Author Question: A city paid 40,000 for police cars with the expectation that they would have a useful life of four ... (Read 39 times)

Shelles · **on:** Jul 5, 2018

A city paid 40,000 for police cars with the expectation that they would have a useful life of four years. After three years, the city sold the cars for 3,000 . How should the city account for the sale in the General Fund?

a. debit cash for 3,000, debit accumulated depreciation for 30,000, debit loss on sale of general fixed assets for 7,000, and credit equipment for 40,000
b. debit cash for 3,000 and credit other financing source--sale of capital assets for 3,000
c. debit cash for 3,000, debit loss on sale of general fixed assets for 37,000, and credit equipment for 40,000
d. debit cash for 3,000, debit other financing uses for 37,000, and credit equipment for 40,000

Question 2

Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current assets.
a. True
b. False

Indicate whether the statement is true or false