In Accounting, Depreciation Refers to The

question 122

Multiple Choice

In accounting, depreciation refers to the:

• A)method of spreading the cost of an asset over its useful life.
• B)method of declining the market value of an asset to its book value.
• C)method of estimation of an asset's current market value.
• D)process of sale of a used asset.

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Definitions:

Conversion Costs

The costs required to convert raw materials into finished products, including labor and manufacturing overhead.

Equivalent Units

A concept used in cost accounting to express the amount of goods produced in terms of complete units.

Work In Process

Items or inventory that are partially completed in the manufacturing process, not yet ready for sale.

Conversion Costs

The total expenses of direct labor plus the manufacturing overheads used in transforming raw materials into completed products.