Cost of the asset$100,000
Life of the asset 5 years
Depreciation rate20%
Capital cost allowance rate 50%
Residual value of the asset nil
Income tax rate 50%
-What are the two basic types of accounting methods?
A) sum-of-the-digits method and straight-line depreciation method
B) deferred accounting and cash accounting
C) trial balance method and bookkeeping method
D) cash method and accrual method

Question

Cost of the asset$100,000 
Life of the asset 5 years 
Depreciation rate20% 
Capital cost allowance rate 50% 
Residual value of the asset nil 
Income tax rate 50%
-What are the two basic types of accounting methods?
A) sum-of-the-digits method and straight-line depreciation method
B) deferred accounting and cash accounting
C) trial balance method and bookkeeping method
D) cash method and accrual method

Quizplus · Accepted Answer

The two basic types of accounting methods are the cash method and the accrual method. The cash method recognizes revenue and expenses only when money changes hands, while the accrual method recognizes revenue when it is earned and expenses when they are incurred, regardless of when the cash transaction occurs.

Cost of the Asset$100,000