Which of the Following Is Not True Regarding Depreciation

question 30

Multiple Choice

Which of the following is not true regarding depreciation?

• A) depreciation allocates the cost of a fixed asset over its estimated life.
• B) depreciation expense reflects the decrease in market value each year.
• C) depreciation is an allocation not a valuation method.
• D) depreciation expense does not measure changes in market value.

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Definitions:

Predetermined Overhead

An estimated rate used to allocate overhead costs to products or services based on expected activities and costs.

Direct Materials

Materials that can be directly linked to the production process and form a fundamental component of the final product.

Direct Labor-Hours

The cumulative hours that employees actively participating in manufacturing processes have worked.

Predetermined Overhead

An estimated rate used in manufacturing to allocate overhead costs to products or services based on a certain activity measure.