Yes depreciation expense is also an example of matching concept as in this way part of fixed asset cost is apportioned to income statement and depreciation is not used in cash basis of accounting as there cash purchase is fully expensed in purchasing year.
Advantages: Easy to use Matches Cost to revenues (Matching Concept) Disadvantages: Depreciation can not be charged when the Asset is not in use.
Prudence concept tends to understate the profit . depreciation is a tool through which we record our losses , which means that our profit is declining .This means that depreciation is a supportive tool for reducing profit. Matching concept tends to record the expense to the revenue generated from the assets . Hence depreciation fulfils the requirements of both the concepts .
Depreciation is used to allocate the fixed cost of asset to specific fiscal years during which that fixed asset is used to earn revenue if depreciation is not used then all cost is charged to one fiscal year which is against the matching concept.
Depreciation is necessary because in this way the cost of asset is allocated to all those fiscal years in which that asset is used to generate revenue and if depreciation is not charged for all those years then it is against the matching concept as asset is used to generate revenue for more than one fiscal year but cost is allocated to one specific year.
Depreciation or Amortization.
Advantages: Easy to use Matches Cost to revenues (Matching Concept) Disadvantages: Depreciation can not be charged when the Asset is not in use.
Prudence concept tends to understate the profit . depreciation is a tool through which we record our losses , which means that our profit is declining .This means that depreciation is a supportive tool for reducing profit. Matching concept tends to record the expense to the revenue generated from the assets . Hence depreciation fulfils the requirements of both the concepts .
basic matching concept of account is that all expenses of same fiscal years should be matched with revenues of that fiscal year and depreciation is also charged for that portion of asset which is used in specific fiscal year.
Depreciation is used to allocate the fixed cost of asset to specific fiscal years during which that fixed asset is used to earn revenue if depreciation is not used then all cost is charged to one fiscal year which is against the matching concept.
What is The application of the matching principle to depreciation of plant and equipment can best be described as?
Depreciation is necessary because in this way the cost of asset is allocated to all those fiscal years in which that asset is used to generate revenue and if depreciation is not charged for all those years then it is against the matching concept as asset is used to generate revenue for more than one fiscal year but cost is allocated to one specific year.
Depreciation or Amortization.
concept of pacing or matching and mirroring another individual
Matching revenues and expenses is called "Matching concept" of Accounting.
True
Depreciation policy is management thing that what depreciation method to use and how much depreciation to charge to each asset. Depreciation concepts are concepts which govern the depreciation process which management cannot change they are universal rules to follow depreciation that how straight line depreciation work etc.
Causes of depreciation is that wear and tear which affects the fixed asset during the year in which that asset is utilized in revenue generation process of business as well as it is not fair to use assets for more than one fiscal year for revenue generation but all cost allocate to one specific fiscal year which is against the matching concept.