A General Description of the Depreciation Methods Applicable to Major

question 107

Multiple Choice

A general description of the depreciation methods applicable to major classes of depreciable assets:

• A)is not a current practice in financial reporting.
• B)is not essential to a fair presentation of financial position.
• C)is needed in financial reporting when company policy differs from income tax policy.
• D)should be included in corporate financial statements or notes to the financial statements.

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Definitions:

Average Total Cost

The total cost of production divided by the number of units produced, encompassing both fixed and variable costs.

Total Variable Costs

The sum of expenses that vary directly with the level of production or sales volume.

Marginal Cost

The amount of money needed to create an additional unit of a product or service.

Average Total Costs

The total costs of production (fixed and variable) divided by the quantity of output produced.