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.
Appreciation is an antonym for depreciation.
The accountant calculated the depreciation of the computer over a period of five years.
Interest rates also have to be held down to secure a currency depreciation.
My 1998 Jaguar has suffered no small depreciation.
Devaluation and depreciation are often interchangeable, although there is a subtle difference. Devaluation refers to changing the value of a currency in a fixed exchange rate, while depreciation is decreasing the value in a floating exchange rate.
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 .
What is The application of the matching principle to depreciation of plant and equipment can best be described as?
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.
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.
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.
Matching concept is the basis for accrual accounting system so Yes they are same.
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.
Matching concepts advocates the matching of one fiscal year revenues with same fiscal year expenses while revenue recogition concepts advocates the no revenue can be recognised until product is not transferred to third party.
Systematic and rational allocation
Matching type assessment questions can be used when the answers require critical thinking. When the answer isn't straight forward, matching can help users identity concepts.
Matching principle. Go SPC.