If a $1002 Item Depreciates in Value by $167 Per

question 7

Multiple Choice

If a $1002 item depreciates in value by $167 per year, how many years will it take the item to depreciate to a value of zero dollars?

• A) 3 years
• B) 4 years
• C) 5 years
• D) 6 years

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Definitions:

Accumulated Depreciation

The cumulative amount of depreciation expense recorded for an asset from the time of its acquisition.

Contra Asset

An account on a company's balance sheet that reduces the value of a related asset, such as accumulated depreciation.

Expense Account

An account that records the costs incurred by a business in the process of earning revenue, part of the company's income statement.

Adjusting Entry

A record added in the books at the closing of an accounting cycle to note any unrecorded earnings or expenditures during that time.