Which of the Following Statements About Depreciation Is Correct

question 1

Multiple Choice

Which of the following statements about depreciation is correct?

• A) Depreciation is subtracted from cost of goods sold to calculate net income.
• B) When depreciation expense is incurred, cash balances are reduced.
• C) Depreciation expense does not affect net income.
• D) Depreciation reduces the book value of assets.

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Definitions:

Scatterplot

A type of graph used in statistics to display values for two variables for a set of data, showing how much one variable is affected by another.

Variables

Entities that can assume different values or categories in a study or experiment, influencing the outcomes of statistical analyses.

Regression Model

A statistical approach to modelling the relationship between a dependent variable and one or more independent variables.

Residual Value

The estimated salvage value of an asset at the end of its useful life.