As buildings and equipment wear out or become obsolete,their value decreases.To reflect decreasing value,accountants use ________.

Question

Quizplus · Accepted Answer

Depreciation is the accounting method used to reflect the decreasing value of buildings and equipment as they wear out or become obsolete. This allows companies to allocate the cost of an asset over its useful life, rather than expensing the full amount in the year of purchase. Prepaid expenses refer to expenses that have been paid in advance, such as insurance premiums or rent payments. Subtracting methods are not a commonly used accounting term. Licensing refers to the legal permission to use a product or service, and is not related to the accounting concept of depreciation.

As Buildings and Equipment Wear Out or Become Obsolete,their Value