June Smith, a process engineer, has sold her $15-$year patent for a new etching process to Silica Labs, Inc. In return, she has received $$500,000$ in cash and, based on its value on the sale date, $$200,000$ in common stock in Silica Labs. The stock is forecasted to double in market value over the next two months. How would this transaction be recorded by Silica Labs?

a$)$ Debit patent account $$700,000$; credit cash $$500,000$; credit common stock $$200,000$

b$)$ Debit cash $$500,000$; debit common stock $$200,000$; credit patent account $$700,000$

c$)$ Debit cash $$500,000$; credit patent account $$500,000$

d$)$ Debit patent account $$500,000$; credit cash $$500,000$

Annie's Fitness sells a set of free weights to a customer for which Annie's had paid $$750.$ Which one of the following statements describes the most appropriate accounting for the transaction?

a$)$ Debit cost of goods sold expense $$750$; credit cash $$750$

b$)$ Debit inventory $$750$; credit cost of goods sold expense $$750$

c$)$ Debit cost of goods sold expense $$750$; credit inventory $$750$

d$)$ Debit inventory $$750$; credit accounts payable $$750$

Lucky Lee, a video$-$game store in New York city, purchases a game machine directly from Taiwan for $$30,000.$ In the U$.$S$.,$ the same machine will probably cost at least $$36,000.$ Pick the most appropriate accounting action for Lucky Lee:

a$)$ Record the machine at $$36,000$

b$)$ Record the machine at $$30,000$

c$)$ Record the machine for $[\frac{\text{\$}30,000+\text{\$}36,000}{2}]=$$$33,000$

d$)$ Have the machine examined by an independent appraiser and record it at the appraised value

Which one of the following is an item of owners' equity?

a$)$ Bank loan

b$)$ Suppliers' monetary claims

c$)$ Prepaid expenses

d$)$ Earnings generated by the entity

Complete the following sentence: The Conservatism Concept directs an entity to consider recognizing a liability when it is

a$)$ absolutely certain economic resources may be sacrificed in the future

b$)$ remotely possible economic resources may be sacrificed in the future

c$)$ reasonably possible economic resources may be sacrificed in the future

d$)$ reasonably certain economic resources may be sacrificed in the future