Failure to Record Depreciation Expense at the End of an Accounting

question 47

Multiple Choice

Failure to record depreciation expense at the end of an accounting period results in

• A) understated income.
• B) understated assets.
• C) overstated expenses.
• D) overstated assets.

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Definitions:

Marginal Benefit

The boost in pleasure or utility a person gets from purchasing one more unit of a product or service.

Output

The aggregate output of products or services generated by an enterprise, sector, or economic system over a defined time frame.

Positive Externality

A benefit obtained without compensation by third parties from the production or consumption of sellers or buyers. Example: A beekeeper benefits when a neighboring farmer plants clover. Also known as an external benefit or a spillover benefit.

Spillover Benefit

A positive effect experienced by bystanders or other parties not directly involved in the production or consumption of a good or service.