During the Closing Process, Accumulated Depreciation, Equipment Will

question 5

Multiple Choice

During the closing process, Accumulated Depreciation, Equipment will:

• A)be closed to the income summary account.
• B)not be closed.
• C)be closed to the drawing account.
• D)be closed to the capital account.

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Definitions:

Depreciation

Allocation of the cost of an asset over its useful life, recognizing the reduction in value due to wear and use.

Bid Price

The price at which a buyer is willing to purchase a security, currency, or commodity.

Discount Rate

It’s the interest rate applied for determining the current value of cash flows expected in the future through discounted cash flow analysis.

Depreciation Tax Shield

A reduction in taxable income that results from taking the depreciation expense as a tax deduction, thus reducing the firm's tax liability.