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:

Recall Price

The price at which a company can recall its shares or bonds before their maturity date, usually at a premium.

Retained Earnings

The cumulative amount of net income earned by a company that is retained and not distributed to shareholders as dividends.

Cumulative Preferred Stock

Cumulative Preferred Stock is a type of stock that entitles its holders to receive dividends in arrears before any dividends can be paid on common stock.

Dividends in Arrears

Dividends on cumulative preferred stock that have not been paid in the period they were due.