Which of the Following Principles Best Describes the Conceptual Rationale

question 138

Multiple Choice

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

• A) Associating cause and effect
• B) Systematic and rational allocation
• C) Immediate recognition
• D) Partial recognition

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Definitions:

Accounting Period

The specific period of time covered by financial statements, typically a year or a quarter, for which all financial transactions are recorded and reported.

Straight-line

A method of depreciation that allocates an equal expense rate to each year of an asset’s useful life.

Accelerated Methods

Depreciation methods that allocate more depreciation expense to the earlier years of an asset's life.

Depreciation

Strategically spreading out the cost of a tangible asset throughout its period of usefulness.