A Machine with a Salvage Value of $2,000 and a Cost

question 16

Multiple Choice

A machine with a salvage value of $2,000 and a cost of $40,000 was purchased on January 1, 2012. What is the depreciation expense for 2012 if the company uses straight-line depreciation for 10 years?

• A)$40,000
• B)$38,000
• C)$4,000
• D)$3,800

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Definitions:

Debt Management

The strategic planning and execution aimed at reducing, reorganizing, or consolidating debt to manage financial obligations more effectively.

Profitability

A measure of the efficiency and effectiveness of a company in generating profit from its operations.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects cash from credit sales by comparing net credit sales with the average accounts receivable balance.

Net Credit Sales

The total amount of sales made on credit, subtracting returns and allowances.