Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which term describes the number of years an asset is expected to be valuable to a business?

1. Useful life

2. Withdrawal

3. Wholesale

4. Gross pay

The correct answer is: Useful life

The correct term that describes the number of years an asset is expected to be valuable to a business is "useful life." Useful life represents the duration over which an asset is predicted to be economically viable and can generate revenue for the business. It is an essential concept in accounting and finance, as it helps businesses determine depreciation schedules and risk assessments of their assets. In accounting practices, understanding an asset's useful life is crucial for budgeting and planning, as it influences decisions related to asset acquisition, replacement, and maintenance. For example, if a piece of machinery has a useful life of ten years, the business can gradually expense the cost of that asset over ten years, which aligns with the period it is utilized to generate income. The other terms do not apply to this context. Withdrawal refers to taking money or assets out of a business or account. Wholesale pertains to the sale of goods in large quantities at lower prices, often to retailers rather than consumers. Gross pay is the total amount earned by an employee before any deductions, unrelated to asset valuation.