The purpose of the depreciation adjustment is to:
A) spread the cost invested in an asset over its useful life.
B) show the current market value of the asset.
C) set up a reserve fund for purchasing a new asset.
D) expense the full amount of the asset in the year purchased.

Question

Quizplus · Accepted Answer

Depreciation is the process of allocating the cost of an asset over its useful life. By making an adjustment for depreciation, the cost of the asset is spread out over several accounting periods, rather than being expensed all at once in the year of purchase. This ensures that the financial statements accurately reflect the company's expenses and the value of its assets over time.

The Purpose of the Depreciation Adjustment Is To