The accounting process of gradually converting the unexpired cost of fixed assets into expenses over a series of accounting periods is_________?
Correct answer: B. Depreciation
- A. Physical deterioration of the asset
- B. Depreciation
- C. Decrease in market value of the asset
- D. Valuation of an asset at a point of time
Explanation
Depreciation systematically allocates the cost of a fixed asset, after any residual value, as an expense over its useful life. Physical deterioration and market-value decline may cause depreciation but are not the accounting process itself.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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