Which of the Following Is True

question 214

Multiple Choice

Which of the following is true?

• A) If using the double-declining-balance method, the total amount of depreciation expense during the life of the asset will be the highest.
• B) If using the units-of-activity method, it is possible to depreciate more than the depreciable cost.
• C) If using the straight-line method, the amount of depreciation expense during the first year is higher than that of the double-declining-balance.
• D) Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset will be the same.

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Definitions:

Cost of Money

Refers to the interest rate or the opportunity cost of borrowing or using money.

Car Dealer

A business that sells new or used cars at the retail level, typically based on a dealership contract with an automaker or sales subsidiary.

Lease

A contractual agreement where one party, the lessor, grants the other party, the lessee, the right to use an asset for a specified period in exchange for payment.

Discount Rate

A rate used to determine the present value of future cash flows; in monetary policy, it refers to the interest rate charged to commercial banks for loans from a central bank.