Depreciation

Depreciation expense has a normal balance of...

• debit
• revenue
• equity
• credit

What is the formula for straight-line depreciation?

• Depreciation expense = (Cost - Salvage value) / Useful life
• Depreciation expense = (Cost - Salvage value) x Useful life
• Depreciation expense = (Cost - Salvage value) x 2 / Useful life
• Depreciation expense = (Cost - Salvage value) / 2 x Useful life

What is the term used for the systematic allocation of the cost of an intangible asset over its useful life?

• Amortization

• Appreciation

• Depreciation

• Depletion

What is the purpose of depreciation?

• To summarize financial performance of a business
• To adjust the cost of an asset over time
• To record the loss of value of an asset
• To reduce tax liability

A method that equally distributes the depreciation expense over an asset’s estimated useful life.

• Accelerated Depreciation

• Straight Line Depreciation

• Double Declining Balance Depreciation

• Sum of the Years Digit Depreciation

Accumulated depreciation has a normal balance of...

• debit
• asset
• expense
• credit

During the final step of closing entries, what are my debits and credits?

• Debit Retained Earnings, Credit Income Summary
• Debit Expenses, Credit Income Summary
• Debit Dividends, Credit Income Summary
• Debit Income Summary, Credit Retained Earnings

What is the term for the value of an asset at the end of its useful life?

• Salvage value

• Residual value

• Depreciated value

• Book value

Which type of depreciation is used to calculate the value of an asset over its estimated useful life?

• Straight-line depreciation
• Sum-of-the-years digits depreciation
• Unit-of-production depreciation
• Double-declining balance depreciation

A temporary account...

• Temporary accounts are permanent until closed.
• Temporary accounts are never used in accounting.
• Temporary accounts are only used for cash transactions.
• Temporary accounts are closed at the end of an accounting period.