Use of a Longer Useful Life for Depreciation Is an Example

question 137

True/False

Use of a longer useful life for depreciation is an example of conservative accounting.

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Definitions:

Total Cost

The sum of all expenses, both fixed and variable, involved in producing a good or providing a service.

Fixed Cost

Costs that do not change in total regardless of the level of output or activity in the short term.

Average Fixed Cost

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced.

Variable Cost

Costs that change in proportion to the level of activity or volume of production in a business.