Question

Remaining Time: 2 hours, 12 minutes, 43 seconds. Question Completion Status: QUESTION 11 Which of the following requires businesses to record depreciation? going concern principle revenue recognition principle O matching principle cost principle

Answer 1

Option C "Matching Principle" is Correct.

Explantion : According to this Principle, Income of period should be match with concerned period expenses.In other word expenses should be adjusted according to the income so that income statement show true and fair face of Profit / Loss. All unearned income,outstanding expenses,accured income ,prepaid expenses etc should be adjusted for accounting period.

Depreciation expenses is reduction of assets value that are occured due to passing of time , uses of assets etc.Adjustment of depreciation expenses should be made at end of financial year to find actual income and actual value of assets.

Other option explanations:-

Going Concern:- According to this concept , Business continues for indefinite period it is close by consent of owners or legal order/compulsion.

Revenue Recognition : According to this concept ,Revenue should be recognise when it is earned and realized/realizable

Cost principle:- According to this concept,transaction should be recorded at historical purchase price.