What Is the Effect of Overstating 2012 Depreciation Expense

question 2

Multiple Choice

What is the effect of overstating 2012 depreciation expense?

• A)Accumulated depreciation will be understated for 2012.
• B)Net income for 2012 will be overstated.
• C)Ending retained earnings for 2012 will be understated.
• D)Ending retained earnings for 2012 will be overstated.

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Definitions:

Total Expense Ratio

The total cost of operating a fund, including management fees and administrative expenses, expressed as a percentage of the fund's average assets.

Income Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s cost.

Portfolio Beta

A measure of the volatility of a portfolio compared to the market as a whole, indicating the expected percentage change in a portfolio's value for a 1% change in the market.