Which of the Following Statements Is Correct When the Straight-Line

question 33

Multiple Choice

Which of the following statements is correct when the straight-line method is used to compute depreciation?

• A)The carrying value of an asset is a constant amount during the asset's useful life.
• B)Accumulated depreciation is a constant amount during the asset's estimated useful life.
• C)Depreciation Expense is a constant amount each year.
• D)The book value of an asset is an increasing amount during the asset's useful life.

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Definitions:

Depreciation

The systematic allocation of the depreciable amount of an asset over its useful life.

Balance Sheet

A balance sheet is a financial statement that provides a snapshot of a company's financial position, including assets, liabilities, and shareholders' equity at a specific point in time.

Vertical Analysis

A financial analysis method that expresses each item in a financial statement as a percentage of a base figure, facilitating ratio comparisons across companies and time periods.

Revenue Recognition Principle

An accounting principle that outlines the specific conditions under which revenue is recognized and dictates that revenue should be recognized in the accounting period in which it is earned.