A partner who handles the financial side of the business estimates that a new machine will useful for 10 years before it will have to be replaced.He plans to allocate one-tenth of the cost to each year that the machine is in use.What is the proper accounting term for this cost?
A) allocation
B) asset usage
C) depreciation
D) appropriation

Question

Quizplus · Accepted Answer

The proper accounting term for this cost is depreciation. Depreciation is the allocation of the cost of a long-term asset over the period in which it will be used. In this case, the partner plans to allocate one-tenth of the cost to each year that the machine is in use, which is a form of depreciation.

A Partner Who Handles the Financial Side of the Business