Choose the Statement About Depreciation That Is Correct

question 10

Multiple Choice

Choose the statement about depreciation that is correct.

• A)Yearly depreciation will always be higher using the straight-line method.
• B)At the end of the asset's useful life, total depreciation charged will be the same whichever depreciation method is used.
• C)Yearly depreciation will always be lower using the units of use method.
• D)Yearly depreciation will always be higher using the reducing-balance method.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowing funds, typically reflected in the profit and loss statement.

Cash Coverage

A ratio that measures a company's ability to meet its interest obligations with its operating cash flow, providing insight into financial stability.

Price/Earnings Ratio

A metric that measures the relationship between a company's stock price and its per-share earnings, providing insight into the market's valuation of the company.

Earnings Per Share

A company's profit divided by the number of outstanding shares of its common stock, indicating the company's profitability on a per-share basis.