Which of the following statements is true?
A) Accumulated depreciation is a contra account in the income statement.
B) The current ratio is current assets divided by current liabilities.
C) Book value of a building is the cost less the current year's depreciation.
D) Retained earnings is the accumulated profit plus the accumulated dividends paid.

Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. Choices A, C, and D are incorrect statements. Accumulated depreciation is a contra account in the balance sheet, not the income statement. The book value of a building is the cost less the accumulated depreciation, not just the current year's depreciation. Retained earnings is the accumulated profit minus the accumulated dividends paid.

Which of the Following Statements Is True