Amortization

Amortization is the systematic allocation of the cost of an intangible asset over its useful life.

It spreads the cost of intangible assets such as software or patents over the periods benefiting from them.

- Used in day-to-day bookkeeping and journal entries to record transactions correctly.
- Used when preparing trial balances and reconciling accounts.

- Example: Accountants use **Amortization** when recording transactions and preparing the trial balance.

- Why it matters: Ensures accurate records, supports reliable reporting, and reduces posting and reconciliation errors.