The Purpose of Recording Depreciation Expense Is To

question 91

Multiple Choice

The purpose of recording depreciation expense is to:

• A)provide cash necessary to replace plant assets when they are used up.
• B)record the balance sheet amount of plant assets at replacement value.
• C)match expenses with revenues using a reasonable systematic method.
• D)gain a better understanding of estimating the extraction of natural resources.

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Definitions:

Journal Entry

A record in accounting that notes the details of a financial transaction in terms of debits and credits to the accounts.

Discount on Bonds Payable

The difference between the face value of a bond and its selling price when the bond is sold for less than its face value.

Bonds Payable

Long-term liabilities represented by promissory notes issued by a company to raise capital, to be repaid at a future date.

Installment Note

A debt instrument that requires the borrower to make regular payments (installments) of principal and interest over a set period until the total debt is paid.