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.

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Definitions:

Earnings Per Share

A financial metric calculated by dividing the company's net income by the number of its outstanding shares, indicating the profitability of a company on a per-share basis.

Return On Total Assets

A profitability ratio that measures the net income generated from total assets during a period.

Earnings Per Share

A metric that calculates a company's profit divided by its number of outstanding shares of common stock.

Price-Earnings Ratio

A financial metric used to evaluate the relative value of a company's shares, calculated by dividing the market price per share by the earnings per share.