Net Income Is Allocated to Which Two Items

question 127

Multiple Choice

Net income is allocated to which two items?

• A) Shareholders' equity and cash.
• B) Paid-in surplus and dividends.
• C) Taxes and dividends.
• D) Paid-in surplus and cash.
• E) Retained earnings and dividends.

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Definitions:

Depreciation Expense

The allocation of the cost of an asset over its useful life, reflecting the decrease in value of the asset over time due to usage, wear and tear, or obsolescence.

Telephone System

A communication network designed for the purpose of transmitting voice over distances.

Useful Life

The estimated duration an asset is expected to be functional and valuable for, used for depreciation calculations.

Salvage Value

The predicted resale value of an asset at the close of its effective life.