When Capital Loses Value Over Time Because of Use and Wear

question 32

Multiple Choice

When capital loses value over time because of use and wear, we call this

• A)depreciation.
• B)wear and tear.
• C)creative destruction.
• D)capital utilization.
• E)decapitalization.

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Definitions:

Gain On Sale

The profit realized from the sale of assets when the selling price exceeds the book value of the asset sold.

Semiannual Interest

Interest that is computed and disbursed biannually, frequently associated with bonds and lending agreements.

Accrued Interest

Interest that has been incurred but not yet paid, accumulating on loans or bonds over time until payment is made.

Interest Receivable

The amount of interest that has been earned but not yet received in cash.