Depreciation matches the cost of an asset against the revenues it will produce.

Question

Quizplus · Accepted Answer

Depreciation is a way of allocating the cost of an asset over its useful life, so it matches the cost of the asset against the revenue that it helps to generate each year. This allows a business to spread the cost of the asset over several years rather than recording the entire cost as an expense in the year it was acquired. Therefore, depreciation matches the cost of an asset against the revenues it will produce over its useful life.

Depreciation Matches the Cost of an Asset Against the Revenues