The Underlying Assumption of the Straight-Line Method of Depreciation Is

question 40

Multiple Choice

The underlying assumption of the straight-line method of depreciation is:

• A) The asset's contribution to income is variable.
• B) The asset makes the same contribution to income each year.
• C) The asset's contribution to income relates mainly to obsolescence.
• D) The asset makes a higher contribution to income in the earlier years of its life.

Comprehend the relationship between the numerator and denominator in a fraction and their impact on the fraction's value.

Demonstrate proficiency in percentage calculations related to financial and mathematical contexts.

Understand and apply simple interest formulas to calculate the future value of an investment.

Understand and apply compound interest formulas to calculate the future value of an investment.

---

Definitions:

Drawing Account

An account used to record withdrawals of business assets by the owner for personal use, reducing the capital account.

Salary Expense

The cost incurred by a company for the payment of regular salaries to its employees.

Accrued Salaries

Salaries that have been incurred but not yet paid by the end of a financial period, representing a liability for the business.

Closing

The process of finalizing accounting records at the end of an accounting period, including updating accounts and preparing financial statements.