Tally Company paid cash to purchase a long-term operational asset. The cost of the asset will be expensed (depreciated)
A)over the useful life of the asset.
B)at the end of its useful life.
C)on the day it is purchased.
D)when the asset is sold.

Question

Quizplus · Accepted Answer

The cost of a long-term operational asset should be expensed (depreciated) over its useful life, which helps to match the cost of the asset with the revenue it helps to generate over that period. This is done through an accounting process called depreciation. Option B is incorrect, as the cost of the asset is expensed over its useful life and not at the end of it. Option C is incorrect because the entire cost of the asset is not expensed on the day it is purchased. Option D is incorrect because the cost of the asset is not expensed when it is sold, but rather when it is used to generate revenue over its useful life.

Tally Company Paid Cash to Purchase a Long-Term Operational Asset