In Calculating Depreciation, the Number of Years of Useful Life

question 6

Multiple Choice

In calculating depreciation, the number of years of useful life of the asset is

• A) known with certainty.
• B) an estimate.
• C) the estimated time period before repairs or maintenance will be required.
• D) based on the cost of the asset.

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Definitions:

Beginning Inventory

The value of goods available for sale at the start of an accounting period, carried over from the end of the previous period.

Inventory Units

The individual items or products that are available for sale, in production, or in stock as part of a company's inventory.

Variable Costing

Variable costing is an accounting method that includes only variable production costs (materials, labor) in product costs, excluding fixed overhead.

Unit Product Cost

The total cost to produce one unit of product, including direct materials, direct labor, and allocated overhead costs.