Depreciation fund method is also known as__________?
Correct answer: A. Sinking Fund Method
- A. Sinking Fund Method
- B. Annuity Method
- C. Sum of Year Digits Method
- D. None of these
Explanation
Under the depreciation fund method, equal annual amounts are invested to accumulate funds for replacing the asset, so it is also called the sinking fund method. The annuity method is a different depreciation technique that considers interest on the investment in the asset.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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