Which One of the Following Statements Is True

question 50

Multiple Choice

Which one of the following statements is true?

• A)The activity method of computing depreciation could result in zero depreciation expense in some periods of time.
• B)If the activity method is in use, residual value should not be subtracted from cost to determine the depreciation base.
• C)The activity method produces a constant unit cost of depreciation.
• D)The activity method should be used when the service life of the asset is affected mostly by the passage of time.

---

Definitions:

Four-firm Concentration Ratio

A measurement that indicates the combined market share of the four largest firms in an industry, used to assess the degree of competition within the market.

Herfindahl Index

A measure of market concentration that is used to determine the amount of competition among firms within an industry.

Import Competition

The competition between domestic products and foreign products in a domestic market, affecting local industries.

Herfindahl Index

A measure of the concentration of industries or markets, calculated as the sum of the squares of the market shares of the largest firms, used to assess the extent of competition.