What term defines the depreciation in monetary value of a fixed asset ?
Show answer Hide answer
Answer: B. Capital loss
Explanation
A capital loss occurs when fixed asset value drops below book value. Selling capital assets below their purchase cost generates this financial loss. Depreciation and market declines contribute to reduced asset valuations. Fixed assets include machinery, buildings, and long-term equipment holdings. Book value equals historical cost minus accumulated depreciation expenses. Capital gains occur oppositely when assets appreciate above purchase prices.
Corporations report capital losses on income statements to offset taxable gains. Asset impairment tests require businesses to write down depreciated machinery. Financial analysts track asset write-downs to evaluate operational asset efficiency. Capital expenditure describes money spent acquiring or upgrading fixed assets. Loss is a generic term lacking the specific fixed asset depreciation context. Deficit refers to budgetary shortfalls rather than fixed asset value reductions.
- Subject
- Engineering
- Category
- Civil Engineering
- Topic
- —
- Difficulty
- medium
Related questions
Q1. What reflects an individual's or entity's legal stake in ownership ?
Show answer Hide answer
Answer: C. Equity
Equity represents the legal ownership stake held in an organizational entity. It defines the residual interest remaining after subtracting external liabilities. Shareholders hold equity as proof of their proportional bus...
Q2. What alternative expression corresponds to the acid-test ratio ?
Show answer Hide answer
Answer: B. Quick ratio
The quick ratio is also widely known as the acid-test ratio in financial accounting. Both terms describe the exact same rigorous metric measuring immediate short-term liquidity. It strips away slow-moving inventory to te...
Q3. What financial metric represents the net worth of a corporate entity after subtracting all external liabilities from total assets?
Show answer Hide answer
Answer: B. Equity
Equity represents the net worth of a corporation after paying all liabilities. Subtracting external debts from total assets isolates the residual owner value. This financial metric reflects the true accumulated value bel...
Q4. What denotes the discount rate that equates a project's cash flow present value to zero, or signifies the yields generated by an investment ?
Show answer Hide answer
Answer: C. Rate of return
Rate of return measures net financial gain relative to initial investment cost. It equates project cash flow present values to zero during discounting. Investors use this metric to evaluate profitability across different...
Q5. What indicates fractional equity ownership within commercial enterprises?
Show answer Hide answer
Answer: C. Stock
Stock represents fractional units of equity ownership in a commercial corporation. Purchasing shares grants investors proportional ownership rights and claims on corporate assets. This financial instrument allows compani...
Q6. What analytical rule of thumb is applied when a swift estimation of investment doubling duration is required ?
Show answer Hide answer
Answer: D. Rule of 72
The Rule of 72 estimates investment doubling time at a fixed compound rate. Dividing seventy-two by the annual percentage rate yields approximate years. Mental math shortcuts help investors quickly project long-term fina...