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    Question

    Depreciation is charged on fixed assets to comply with

    which of the following accounting principle?
    A Matching concept Correct Answer Incorrect Answer
    B Prudence concept Correct Answer Incorrect Answer
    C Timeliness concept Correct Answer Incorrect Answer
    D Reliability concept Correct Answer Incorrect Answer

    Solution

    The Matching Principle states that expenses should be recognized in the same period as the revenues they helped to generate. In the case of fixed assets, they are acquired to help generate revenue over a period of time. Thus, their cost should be allocated as an expense over their useful life, rather than being recognized as a one-time expense in the period of purchase.

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