A Company Expects to Use Equipment That Cost $48,000 for Ten

question 25

Multiple Choice

A company expects to use equipment that cost $48,000 for ten years and then sell it for $6,000.Using the straight-line method,the company should report depreciation for the equipment of:

• A)$4,200 per year.
• B)$8,400 per year.
• C)$4,800 per year.
• D)$9,600 per year.

---

Definitions:

Operating Expenses

Costs associated with the day-to-day functions of a business, excluding production costs.

Gross Margin

Gross margin is a financial metric that measures the difference between revenue and the cost of goods sold (COGS), divided by revenue.

Accounts Receivable Turnover

A ratio that measures how effectively a company collects its receivables, calculated by dividing total net sales by the average accounts receivable.

Inventory Turnover Ratio

A metric indicating how often a company's inventory is sold and replaced over a specific period, useful in evaluating the efficiency of inventory management.