Because the Number of Shares of Common Stock Outstanding During

question 12

True/False

Because the number of shares of common stock outstanding during the year can fluctuate, computing return on common stockholders' equity is not a useful indicator of profitability.

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Definitions:

Depreciation Expense

The organized allocation of a tangible asset's expenditure over its life of usefulness.

Straight-Line Method

A method of depreciation that allocates an equal amount of the asset's cost to each accounting period over its useful life.

Depreciation Expense

Apportioning the cost of a concrete asset over its duration of use.

Units-Of-Activity

A depreciation method that allocates expense based on the actual usage or activity level of an asset.