Which of the Following Is Not a Difference Between the Accounting

question 69

Multiple Choice

Which of the following is not a difference between the accounting treatment for depreciation and cost depletion?

• A) Depletion applies to natural resources while depreciation applies to plant and equipment.
• B) Depletion refers to the physical exhaustion or consumption of the asset while depreciation refers to the wear, tear, and obsolescence of the asset.
• C) Many formulas are used in computing depreciation but only one is used to any extent in computing depletion.
• D) The cost of the asset is the starting point from which computation of the amount of the periodic charge is made to operations for depreciation, but the fair value reassessed each year as the starting point for the periodic charge for depletion.

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Definitions:

Average Accounts Receivable

The mean amount of money owed to a company by its customers over a specific period, indicating the efficiency of credit policies.

Net Sales

The revenue generated from sales transactions after deducting returns, allowances for damaged or missing goods, and discounts provided to customers.

Profit Margin

A financial metric that measures the amount by which revenue from sales exceeds costs in a business, expressed as a percentage.

Net Income

The total profit (or loss) of a company after all expenses and taxes have been subtracted from total revenues.