Obsolescence

question 167

Multiple Choice

Obsolescence:

• A)Occurs when an asset is at the end of its useful life.
• B)Refers to a plant asset that is no longer useful in producing goods and services.
• C)Refers to the insufficient capacity of a company's plant assets to meet the company's productive demands.
• D)Occurs when an asset's salvage value is less than its replacement cost.
• E)Does not affect plant assets.

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Definitions:

Direct Method

A way of preparing the cash flow statement where actual cash flow information from the company's operating activities is used, as opposed to the indirect method.

Accounts Payable

Short-term liabilities owed to suppliers or creditors for goods and services received but not yet paid for.

Financing Activities

Refers to the transactions and events through which a business raises funds to operate and expand, including issuing shares, taking on loans, or issuing bonds.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock on the balance sheet.