In the MACRS Depreciation Schedules,the Depreciation Percentage Is Lower in the First

question 96

Multiple Choice

In the MACRS depreciation schedules,the depreciation percentage is lower in the first year than in the second year.This is due to the fact that:

• A) the depreciation percentage increases each year.
• B) assets are assumed to be acquired at midyear.
• C) depreciation expense increases at the rate of inflation.
• D) MACRS depreciation is less attractive than straight-line depreciation.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity and operational efficiency.

Carrying Costs

Expenses associated with holding or storing inventories, including warehousing, insurance, and spoilage costs.

Cash Inflows

The total amount of money being transferred into a business, often from operations, investments, or financing.

Net Working Capital

The difference between a company’s current assets and current liabilities, indicating its short-term financial health and ability to cover short-term liabilities.