Accounting for IGCSE & O level - Accounting Procedures (Section 19 - No. 8)
How does the matching principle relate to depreciation?
It requires depreciation to be recorded in the period the asset is purchased.
It requires depreciation expense to be matched with the revenues the asset helps generate.
It requires assets to be depreciated over their physical lifespan.
It has no relationship to depreciation.
Explanation
The matching principle is the cornerstone of depreciation, ensuring that the cost of an asset is allocated to the periods it benefits.
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