Reference no: EM132992484

Problem 1: Depletion is recorded for natural resources

a) To match the cost of resources used up with the revenues that are earned.

b) To recognize increases in market value with the passage of time.

c) And for buildings and equipment used in extracting the resource.

d) By a method similar to declining balance depreciation.

Problem 2: Use of the sum-of-the-years'-digits method

a) Results in salvage value being ignored.

b) Means the denominator is the years remaining at the beginning of the year.

c) Means the book value should not be reduced below salvage value.

d) All of these.

Problem 3: The following is true of depreciation accounting.

a) It is not a matter of valuation.

b) It is part of the matching of revenues and expenses.

c) It retains funds by reducing income taxes and dividends.

d) All of these.