Which one of the following statements is not true regarding depreciation?
A. It is a systematic, rational method of allocating the cost of an asset over its useful life.
B. It attempts to match the costs of acquiring an asset to the benefits to be derived from the asset.
C. It does not attempt to measure the value of the asset.
D. It provides funds for the replacement of the asset through tax savings over the asset's life.
Answer: D
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A) benefit B) demand C) need D) stake E) service
A company's manager estimates that in the upcoming year, total variable costs will increase by $20,000 and total fixed costs will decrease by $14,000. Assume that the unit sales price did not change. What will be the anticipated effect on net operating income?
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