Which statement about depreciation is TRUE?
A)Depreciation means loss in economic value.
B)Depreciation means to capitalize a cost over several accounting periods.
C)Depreciation refers to an allocation of an asset's cost to an expense account.
D)Depreciation means to increase net income by transferring balances from shareholders' equity.

Question

Quizplus · Accepted Answer

Depreciation is the allocation of the cost of a tangible asset over its useful life to match the expense with the revenue generated by the asset. It refers to the accounting process of transferring a portion of the cost of the asset from the balance sheet to the income statement as an expense. Therefore, option C is the true statement about depreciation.

Which Statement About Depreciation Is TRUE