Which of the Following Statements Most Appropriately Describes the Purpose

question 55

Multiple Choice

Which of the following statements most appropriately describes the purpose of amortization of a long-lived tangible asset?

• A)To indicate how the asset has physically deteriorated.
• B)To show that the asset will eventually and gradually become obsolete.
• C)To record that the asset's market value declines over time.
• D)To match the cost of the asset to the period in which it generates revenue.

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Definitions:

Operating Expenses

Costs associated with a company's main operational activities, excluding the cost of goods sold.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, indicating the financial performance over a specific period.

Service Businesses

Businesses that primarily offer intangible products or services to consumers or other businesses.

Merchandising Business

A merchandising business purchases and sells goods in their original form without undergoing transformation, aiming to profit from the retail or wholesale distribution.