According to Accounting Standards, the Method of Amortization Chosen Should

question 6

Multiple Choice

According to accounting standards, the method of amortization chosen should:

• A)measure the change in an asset's value.
• B)be systematic and rational.
• C)allocate the most of the asset's cost to the early periods benefiting from its use.
• D)recognize the reduced usefulness of an asset.

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Definitions:

Combined Margin

The total margin that results from combining the gross margin and net margin of a company.

Contribution Margin Ratio

A financial metric that shows the percentage of sales revenue that is not consumed by variable costs and contributes to covering fixed costs.

Fixed Expenses

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Residual Income

The amount of income that exceeds the minimum rate of return on a project or investment.