A Company Should Choose a Depreciation Method That

question 174

Multiple Choice

A company should choose a depreciation method that

• A)best allocates the original cost of the asset to the periods benefited by the use of the asset.
• B)saves the most taxes.
• C)minimizes net income.
• D)shows the highest amount of net income.

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Definitions:

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating the short-term financial health and operational efficiency of a company.

Capital Budgeting Decisions

The process of planning and managing a company's long-term investments in major projects or assets.

Financial Planning

A comprehensive evaluation of someone's current pay and future financial state by using current known variables to predict future income, asset values, and withdrawal plans.

Fixed Assets Investment

Expenditure on physical assets such as machinery, land, and buildings, intended for long-term use in the production of goods and services.