Multiple Choice 1. Which of the following most accurately reflects the concept of depreciation as used in accounting? a. The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred. b. The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset. c. A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved. d. An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets. 2. The term "depreciable base," or "depreciation base," as it is used in accounting, refers to a. the total amount to be charged (debited) to expense over an asset's useful life. b. the cost of the asset less the related depreciation recorded to date. c. the estimated market value of the asset at the end of its useful life. d. the acquisition cost of the asset. Matching - Depreciation methods - questions 3 - 6 Each of the statements appearing below is descriptive of one or more of the following depreciation methods. In the spaces below, place the letter(s) belonging to the method(s) to which the statement best applies. A - Straight-Line B-Units of Production C. - Sum-of-the-years digits May use the answers (A, B or C) once, more than once or not at all 3. The depreciation charged by this method decreases by the same amount each year. 4. This method allocates larger shares of the cost of a plant asset to expense during the years in which the greatest use is made of the asset. 5. This method always allocates larger shares of the cost of a plant asset to expense during the earlier years of its life. 6. Once the depreciable base, scrap value, and life of a plant asset are determined, the annual charges to operations under this method will be the same