The Depreciation Method That Charges the Same Amount of Expense

question 60

Multiple Choice

The depreciation method that charges the same amount of expense to each period of the asset's useful life is called:

• A) Units-of-production depreciation.
• B) Modified accelerated cost recovery system (MACRS) depreciation.
• C) Accelerated depreciation.
• D) Declining-balance depreciation.
• E) Straight-line depreciation.

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Definitions:

Cash Equivalents

Liquid assets that can be quickly turned into a specific amount of cash and have initial maturity times of no more than three months.

Cash Ratio

A financial ratio indicating how well a company can cover its short-term obligations using its liquid assets.

Current Ratio

A financial metric that evaluates a firm's capacity to meet its short-term liabilities, which are due within a year.

Total Current Assets

The sum of all assets of a company that are expected to be converted into cash or used within one year or within the operating cycle.