The Most Common Method of Recording Depletion for Accounting Purposes

question 49

Multiple Choice

The most common method of recording depletion for accounting purposes is the

• A) percentage depletion method.
• B) decreasing charge method.
• C) straight-line method.
• D) units-of-production method.

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Definitions:

Selling Price

The amount of money a buyer pays to acquire a product or service from a seller.

Absorption Costing

An accounting method that includes all production costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Markup Percentage

The percentage added to the cost of goods to cover overhead and profit, calculated as markup divided by the cost of the goods.

Selling Price

The amount of money for which a product is sold to the customer; it may include costs such as manufacturing, distribution, and markup.