Question

Identify the type of adjustment that would most likely be needed. Business B purchased a piece of equipment to be used in operations for $5,000 during the middle of October. Today is December 31st, the end of the 4th quarter and financial reports are being produced. g

Answer 1

Answer:  c . Depreciation

Explanation:

When accounting for fixed assets, it is important that they are recorded at their book value to reflect the effects of being utilized. This means that depreciation needs to be charged on fixed assets.

Even though the equipment in question was only purchased 2.5 months prior to the financial reports being made, depreciation still needs to be accounted for such that the equipment is represented at its book value in the financial statement.