[amp_mcq option1=”Matching concept” option2=”Prudence concept” option3=”Timeliness concept” option4=”Reliability concept” correct=”option1″]
The correct answer is: A. Matching concept.
The matching concept is an accounting principle that requires expenses to be matched with the revenues they generate. This means that the cost of an asset should be allocated over the period of time it is used to generate revenue. Depreciation is a way of allocating the cost of a fixed asset over its useful life.
The prudence concept is an accounting principle that requires accountants to be conservative in their estimates. This means that they should not overstate assets or income, and they should not understate liabilities or expenses.
The timeliness concept is an accounting principle that requires financial statements to be prepared and issued in a timely manner. This means that they should be available to users of financial information as soon as possible after the end of the reporting period.
The reliability concept is an accounting principle that requires financial statements to be free from material error and bias. This means that they should be accurate and objective.
In conclusion, the matching concept is the accounting principle that requires depreciation to be charged on fixed assets.