Depreciation is:
A)income earned but not received.
B)an allowance for the replacement of capital.
C)income received but not earned.
D)an indirect business tax.

Question

Depreciation is:
A)​income earned but not received.
B)​an allowance for the replacement of capital.
C)​income received but not earned.
D)​an indirect business tax.

Quizplus · Accepted Answer

Depreciation is an allowance for the replacement of capital assets. It recognizes the reduction of an asset's value over time due to wear and tear, obsolescence, or other factors. By allocating a portion of the asset's cost as an expense over its useful life, depreciation helps businesses determine their true profitability and plan for the eventual replacement of their assets. Depreciation is not income earned or received, nor is it a tax or business expense.

Depreciation Is