Which of the following statements is correct?
A)Using straight-line depreciation in comparison to an accelerated depreciation method will result in a lower reported amount of total assets at end of the first year of an asset's life.
B)Using accelerated depreciation in the first year of an asset's life will result in a higher net income during the first year compared to using the straight-line depreciation method.
C)Using an accelerated depreciation method will lead to a higher fixed asset turnover ratio for the first year.
D)Using straight-line depreciation in comparison to an accelerated depreciation method will lead to a higher book value at the end of an asset's life.

Question

Quizplus · Accepted Answer

Accelerated depreciation results in higher depreciation expenses in the early years of an asset's life, reducing net income and the book value of assets more quickly than straight-line depreciation. This leads to a lower asset base, which can result in a higher fixed asset turnover ratio, as this ratio measures how efficiently a company uses its fixed assets to generate sales.

Which of the Following Statements Is Correct