When an Accountant Allocates the Cost of a Piece of Equipment

question 19

Multiple Choice

When an accountant allocates the cost of a piece of equipment over a period of time,this is called

• A) discounting.
• B) appreciation.
• C) cost plus.
• D) expense designation.
• E) depreciation.

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Definitions:

Required Return

The minimum return an investor expects to achieve by investing in a particular asset, factoring in the risk associated with the investment.

Interest Rate

The proportion, in percentage, charged by a lender to a borrower for the use of assets, usually expressed on an annual basis.

Annual Interest

The amount of interest paid or earned over a one-year period, typically expressed as a percentage of the principal.

Graduate

The act of completing a course of study at a college or university, culminating in the receipt of a degree.