The loss in the value of an asset, such as an automobile, that occurs over its period of ownership; calculated as the difference between the price initially paid and the subsequent sale price.
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A. B. C. D.A
The correct answer is A. Depreciation.
Depreciation refers to the decline in the value of an asset over time due to wear and tear, obsolescence, or other factors. It is a common concept in accounting and finance and is often used to calculate the cost of owning and using an asset over its useful life.
In the context of the question, the asset being referred to is an automobile. Like any other asset, a car loses value over time due to factors such as age, mileage, condition, and market trends. This loss in value is called depreciation.
To calculate the depreciation of a car, one needs to know the initial purchase price and the subsequent sale price. The difference between these two prices is the amount of depreciation that has occurred. For example, if a car was purchased for $20,000 and sold for $15,000 after three years of ownership, the depreciation would be $5,000.
It is worth noting that depreciation is not a uniform process, and different assets may depreciate at different rates. For example, a new car may lose a significant portion of its value in the first year due to the initial depreciation that occurs when it is driven off the lot. After that, the rate of depreciation may slow down and level off over time.
In conclusion, the loss in value that occurs over the period of ownership of an automobile is called depreciation. It is calculated as the difference between the initial purchase price and the subsequent sale price and can be influenced by various factors such as age, mileage, condition, and market trends.