When the Future Benefits of Existing Assets Are Used Up

question 73

Multiple Choice

When the future benefits of existing assets are used up in the ordinary course of business:

• A)an expense is recorded.
• B)a loss is recorded.
• C)a credit to a liability is recorded.
• D)a debit to assets is recorded.

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Definitions:

Appropriate Code

A specific numerical or alphanumeric identifier used to classify and organize data, transactions, or items according to established criteria.

Merchandise Inventory

The value of the products that a company has in stock and intends to sell.

FOB Shipping Point

A term used in shipping agreements indicating that the buyer is responsible for paying shipping costs and for the goods at the point of departure from the seller's shipping dock.

Inventory Turnover

An indicator of the number of times a business's inventory turns over and is replenished during a certain period, demonstrating how efficiently inventory is managed.