A Benefit of Using an Accelerated Depreciation Method Is That

question 85

Multiple Choice

A benefit of using an accelerated depreciation method is that:

• A)It is preferred by the tax code.
• B)It is the simplest method to calculate.
• C)It yields larger depreciation expense in the early years of an asset's life.
• D)It yields a higher income in the early years of the asset's useful life.
• E)The results are identical to straight-line depreciation.

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Definitions:

Variable Costing

A cost accounting method that encompasses solely variable costs involved in production (direct materials, direct labor, and variable manufacturing overhead) for product cost calculation.

Contribution Format

A type of income statement layout that separates fixed costs from variable costs to highlight the contribution margin.

Absorption Costing

An accounting method that includes all manufacturing costs, both fixed and variable, in the cost of a produced unit.

Income Statement

A financial statement that shows a company's revenues, expenses, and profit over a specific period, typically a quarter or year.