Questions: A nursing facility using the accrual accounting method allocates the cost of durable medical equipment over the life span of the equipment, taking into account the decrease in value of the equipment due to wear and tear. This accounting practice is known as which of the following? Revenue Bookkeeping Deduction Depreciation

A nursing facility using the accrual accounting method allocates the cost of durable medical equipment over the life span of the equipment, taking into account the decrease in value of the equipment due to wear and tear. This accounting practice is known as which of the following? Revenue Bookkeeping Deduction Depreciation
Transcript text: A nursing facility using the accrual accounting method allocates the cost of durable medical equipment over the life span of the equipment, taking into account the decrease in value of the equipment due to wear and tear. This accounting practice is known as which of the following? Revenue Bookkeeping Deduction Depreciation
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Solution

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Answer

The answer is Depreciation.

Explanation
Option 1: Revenue

Revenue refers to the income generated from normal business operations and is not related to the allocation of costs over time.

Option 2: Bookkeeping

Bookkeeping is the process of recording financial transactions, but it does not specifically address the allocation of costs over the lifespan of an asset.

Option 3: Deduction

A deduction typically refers to an expense that can be subtracted from gross income to reduce taxable income, not the allocation of an asset's cost over time.

Option 4: Depreciation

Depreciation is the accounting practice of allocating the cost of a tangible asset over its useful life. It accounts for the decrease in value due to wear and tear, making it the correct term for the practice described in the question.

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