The term used to define the decrease in value of an asset over time due to wear and tear is?

The concept of depreciation specifically refers to the reduction in the value of an asset over time, primarily due to wear and tear, age, or obsolescence. This is especially relevant for tangible assets such as vehicles, machinery, and buildings, where the physical condition deteriorates or becomes less attractive in the marketplace as time progresses.

In accounting and financial contexts, depreciation is essential for representing the cost of using an asset over its useful life. This helps in accurately determining profit margins and can provide tax benefits, as businesses can deduct depreciation as an expense.

The other terms do not align with the definition of value decrease over time. Appreciation refers to the increase in the value of an asset, while deflation pertains to the decrease in prices of goods and services in an economy. Liquidity describes how easily an asset can be converted into cash, which is unrelated to the concept of value decline over time.