Which of the Following Statements Is Not True About Depreciation

question 171

Multiple Choice

Which of the following statements is not true about depreciation for tax purposes?

• A) The straight-line method is used for most assets.
• B) Estimated useful life is ignored.
• C) Depreciable assets are written off rapidly.
• D) Estimated residual value is ignored.

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Definitions:

Overapplied Overhead

A situation in cost accounting where the allocated manufacturing overhead costs are more than the actual overhead costs incurred.

Underapplied Overhead

Occurs when the allocated or applied overhead costs in the production process are less than the actual overhead costs incurred.

Manufacturing Overhead Account

An accounting category that records the indirect costs associated with producing goods, such as utilities for the factory or salaries for the maintenance staff.

Overapplied Manufacturing Overhead

A situation where the amount of manufacturing overhead allocated to products is more than the actual overhead incurred.