The Purpose of the Depreciation Adjustment Is To

question 103

Multiple Choice

The purpose of the depreciation adjustment is to:

• A) spread the cost invested in an asset over its useful life.
• B) show the current market value of the asset.
• C) set up a reserve fund for purchasing a new asset.
• D) expense the full amount of the asset in the year purchased.

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Definitions:

Marginal Cost

The expenditure required to produce an additional single unit of a product or service.

Total Revenue

The total amount of money generated by a business from selling its goods or services, calculated as the unit price multiplied by the quantity sold.

Competitive Industry

An industry where numerous producers are in competition with one another, leading to a situation where no single firm has significant market power, and prices are determined by overall supply and demand.

Marginal Revenue

Marginal Revenue is the increase in revenue resulting from the sale of one additional unit of a product or service.