Depreciation is a process of____________?
Correct answer: C. Allocation
- A. Valuation
- B. Valuation and allocation
- C. Allocation
- D. Appropriation
Explanation
Depreciation is an allocation process: the depreciable cost of an asset is systematically assigned to the periods benefiting from its use. It is not a valuation of current market worth or an appropriation of profit.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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