How Is the Matching Principle Related to the Recording of Depreciation

question 123

Multiple Choice

How is the matching principle related to the recording of depreciation on tangible operational assets?

• A) The matching principle requires a company to use the same depreciation.
• B) The accountant who calculates the depreciation may assume that the company will continue in business as long as the estimated useful life of the asset.
• C) A portion of the cost of the asset should be allocated as an expense for the periods in which the asset helps the business to earn revenue.
• D) Once a particular depreciation method is adopted for a particular asset, the owner must continue to use the same method.

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Definitions:

Acquiring And Disposing

The processes involved in obtaining and getting rid of assets, including purchasing or receiving assets and selling or disposing of them.

Products Or Services

The tangible items (products) and intangible activities (services) offered by a business to satisfy the needs or wants of its customers.

Financing Activities

Transactions and events where a company raises capital and repays investors, including issuing debt and equity as well as dividend payments.

Resources

Economic or productive assets that can be utilized by an organization or individual to generate income or value, including natural, human, and financial resources.