Which One of the Following Statements Is Not True

question 57

Multiple Choice

Which one of the following statements is not true?

• A)Depletion may be credited either to Accumulated Amortization or directly to the asset account.
• B)If statutory depletion is used for tax purposes, it must also be used for financial reporting purposes.
• C)Depletion costs can be added directly to inventory.
• D)The total depletion charges for income tax purposes over the life of an asset may exceed the cost of the asset.

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Definitions:

Cost of Goods Sold

Direct expenditures associated with the process of producing goods for sale by a company, which include materials and labor.

Average Inventory

The mean value of inventory over a certain period of time, calculated to assess inventory levels and turnover.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its customers by comparing net credit sales to average accounts receivable.

Net Credit Sales

The total revenue from sales made on credit, minus returns and allowances, over a specific period.