The Application of the Matching Principle to Depreciation of Plant

question 31

Multiple Choice

The application of the matching principle to depreciation of plant and equipment can best be described as:

• A) The matching of the book value of an asset with its market value.
• B) Offsetting the revenue of an accounting period with the estimated decline in value of plant and equipment during the accounting period.
• C) Offsetting revenue of an accounting period with the portion of the cost of plant and equipment estimated to have been used up during the accounting period.
• D) The matching of the depreciation expense reported in the income statement for an accounting period with the accumulated depreciation reported in the balance sheet.

---

Definitions:

Accounts Receivable

Funds that a company's customers have not yet remitted for products or services that have been provided.

Subsidiary Ledger

A detailed ledger containing the individual accounts that make up a controlling account in the general ledger.

Purchases Journal

The journal in which all items purchased on account are recorded.

Supplies

Items used in the operation of a business that are typically consumed or expendable, such as office supplies or maintenance materials.