When the Amount of Use of a Fixed Asset Varies

question 130

Multiple Choice

When the amount of use of a fixed asset varies from year to year, the method of determining depreciation expense that best matches allocation of cost with revenue is

• A) the double-declining-balance method
• B) the straight-line method
• C) the units-of-activity method
• D) MACRS

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Definitions:

Cash

Refers to money in the form of coins or banknotes, especially that possessed by a person or business for transactions.

Accounts Payable

Accounts payable is a liability account that records amounts a company owes to suppliers or creditors for goods and services received but not yet paid for.

Utilities Expense

The cost incurred from the consumption of utility services such as electricity, water, and gas in the business operations.

Income Summary Account

An account used in closing entries to gather all income and expense items, facilitating the transfer of their net balance to retained earnings.