Depreciation Refers to a Decrease in the Value of a Durable

question 61

Multiple Choice

Depreciation refers to a decrease in the value of a durable good caused by

• A)an increase in the price level
• B)changes in the depreciation allowance
• C)wear and tear over time
• D)changes in tax law
• E)a decrease in its resale value

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Definitions:

Materiality Constraint

A principle that allows accountants to disregard minor errors or omissions in financial statements when such misstatements are not expected to influence the decision of a reasonable user.

Inappropriate Accounting Procedures

Accounting practices that do not comply with generally accepted accounting principles (GAAP) and may lead to misleading financial statements.

Qualitative Characteristics Exposure Draft

A preliminary document issued by accounting standards organizations proposing improvements or changes to the qualitative characteristics of financial information.

Logical Order

A method of arranging elements in a sequence based on their relationships or hierarchy, ensuring coherence and clear progression of ideas or steps.