Leslie started a computer software firm by investing $16 000 of her own money. She spent three-quarters of it on furniture, fixtures and operating supplies for the business. After borrowing $12 000 from First National Bank, she spent one-third of the funds on computer hardware. At that point in time what balances should be recorded in her accounting system for total assets and total expenses? Total Assets Total Expenses
A) $28 000$16 000
B) $12 000$16 000
C) $16 000 $0
D) $28 000 $0

Question

Quizplus · Accepted Answer

Leslie's initial investment was $16,000, and she borrowed an additional $12,000, making her total assets $28,000 ($16,000 + $12,000). The purchases she made (three-quarters of her own money on furniture, fixtures, and operating supplies, and one-third of the total funds on computer hardware) are considered investments into the business's assets, not expenses. Therefore, the total expenses at this point are $0, as all money spent has been capitalized as assets.

Leslie Started a Computer Software Firm by Investing $16 000