A Truck Costs $9,200 with a Residual Value of $1,000

question 7

Multiple Choice

A truck costs $9,200 with a residual value of $1,000. It is estimated that the useful life of the truck is four years. The amount of depreciation expense in year 2 using the declining-balance method at twice the straight-line rate is:

• A) $2,300
• B) $4,600
• C) $3,200
• D) $6,400
• E) None of these

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Definitions:

Return On Total Assets

A financial metric that measures the efficiency of a company in generating profits from its total assets.

Interest Expense

The cost incurred by an entity for borrowed funds, reflected as a finance charge on the income statement.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenue.

Return On Equity

This is a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how much profit a company generates with the money shareholders have invested.