciding to outsource?