Straight Line/Fixed Installment Method - SS1 Accounting Past Questions and Answers - page 1
What is the straight-line method of depreciation?
A method that assumes the asset depreciates at different rates over its useful life
A method that assumes the asset depreciates at an equal rate over its useful life
A method that calculates depreciation based on the market value of an asset
A method that calculates depreciation based on the amount of revenue generated by an asset
How is the annual depreciation expense calculated using the straight-line method?
By dividing the cost of the asset by its useful life
By dividing the cost of the asset by its salvage value
By subtracting the salvage value from the cost of the asset and dividing it by the useful life
By multiplying the cost of the asset by the useful life
What is salvage value?
The total cost of an asset
The value of an asset at the end of its useful life
The revenue generated by an asset
The depreciation expense of an asset
How does the straight-line method allocate the depreciation expense?
It allocates more depreciation expense in the early years of an asset's life
It allocates less depreciation expense in the early years of an asset's life
It allocates the same amount of depreciation expense each year
It allocates depreciation expense based on the amount of revenue generated by an asset
What is the purpose of calculating depreciation expense?
To increase the value of an asset
To reduce the value of an asset to zero
To accurately reflect the cost of using an asset over time
To calculate the revenue generated by an asset
How is the useful life of an asset determined?
The useful life of an asset is determined by considering factors such as the age, condition, and expected usage of the asset.
What is the relationship between depreciation and net income?
Depreciation is an expense that reduces the net income of a company.