Depreciation Is

question 15

Multiple Choice

Depreciation is:

• A) the process of systematically and rationally allocating the cost of a fixed asset over its useful life.
• B) an accumulation of funds to replace the related plant asset.
• C) the difference between the replacement cost and salvage value of an asset.
• D) the cash allocated each period to maintain a plant asset.

---

Definitions:

Normal Goods

Goods for which demand increases as the income of consumers increases and vice versa, showing a direct relationship between income and demand.

Demand Schedule

A list or table showing how much of a good or service consumers will want to buy at different prices.

Elasticity

The degree to which the demand or supply of a product responds to changes in price or other factors, indicating how adjustments in price can influence market dynamics.

Income Elasticity

A measure of how much the demand for a good will change in response to a change in consumers' income.