The Cost of a Long-Term Asset Is Expensed

question 201

Multiple Choice

The cost of a long-term asset is expensed

• A)when it is paid for.
• B)as the asset benefits the company.
• C)in the period in which it is acquired.
• D)in the period in which it is disposed of.

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Definitions:

Capital Balances

The amounts recorded in the capital accounts of a company or partnership, reflecting the initial capital contributions and subsequent changes including profits earned and withdrawals.

Losses

Financial reductions resulting from business activities, such as the sale of assets for less than their book value or operational losses.

Net Profit

The amount of money a company earns after deducting all costs, expenses, and taxes from the total revenue.

Partnership Agreement

A legal document that outlines the terms and conditions governing the relationship between partners in a business partnership.