Which of the Following Most Accurately Reflects the Concept of Depreciation

question 4

Multiple Choice

Which of the following most accurately reflects the concept of depreciation as used in accounting?

• A) The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred.
• B) The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.
• C) A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved.
• D) An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets.

---

Definitions:

Bearer Bond

A bearer bond is a type of fixed-income security that is not registered in the owner's name, allowing the holder of the document to collect the interest and principal payments.

Registered

This can refer to securities, companies, or assets that have been officially recorded and recognized by regulatory authorities.

Premium

The amount by which the price of a financial instrument or commodity exceeds its principal or face value, or the amount paid for an insurance policy.

Coupon Rate

The yearly rate of interest that the entity issuing a bond pays to its investors, typically shown as a portion of the bond's nominal value in percentage terms.