Use of the Sum-Of-The-Years'-Digits Method

question 99

Multiple Choice

Use of the sum-of-the-years'-digits method

• A)results in residual value being ignored.
• B)means the denominator is the years remaining at the beginning of the year.
• C)means the book value should not be reduced below residual value.
• D)all of these.

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Definitions:

Discount Rate

The interest rate charged by central banks on loans and advances to commercial banks and other financial institutions.

Reserve Requirements

Reserve requirements are central bank regulations that set the minimum amount of reserves that commercial banks must hold, either in their vaults or deposited with the central bank, as a percentage of their deposit liabilities.

Central Bank

An institution that manages a state's currency, money supply, and interest rates.

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulation of financial institutions, and maintenance of financial stability.