Which of the Following Statements About Depreciation Is FALSE

question 110

Multiple Choice

Which of the following statements about depreciation is FALSE?

• A) Depreciation does not generate cash.
• B) Depreciation is an allocation of the original cost of an asset to the periods in which the asset is used.
• C) Depreciation does not entail an outflow of cash.
• D) Depreciation is a means of setting aside cash for the replacement of an asset.

---

Definitions:

Indifference Curves

Graphical representations of different bundles of goods between which a consumer is indifferent, showing the same level of satisfaction or utility from each bundle.

Budget Constraint

The limits imposed on household or individual choices by income, wealth, and product prices.

Indifference Curve

A graph representing different bundles of goods between which a consumer is indifferent, showing the trade-offs they are willing to make.

Compensated

Refers to receiving payment or reimbursement for services provided or damages incurred; in economics, often related to adjustments for changes in external factors.