Which of the Following Statements Is True

question 44

Multiple Choice

Which of the following statements is true?

• A)The entry to record depreciation expense involves a credit to a liability.
• B)The entry to record depreciation expense involves a credit to a contra-asset.
• C)The entry to record depreciation expense involves a credit to the asset being depreciated.
• D)The entry to record depreciation expense involves a credit to depreciation expense.

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Definitions:

Implicit Costs

The opportunity costs that arise from using resources that could have been employed in an alternative use but were instead utilized in the current operation without direct payment.

Explicit Costs

Direct, out-of-pocket payments for goods and services used in the production of a product or provision of a service.

Accounting Profit

The difference between total monetary revenue and total monetary costs, excluding the consideration of opportunity costs.

Explicit Costs

These are the direct, clear expenses related to business operations, such as salaries, utilities, and rent, that are easily quantifiable.