What Is Depreciation

question 6

Multiple Choice

What is depreciation?

• A)the decline in value of a future good due to the time we have to wait to receive that good
• B)the decline in value of expected future income, due to inflation
• C)the tendency of money in a bank account to lose value over time
• D)the loss in an asset's value over time
• E)the accumulation of money in an interest-bearing account over time

---

Definitions:

Alternative Minimum Tax

A parallel tax system designed to ensure that individuals and corporations that benefit from certain exemptions, deductions, or credits pay at least a minimum amount of tax.

Corporation

A legal entity that is separate and distinct from its owners, capable of owning property, entering into contracts, and being sued.

AMT Income

Income calculated for the Alternative Minimum Tax, which ensures high-income earners pay a minimum amount of tax.

Subchapter S Status

A tax status elected by qualifying small businesses where income, losses, deductions, and credits flow through to the shareholders, preventing double taxation.