If Certain Assets Are Partially Used Up During the Accounting

question 110

Multiple Choice

If certain assets are partially used up during the accounting period,then:

• A)nothing is recorded on the financial statements until they are completely used up.
• B)a liability account is decreased or eliminated and an expense is recorded.
• C)an asset account is decreased or eliminated and an expense is recorded.
• D)nothing is recorded on the financial statements until they are replaced or replenished.

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Definitions:

Net Capital Loss

It's the loss incurred when the total capital losses from investments exceed the total capital gains for a year.

Capital Loss Carryforward

A tax provision that allows investors to use a net capital loss in one year to offset future capital gains for tax purposes.

Net Capital Gains

The profit from the sale of assets or investments after subtracting any losses, important for tax calculations.

Net Operating Loss

A situation in which a company's allowable tax deductions are greater than its taxable income within a tax period, leading to a negative taxable income.