Assume That the Balance in Retained Earnings at the End

question 5

Multiple Choice

Assume that the balance in Retained Earnings at the end of year is $100,000, and that it decreased by 15% during the year. The balance in Retained Earnings at the beginning of the year was closest to:

• A)$120,000.
• B)$117,647.
• C)$115,000.
• D)$ 85,000.

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Definitions:

Annual Straight-Line Depreciation

A method of calculating the depreciation of an asset, spreading its cost evenly over its useful life.

Straight-Line Depreciation Rate

A method of calculating the depreciation of an asset, where the asset's cost is evenly distributed over its useful life.

Useful Life

The estimated duration an asset is expected to be economically usable, with normal wear and tear.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, representing the asset's wear and tear, deterioration, or obsolescence.