Q1. Roger Margotta, the CFO of Brainchild, Inc., is considering several alternative methods of depreciation for long-term assets. With respect to double-declining method of depreciation, which of the following statements is the most accurate?
A) Current ratio will increase over the life of the asset. B) Asset turnover ratio will decrease over the life of the asset. C) Return on Investment will increase over the life of the asset.
Q2. Which of the following statements comparing straight-line depreciation methods to alternative depreciation methods is least accurate? Companies that use: A) accelerated depreciation methods will decrease the amount of taxes in early years. B) accelerated depreciation methods will increase the total amount of depreciation expense over the life of an asset. C) the units-of-production method to depreciate assets will overstate income during periods of low production.
Q3. A company is switching from straight-line depreciation to an accelerated method of depreciation. Assuming all other revenue and expenses are at the same levels for the next period, switching to an accelerated method will most likely increase the company’s:
A) fixed asset turnover ratio. B) total assets on the balance sheet. C) net income/sales ratio.
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发表于 2009-1-19 10:12
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