Which One of the Following Statements Regarding Depreciation Is Correct

question 85

Multiple Choice

Which one of the following statements regarding depreciation is correct?

• A) The depreciation tax shield adjusts annually with the level of inflation.
• B) The real amount of annual depreciation is fixed, thus the higher the rate of inflation, the higher the depreciation tax shield.
• C) Tax law allows accelerated depreciation to be used for tax purposes.
• D) MACRS can be used for accounting purposes but not for tax purposes.

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Definitions:

ANOVA Table

A table that summarizes the sources of variance in an ANOVA test, showing the degrees of freedom, sum of squares, mean squares, F-statistic, and significance level.

NFL

The National Football League, a professional American football league consisting of 32 teams.

Standard Error

The standard deviation of the sampling distribution of a statistic, used to estimate the precision of a sample mean relative to the true population mean.

Correlation

A statistical measure that describes the extent to which two variables change together, but does not imply causation.