If an Industrial Firm Uses the Units-Of-Production Method for Computing

question 2

Multiple Choice

If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will

• A) be constant.
• B) vary with unit sales.
• C) vary with sales revenue.
• D) vary with production.

---

Definitions:

Discount Period

refers to the time frame in which a sales discount is available to a customer, encouraging prompt payment.

Perpetual Inventory Method

An accounting approach that records inventory purchases and sales in real-time through direct changes in inventory and cost of goods sold accounts.

General Journal Entries

Recorded financial transactions that detail the exchange or transfer of value, representing the broader double-entry bookkeeping system.