Accounting recognizes that assets, such as machinery and buildings, lose value over time. Accountants will record a portion of the cost of an asset as an expense each year through the use of
A) asset valuation.
B) asset audits.
C) appreciation.
D) depreciation.

Question

Quizplus · Accepted Answer

Accounting recognizes the need to spread the cost of an asset over its useful life, and this is done through depreciation, where a portion of the asset's cost is allocated as an expense each year. This recognizes that assets lose value over time due to wear and tear, obsolescence, or other factors. Asset valuation is the process of determining the value of an asset at a particular point in time, while asset audits are reviews of the physical existence and condition of assets. Appreciation is the opposite of depreciation and refers to an increase in value over time.

Accounting Recognizes That Assets, Such as Machinery and Buildings, Lose