Word has gotten around that you know accounting and can explain it well.Jim, another of your friends has a unique business.During the summer he buys hats that cost $5.00 each and sells them at the beach for $12.00 each.Other than the cost of the hat, his only other expense last summer was $120 for parking.He sold 78 hats last summer.His accountant prepared a financial statement for him and he has several questions about the income statement.He asks:

1. I bought and paid for equipment costing $20,000.Shouldn't there be an equipment expense for $20,000 on the income statement?

Please explain the answer to this or this question?See financialstatements for details.financialstatements for details. - Alternative Formats