Which the Following Statements Regarding Accounting for Natural Resources Is

question 147

Multiple Choice

Which the following statements regarding accounting for natural resources is INCORRECT?

• A)Natural resources are often called wasting assets because they are actually physically used up over time.
• B)When the natural resource is extracted, the entity follows an approach much like the straight-line method of depreciation to account for the production.
• C)If all of the natural resource that is extracted is regarded as sold, the amount depleted is transferred directly from long-term assets to the income statement as depletion expense.
• D)The portion of the extracted natural resource that is not immediately sold, becomes inventory.

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Definitions:

Located Close

The condition or state of being situated near a specific point of interest or within a short distance of a particular location.

Single Firm

A business or company that operates independently without affiliations to parent or subsidiary entities.

Rivalry Among Firms

Describes competition between businesses in the same industry aimed at gaining increased market share, revenues, and customer loyalty.

Customers Locked

A situation where customers are bound to a service or product, often through contracts, making it difficult for them to switch to competitors.