How is the matching principle related to the recording of depreciation on tangible operational assets?
A)The matching principle requires a company to use the same depreciation.
B)Once a particular depreciation method is adopted for a particular asset,the owner must continue to use the same method.
C)The accountant who calculates the depreciation may assume that the company will continue in business as long as the estimated useful life of the asset.
D)A portion of the cost of the asset should be allocated as an expense for the periods in which the asset helps the business to earn revenue.

Question

Quizplus · Accepted Answer

The matching principle requires that expenses be recognized in the same period as the related revenues they help to generate. Since tangible operational assets are used over a number of years to generate revenues, a portion of their cost should be allocated as an expense for the periods in which they are used. This allocation is done through depreciation, which spreads the cost of the asset over its useful life, matching the expense with the revenue it helps to generate. Therefore, answer D is the best option.

How Is the Matching Principle Related to the Recording of Depreciation