Q169
What is depreciation?
A.
Cost of a fixed asset
B.
Cost of a fixed asset's repair
C.
The residual value of a fixed asset
D.
Portion of a fixed asset's cost consumed during the current accounting period
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Portion of a fixed asset's cost consumed during the current accounting period is known as depreciation. Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value. Businesses depreciate long-term assets for both tax and accounting purposes.