Double-Declining-Balance Method Is Used in the First Year When Straight-Line

question 90

Multiple Choice

Double-declining-balance method is used in the first year when straight-line should be used.This error would cause:

• A)the period's net income to be overstated.
• B)the period's net income to be understated.
• C)the period end assets to be overstated.
• D)None of these are correct.

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Definitions:

Corporation Liability

Legal and financial obligations a corporation owes to others, which can involve debts, lawsuits, or other claims against the business.

Restricted Retained Earnings

Portion of retained earnings that is not available for distribution as dividends to shareholders, often because of legal or contractual constraints.

Preferred Stock Dividends

Dividends that are paid out to holders of a company's preferred stock before any dividends are paid to common stockholders.

Common Stock Dividends Distributable

A liability account representing the amount of dividends declared by a corporation on common stock that have not yet been paid to stockholders.