What does depreciation represent in accounting?

Depreciation in accounting represents the allocation of the cost of a non-current asset over its useful life. This concept is essential because it recognizes that, as time passes and assets are utilized, they lose value due to wear and tear, obsolescence, or other factors. Therefore, the correct answer accurately reflects that depreciation is treated as a cost or expense associated with the ongoing use of these assets within a business.

By allocating this expense over various accounting periods, businesses can match the expense of using an asset with the revenue it generates, adhering to the matching principle of accounting. This approach provides a more accurate portrayal of a company's financial performance and position, as it avoids overstating profits in the periods when the asset is initially purchased while spreading the cost over the asset's operational life.