Depreciation
Accrual accounting arises from the matching principle, which indicates that related revenues and costs should be recognized in the same period. If assets are acquired and totally consumed within an accounting period, the cost of the assets will be recognized as an expense of that period. When an asset is not totally consumed within a single accounting period, the cost of the asset must be allocated as an expense over the periods in which the asset is used to produce revenue. Depreciation arises from this attempt to match asset cost to the period of revenue production. The depreciation for an...
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