Which Statement Relating to Depreciation Is True

question 46

Multiple Choice

Which statement relating to depreciation is true?

• A) Accumulated depreciation represents the amount of an asset's cost that has been transferred to depreciation expense to date.
• B) The cash account is affected by charging depreciation.
• C) Accumulated depreciation is a contra-expense account.
• D) Depreciation represents cash that can be used to replace assets when they wear out.

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Definitions:

Economies of Scale

Refers to the cost advantage that arises with increased output of a product, leading to a reduction in the per-unit cost.

Production Process

A sequence of steps or operations involved in the manufacture of goods or the delivery of services.

Minimum Efficient Scale

The smallest scale of production a firm can achieve while still taking full advantage of economies of scale.

Production Expertise

Specialized knowledge or skills in the process of creating goods or services.