As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called
A) equipment allocation
B) depreciation
C) accumulation
D) matching

Question

Quizplus · Accepted Answer

The process of systematically allocating the cost of fixed assets (other than land) to expense to account for their decrease in usefulness is called depreciation. Option A (equipment allocation) is not a commonly used term in accounting. Option C (accumulation) refers to the process of gathering financial information over a period of time. Option D (matching) refers to the accounting principle of matching expenses with revenues. While matching concept is related to depreciation as well, it does not accurately describe the process of allocating the cost of fixed assets to expense. Therefore, the best choice is B (depreciation).

As Time Passes, Fixed Assets Other Than Land Lose Their