Art Works as a Private Accountant for Conwell AeroSpace

question 108

Multiple Choice

Art works as a private accountant for Conwell AeroSpace.He currently is considering the choice of an amortization method for some new manufacturing equipment.Art should realize that:

• A)generally accepted accounting practices only allow one amortization method on equipment.
• B)the choice of amortization methods will affect the value of assets on the balance sheet,but will have no impact on net income.
• C)an amortization method that results in a greater amortization charge this year will cause the company's reported net income to be lower.
• D)his choice will have no real impact on the firm's financial statements because amortization is not a true expense,it is simply an information item on the annual report.

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Definitions:

Net Operating Income

The profit a company generates from its normal business operations, excluding extraordinary items and expenses like taxes and interest.

Break-even

The point at which total revenues equal total costs, resulting in no net profit or loss for a business.

Monthly Dollar Sales

The total revenue generated from sales in a particular month measured in dollars.

Selling Price

The amount of money a customer pays to purchase a product or service.