3. Accrual Accounting Concepts
Adjusting Entries: Depreciation
Multiple Choice
Multiple ChoiceOn January 1, Super Car Wash purchases a brand new auto-washing machine on account for $40,000. The company expects the machine to last eight years. The company chose the 'straight-line' method to depreciate the asset, expecting no salvage value. The adjusting entry at the end of the first year would include:
A
Debit Depreciation Expense $5,000; Credit Accumulated Depreciation $5,000
B
Debit Accumulated Depreciation $5,000; Credit Depreciation Expense $5,000
C
Debit Depreciation Expense $40,000; Credit Accumulated Depreciation $40,000
D
Debit Accumulated Depreciation $40,000; Credit Depreciation Expense $40,000
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