Which accounting principle dictates whether the cost of a repair should be expensed?
A)Conservatism
B)Entity
C)Objectivity
D)Matching

Question

Quizplus · Accepted Answer

The matching principle dictates that expenses incurred during a period should be matched with the revenues earned during the same period. Therefore, if the repair cost is related to an asset that is already being used to generate revenue, the cost should be capitalized and depreciated over the asset's useful life. However, if the repair cost is not related to an asset that is generating revenue or does not increase the asset's useful life, it should be expensed in the period it was incurred to adhere to the matching principle.

Which Accounting Principle Dictates Whether the Cost of a Repair