The Concept of Depreciation Is Best Explained by Which Accounting

question 182

Multiple Choice

The concept of depreciation is best explained by which accounting principle or assumption?

• A) Cost principle.
• B) Going concern assumption.
• C) Expense recognition.
• D) Economic entity assumption.

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Definitions:

Deferred Income Tax Asset

A balance sheet item that represents taxes paid or carried forward but not yet realized on the income statement.

Net Operating Loss

The deficit that occurs when a business's expenses exceed its revenues, excluding taxes and certain other expenses, over a fiscal period.

Future Profitability

An estimation or outlook on the capacity of a business to generate earnings in future periods, often considered for investments or strategy planning.

Deferred Tax Asset

A tax amount that is paid or carried forward, representing future tax savings due to overpayment or advance payment of taxes, or due to allowable temporary differences.