Which of the Following Is INCORRECT Regarding Depreciation

question 61

Multiple Choice

Which of the following is INCORRECT regarding depreciation?

• A) It is not a matter of valuation.
• B) It is part of the matching of revenues and expenses.
• C) It is a means of cost allocation.
• D) It is an attempt to reflect the fair market values of the related assets.

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Definitions:

Borrowing Costs

Expenses incurred by an entity for borrowing funds, including interest, amortization of discounts or premiums on debt, and other related costs.

Agency Theory

The theory that deals with problems caused by separating ownership from control in the modern corporation.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another when entrusted with care of property, finances, or other responsibilities.

Debt Contracts

A legal agreement specifying the conditions under which money is borrowed and must be repaid by the borrower.