Question

Your company buys a car, and its value goes down over time. What is that process called?

Answer 1

The correct answer would be B. Depreciation

Answer 2

The correct answer is B. Depreciation

Explanation

Depreciation is a term used to refer to the decrease in the value of a good or service. In general, depreciation is caused by two main causes, the first is due to degradation of the product that results from its use, and the second is due to obsolescence. For example, cars experience depreciation due to the distance they have traveled because this affects their operation and condition. On the other hand, a technological object such as a cell phone or a computer loses its value, because it becomes obsolete when new models are released.

According to the above, the statement is an example of depreciation because the car that the company bought loses value over time because new models have been released at that time and its use caused the car the degradation of its parts. So, the correct answer is B. Depreciation.