Question

The Diner disposed of no property or equipment in 20X9. Its balance sheets for the beginning and end of 20X9 show an increase in the property and equipment asset account. The difference in these account balances must be due to:

1) financing activity
2) property or equipment purchases
3) profits earned in daily operations with a piece of equipment
4) sale of investments

Answer 1

The difference in the property and equipment asset account balances on the balance sheets for the beginning and end of 20X9 indicates an increase in property and equipment, which can only be due to property or equipment purchases.

Step-by-step explanation:

The difference in the property and equipment asset account balances on the balance sheets for the beginning and end of 20X9 indicates that there was an increase in the value of property and equipment. The difference in the property and equipment asset account balances on the balance sheets for the beginning and end of 20X9 indicates an increase in property and equipment, which can only be due to property or equipment purchases.

This increase can only be attributed to property or equipment purchases, as it does not involve financing activities, profits earned in daily operations, or sale of investments.