Which of the following most accurately reflects the concept of depreciation as used in accounting?
A) The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred.
B) The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.
C) A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved.
D) An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets.

Question

Quizplus · Accepted Answer

Depreciation in accounting is the process of allocating the cost of a tangible asset to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset. It is not simply a process of charging the decline in value to income or matching the physical deterioration of the asset. Depreciation is intended to recognize the gradual use or consumption of an asset over its useful life, and to match the expense of using that asset with the revenue it generates. Choice B is the most accurate reflection of this concept.

Which of the Following Most Accurately Reflects the Concept of Depreciation