Which of the Statements Below Is FALSE

question 55

Multiple Choice

Which of the statements below is FALSE?

• A) Under the modified accelerated cost recovery system (MACRS) system of depreciation, the government classifies all assets into groups that are assigned specific "lives" for the purpose of depreciation.
• B) Under the modified accelerated cost recovery system (MACRS) system of depreciation, once the assigned class life is established, an adjustable percentage of the cost is expensed each year as depreciation.
• C) Under the modified accelerated cost recovery system (MACRS) system of depreciation, it can be assumed that its assigned life class is the shortest allowable recovery period for allocating the capital expenditure costs and reducing taxes.
• D) Depreciation or "expired" costs each year do not reflect cash flows because the actual purchase and installation (outflow of dollars) of the machines have already taken place.

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Definitions:

Cost-to-Retail Ratio

A method used in inventory accounting that calculates the cost of goods available for sale as a percentage of the retail price of the goods.

Net Markdowns

Net markdowns represent the reduction in the selling price of goods or products, often reflecting changes in market demand or stock clearance needs, net of any markdown cancellations.

Ending Inventory's Valuation

The process of assigning value to the inventory that is still on hand at the end of an accounting period.

Retail Inventory Method

An accounting method used by retailers to estimate their inventory's ending value by using a cost to retail price ratio.