Everything Else Remaining the Same, a Decrease in Expected Future

question 111

Multiple Choice

Everything else remaining the same, a decrease in expected future income ________ current consumption expenditure and ________ saving.

• A)increases; increases
• B)increases; decreases
• C)decreases; increases
• D)decreases; decreases
• E)does not change; does not change

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Definitions:

Double-declining-balance Method

A form of accelerated depreciation where an asset’s book value is decreased at double the rate of its straight-line depreciation.

Straight-line Method

A depreciation method that allocates an equal amount of depreciation expense for an asset over its useful life.

Salvage Value

The estimated residual value of an asset at the end of its useful life, usually considered for depreciation calculations.

Depreciation Method

A systematic approach used to allocate the cost of a tangible asset over its useful life.