Final answer:
The statement is true; the cost of an asset is allocated to expense over the asset's useful life to match expenses with the revenues they generate, a practice known as depreciation or amortization for tangible and intangible assets respectively.
Step-by-step explanation:
The statement that an asset's cost is allocated to expense over the asset's useful life because it is used to help generate revenue over that period of time is true. This method of expense allocation is based on the matching principle in accounting, where expenses are matched to the revenues they help generate. The process of spreading out an asset's cost over its useful life is known as depreciation for tangible assets and amortization for intangible assets. This accounting practice ensures that the cost of the asset is expensed in the same periods that the asset helps to generate revenue.
Because fixed costs, such as the cost of capital, do not change in the short run, and the asset that is purchased (e.g., machinery, buildings) is considered a fixed input, its cost is thus spread out over the period it is used to support production and help generate revenue. Over time, as the asset contributes to the production of goods and services, a portion of its cost is allocated as an expense on the income statement, reflecting its use and wear and tear during the accounting period.