The Historical Cost of an Asset Less Its Accumulated Depreciation

question 49

Multiple Choice

The historical cost of an asset less its accumulated depreciation is:

• A) Net book value (NBV).
• B) Return on equity (ROE).
• C) Return on investment (ROI).
• D) A rough measure of current replacement cost of the asset.
• E) An estimate of liquidation value of the asset.

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Definitions:

Sales Price

The amount that a customer pays to purchase a good or service from a business.

Variable Costs

Expenses that fluctuate with the level of output, including costs such as raw materials and labor.

Fixed Costs

Expenses that do not change with the level of production or sales.

Contribution Margin

The amount by which sales revenue exceeds variable costs, indicating how much revenue contributes to fixed costs and profit.