Which One of the Following Statements Is True

question 37

Multiple Choice

Which one of the following statements is true?

• A)Using straight-line depreciation for all newly acquired assets when double-declining-balance depreciation was used in the past does not require a cumulative-effect adjustment.
• B)An obvious error in recording depreciation expense in a prior year should be corrected by adjusting the current year's net income.
• C)A change from straight-line to sum-of-the-years'-digits depreciation should be handled prospectively.
• D)Changes in depreciation estimates are prior-period adjustments.

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Definitions:

Loanable Funds

The market where savers supply funds for loans to borrowers, often facilitated by financial institutions, impacting the interest rates and investment in the economy.

Government Budget Deficit

The financial situation where a government's expenditures exceed its revenues within a specific fiscal period, leading to borrowing or debt accumulation.

National Saving

The total income in an economy that remains after deducting consumption expenditures and government spending.

Interest Rate

The fraction of a quantity of money levied for borrowing it, often shown as a yearly percentage rate.