The conservatism principle requires choosing a depreciation method which matches the cost of the asset to the periods when the asset provides benefits to the business.

Question

Quizplus · Accepted Answer

The conservatism principle in accounting refers to the concept of recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but it does not specifically dictate the choice of depreciation method. The matching principle is the one that requires the cost of an asset to be matched to the periods when the asset provides benefits.

The Conservatism Principle Requires Choosing a Depreciation Method Which Matches