Future Business Leaders of America (FBLA) Agribusiness Practice Test

Disable ads (and more) with a membership for a one time $4.99 payment

Enhance your FBLA Agribusiness knowledge with our comprehensive test. Dive into flashcards and multiple-choice questions, complete with hints and explanations, to ensure exam success. Prepare confidently for a bright future!

Practice this question and more.

What does ACRS stand for?

Annual Cost Recovery System
Accelerated Cost Recovery System
Asset Capital Recovery System
Average Cost Recovery System

The correct answer is: Accelerated Cost Recovery System

The acronym ACRS stands for Accelerated Cost Recovery System. This is a method used in the United States for depreciating assets, allowing businesses to recover the cost of certain assets more quickly than they would under traditional depreciation methods. ACRS was introduced as part of the Economic Recovery Tax Act of 1981 and provides tax benefits by enabling companies to deduct larger amounts of an asset's cost in the earlier years of its useful life. This approach to depreciation is particularly advantageous for businesses, as it can lead to increased cash flow during the early years of asset ownership, thereby encouraging capital investment. In contrast, the other options do not accurately reflect the established depreciation system recognized in U.S. tax law. For instance, while "Annual Cost Recovery System" refers to a similar concept, it is not the official term used in tax regulations. "Asset Capital Recovery System" and "Average Cost Recovery System" also do not exist in the context of U.S. tax depreciation methods, making them incorrect. The specific terminology and concept associated with ACRS are critical for understanding tax benefits related to asset depreciation in business finance.