The Application of the Matching Principle to Depreciation of Plant

question 73

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 market 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.

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Definitions:

Big Business

Large-scale or major corporations and enterprises that have significant influence on the economy, often with considerable power and resources.

Debt

A sum of money that is owed or due.

Thrift

The practice of saving money and spending it wisely, often associated with frugal living.

Reconstruction Finance Corporation

Federal program established in 1932 under President Herbert Hoover to loan money to banks and other institutions to help them avert bankruptcy.