Accounting Online Program Certification Practice Test

What is the accumulated depreciation amount on Derek's vehicles at the beginning of the year?

1. £38,000

2. £44,000

3. £25,000

4. £80,000

The correct answer is: £38,000

To determine the accumulated depreciation amount on Derek's vehicles at the beginning of the year, it's important to understand how accumulated depreciation is calculated. Accumulated depreciation represents the total amount of depreciation expense that has been allocated to an asset since it was acquired. In the context of vehicles, the accumulated depreciation would take into account factors such as the cost of the vehicles, their useful life, and the method of depreciation used (such as straight-line or declining balance). If the selected answer is £38,000, this figure would indicate that this is the total depreciation that has been recognized for all of Derek's vehicles combined up to that point in time. It suggests a depreciation strategy that appropriately reflects wear and tear or obsolescence in relation to the vehicles’ expected useful life. In assessing the relevant choices, £38,000 may have been calculated based on actual depreciation schedules or estimations of vehicle usage. The other amounts listed, such as £44,000, £25,000, and £80,000, could either overestimate or underestimate the depreciation based on the standard practices or specific conditions linked to the assets. Overall, the amount of £38,000 reflects a typical reporting figure for accumulated depreciation that aligns with the context provided, thus