Which of the Following Is True of the Double-Declining-Balance Method

question 11

Multiple Choice

Which of the following is true of the double-declining-balance method?

• A) The method takes larger amounts of depreciation during the later years of an asset's life.
• B) The method calculates depreciation at double the straight-line rate of depreciation.
• C) The method considers the trade-in value of an asset at the beginning of the depreciation schedule.
• D) The method adds the salvage value of an asset to its accumulated depreciation to compute its book value.

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Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding new purchases to the starting inventory and subtracting goods sold.

Physical Flow

The actual movement of goods from the point of production through to the end-user, encompassing distribution and logistics.

Specific Identification

An inventory costing method where each item of inventory is individually valued and tracked.

Cost of Goods Sold

Represents the direct costs attributable to the production of the goods sold by a company.