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    Accounting questions: Define revenues, accumulated depreciat

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    Please select the correct answer:

    1. Revenues are:
    a. increases in net assets from occasional sales of equipment.
    b. increases in net assets from selling common stock.
    c. cash receipts.
    d. increases in net assets from selling a product.

    2. Accumulated depreciation on a balance sheet:
    a. Represents the portion of the cost of an asset that is assumed to have been "used up" in the process of operating the business.
    b. Is part of owners' equity.
    c. Recognizes the economic loss in value of an asset because of its age or use.
    d. Represents cash that will be used to replace worn out equipment.

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    Solution Preview

    Revenue are services or products provided to customers (regardless of when this is settled in cash) so Pick D.
    A: This is a gain on sale of long term assets (non-operating item)
    B: This is issuing stock (not a gain ever)
    C: Increase in ...

    Solution Summary

    Discussion tells you which to pick and why but that's not all. The response also tells you why the others are not suitable.