Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which of the following statements is correct regarding a long-lived asset such as a building?

A building is reported at its current market value on the balance sheet.

A building is expensed immediately when purchased.

A building is recorded at its historical cost and depreciated over its useful life.

A building is not subject to depreciation.

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Verified step by step guidance

Understand the concept of long-lived assets: Long-lived assets, such as buildings, are tangible assets that a company expects to use for more than one accounting period. These assets are not expensed immediately but are capitalized and depreciated over time.

Clarify the historical cost principle: According to the historical cost principle, long-lived assets are recorded on the balance sheet at their purchase price, including all costs necessary to bring the asset to its intended use (e.g., purchase price, transportation, installation).

Explain depreciation: Depreciation is the systematic allocation of the cost of a long-lived asset over its useful life. This process reflects the wear and tear or obsolescence of the asset over time. Buildings are typically subject to depreciation, except for land, which is not depreciated.

Evaluate the incorrect options: (1) A building is not reported at its current market value on the balance sheet because the historical cost principle is used. (2) A building is not expensed immediately when purchased; instead, it is capitalized and depreciated. (3) A building is subject to depreciation, contrary to the statement that it is not.

Conclude with the correct statement: The correct answer is that a building is recorded at its historical cost and depreciated over its useful life, as this aligns with accounting principles and the treatment of long-lived assets.