On April 1 2022 nPropel Corporation paid $48000 cash for equipment that will be used in business operations.The equipment will be used for four years.nPropel records depreciation expense of $48000 for the calendar year ending December 31 2022.Which accounting principle has been violated?

Question

Quizplus · Accepted Answer

The expense recognition principle states that expenses should be recognized or recorded in the same period as the related revenue. Since the equipment will be used for four years, the $48,000 expense should be spread out over the four years of its useful life through depreciation. Recording the entire expense in the first year violates the expense recognition principle.

On April 1 2022 NPropel Corporation Paid $48000 Cash for Equipment