When Comparing the Units-Of-Output Method of Depreciation with Straight-Line Depreciation

question 67

Multiple Choice

When comparing the units-of-output method of depreciation with straight-line depreciation:

• A) The depreciation expense in the first year will always be greater under units-of-output method.
• B) The depreciation expense in the first year will always be less under the units-of-output method.
• C) The depreciation expense in the first year will always be the same.
• D) The depreciation expense in the first year may be greater than, equal to, or less under the units-of-output method.

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Definitions:

Linear Relationship

A relationship between two variables where the change in one variable is directly proportional to the change in another.

Residuals

The differences between observed values and the values predicted by a model, used to evaluate the model's accuracy.

Homoscedasticity

Homoscedasticity refers to a condition in regression analysis where the variance of the error terms (residuals) is constant across all levels of an independent variable, indicating uniform dispersion of data points.

Regression Analysis

A statistical method for estimating the relationships among variables, often used to determine how independent variables affect a dependent variable.