Which of the Following Statements Is TRUE

question 44

Multiple Choice

Which of the following statements is TRUE?

• A)For most assets,MACRS approximates straight-line depreciation.
• B)MACRS depreciates assets over a longer useful life than would be expected from the asset.
• C)MACRS allows for greater depreciation expense in the later years of an asset's life,thus reducing the taxes a company will have to pay during those years.
• D)The purpose of MACRS is to increase a company's income tax liability in the early years of a fixed asset's life.
• E)None of the above

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, usually with fixed dividends and without voting rights.

Stock Split

An action by a company to divide its existing shares into multiple new shares to boost the liquidity of the shares, though the overall value of one’s investment remains the same.

Stock Dividend

A payment made by a corporation to its shareholders in the form of additional shares, rather than cash.

Earnings Per Share

A financial metric calculated by dividing a company's net income by the number of its outstanding shares of common stock.