Option 1 -> Expenditure refers to money spent, not specifically an allowance for wear and tear.
Option 2 -> Shortage means a deficit or lack of something, unrelated to capital goods wear.
Option 3 -> Deduction is a general term for subtracting amounts, but doesn't specifically define wear and tear allowance.
Option 4 -> Depreciation is the systematic allocation of the cost of a capital asset over its useful life.
Hence, Option 4: Depreciation -> Depreciation is specifically defined as the annual allowance made for the wear and tear, deterioration, or obsolescence of capital goods (fixed assets like machinery, buildings, vehicles). It represents the reduction in value of these assets over time due to usage and age. This allowance is recorded as an expense in accounting and helps businesses account for the gradual consumption of their capital assets. -> correct