True or False. Place T or F in Front of Each of the Each

question 16

Essay

True or False.
Place T or F in front of each of the following statements.
1. The straight-line method of depreciation is based on the assumption that depreciation expense can be regarded as a constant function of time.
2. Plant assets should be written down (below cost) when their market value has declined temporarily.
3. The accounting profession has developed specifically recommended procedures for recording appraisal increases with respect to plant assets.
4. An asset's cost minus its accumulated depreciation equals its book value.
5. The sum-of-the-years'-digits method of depreciation ignores salvage value in the computation of an asset's depreciable base.
6. When using the double-declining balance method of determining depreciation, a declining percentage is applied to a constant book value.
7. The book value of plant assets initially declines more rapidly under decreasing-charge methods than under the straight-line method.
8. Accounting depreciation is computed by determining the change in the market value of a company's plant assets during the period under review.
9. The methods of depreciation based upon output assume that obsolescence will not significantly affect the usefulness of the asset.
10. The revision of prior periods' depreciation estimates would be disclosed on the retained earnings statement.

Interpret financial ratios to analyze a firm's financial leverage and asset management.

Calculate depreciation expense using financial ratios and given data.

Understand cash flow changes from changes in accounts receivable, inventory, and accounts payable.

Calculate net income from various financial metrics including tax rate, turnover ratios, and operating expenses.

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Definitions:

Sharpe Ratio

A measure used to evaluate the risk-adjusted return of an investment portfolio.

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean and is calculated as the square root of the variance.

Inflation

A general increase in prices and fall in the purchasing value of money over time.

Taxes

Mandatory financial charges or levies imposed by governments on individuals or entities to fund government spending and various public expenditures.