Which of the Following Principles Best Describes the Conceptual Rationale

question 3

Multiple Choice

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

• A) Systematic and rational allocation
• B) Immediate recognition
• C) The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred.
• D) The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.

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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, after purchases and sales have been accounted for.

Average Cost Formulas

A method used in accounting to calculate the cost of goods sold and ending inventory by averaging the cost of all items available for sale during the period.

Unit Cost

The expense incurred to produce, store, and sell one unit of a product or service.

Unit Cost

The cost to produce, acquire, or purchase one unit of a product or service, calculated by dividing total costs by the number of units produced or acquired.