Depreciation

question 14

Multiple Choice

Depreciation:

• A)reduces both taxes and net income.
• B)increases the net fixed assets as shown on the balance sheet.
• C)reduces both the net fixed assets and the costs of a firm.
• D)is a noncash expense which increases the net income.
• E)decreases net fixed assets, net income, and operating cash flows.

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Definitions:

Cost System

A method utilized by companies to measure, record, and analyze costs associated with their operations.

Process Inventory

Inventory that is currently in the stages of production but has not yet been completed.

Cost Reconciliation

The process of explaining the difference between the starting and ending balances of costs in a specific accounting period.

Work in Process

Materials and products that are in the middle of the production process but are not yet completed goods.