The Calculation of Depreciation Using the Diminishing-Balance Method

question 123

Multiple Choice

The calculation of depreciation using the diminishing-balance method

• A)ignores residual value in determining the amount to which a constant rate is applied.
• B)multiplies a constant percentage times the previous year's depreciation expense.
• C)yields an increasing depreciation expense each period.
• D)multiplies a diminishing percentage times a constant carrying amount.

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Definitions:

Statement Of Cash Flows

A financial document that provides a summary of a company's cash inflows and outflows over a specific period.

Indirect Method

A technique used in cash flow statements where net income is adjusted for changes in balance sheet accounts to calculate cash flow from operating activities.

Operating Activities

Actions related to the day-to-day functions of a business that directly affect its cash inflows and outflows, such as sales, purchase of inventory, and payment of salaries.

Cash Dividends

Cash dividends refer to the distribution of profits made by a company to its shareholders in the form of cash.