DECA Financial Consulting Practice Exam 2025 - Free DECA Financial Consulting Practice Questions and Study Guide

Amortization refers specifically to the gradual repayment of a loan or debt over time. This process involves making regular payments that cover both the principal amount borrowed and the interest on that loan. Each payment reduces the outstanding balance, allowing the borrower to pay off the loan in a structured manner over a predetermined period. This concept is critical in financial planning and debt management, as it helps individuals and businesses understand their repayment obligations and the timeline for clearing their debts.

When considering the other options, it is clear why they do not appropriately define amortization. For instance, a strategy to increase asset values does not relate to the repayment of debts. Similarly, the payment of taxes on accrued income pertains to taxation and not debt repayment. The process of selling off assets focuses on divestiture rather than the systematic repayment of loans. Thus, the correct choice aligns perfectly with the definition of amortization as a structured approach to debt repayment.