Depreciating equipment over its useful life is an example of
A) following the objectivity assumption.
B) applying the matching principle.
C) applying the realization principle.
D) applying the conservatism constraint.

Question

Quizplus · Accepted Answer

Depreciating equipment over its useful life is an example of applying the matching principle, which requires that expenses be matched with the revenues they helped to generate. By depreciating the equipment over its useful life, the cost of the equipment is spread across the years in which it is used, rather than being recognized as a single expense in the year it is purchased. This helps to ensure that the expenses associated with the equipment are matched with the revenues it generates over its useful life.

Depreciating Equipment Over Its Useful Life Is an Example of