Which of the Following Is the Correct Formula for Calculating

question 149

Multiple Choice

Which of the following is the correct formula for calculating depreciation under the straight-line method?

• A) Straight-line depreciation = (Cost + Residual value) / Useful life
• B) Straight-line depreciation = (Cost - Residual value) / Useful life
• C) Straight-line depreciation = (Cost + Residual value) × Useful life
• D) Straight-line depreciation = (Cost - Residual value) × Useful life

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Definitions:

Additive Inverse

The number that when added to the original number, yields zero.

Multiplicative Inverse

A number which, when multiplied by the original number, results in one. It's often referred to as the reciprocal.

Compounded Monthly

A term used in finance to describe a process where interest is added to the principal balance of an investment or loan each month, and future interest accumulations are based on the new balance.

Interest

The cost of borrowing money or the return on investment, calculated as a percentage of the principal amount over a period.