As an asset is used in operations:
A) accumulated depreciation increases and the book value of the asset increases.
B) accumulated depreciation increases and the book value of the asset decreases.
C) accumulated depreciation remains the same and the book value of the asset decreases.
D) accumulated depreciation increases and the book value of the asset remains the same.

Question

Quizplus · Accepted Answer

As an asset is used in operations, it will experience wear and tear and age, causing its value to deteriorate over time. This decrease in value is recognized as accumulated depreciation on the asset's balance sheet. Since the accumulated depreciation increases, it reduces the original book value of the asset, leading to a lower net book value. Therefore, option B is the right answer.

As an Asset Is Used in Operations