Question
How does the Matching Principle apply to depreciation?
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Answer
According to the Matching Principle, the expenses for an accounting period are matched against related revenues for the determination of profit. On account of this principit, the purchase price of the fixed asset is not taken but only depreciation on fixed asset related to the accounting period is taken.
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Similar questions
Enter the following transactions in the Journal of Ganesh Bros.:
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2017
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₹
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March 3
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Sold goods to Dev
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1,00,000
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March 5
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Received from Dev in full settlement of his account
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98,000
|
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March 6
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Sold goods to Manmohan
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80,000
|
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March 8
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Manmohan returned goods
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1,000
|
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March 15
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Received from Manmohan in full settlement of his account
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78,200
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| March 16 | Received cash from Ram and | 19,500 |
| Discount allowed | 500 | |
| March 20 | Paid cash to Pawan and | 4,700 |
| Discount received from him | 300 | |
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March 25
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Sold goods to Varun of the list price of ₹ 25,000 at 20% trade discount
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What are Provisions?
"Accounting information should be comparable”. Do you agreewith this statement? Give two reasons.
How is Trade Discount recorded in the books of account?
Rectify the following entries assuming that the narration in each case is correct:
Elucidate the following statement:
Cash Book is both Journal and Ledger'.
Cash Book is both Journal and Ledger'.
Is it possible to pass a single journal entry for two or more transactions?
Is the agreement of a Trial Balance absolute proof of the accuracy of the books of account? If not, what are the errors which remain even after agreement?
Pass entries in the books of all parties in the following cases assuming CGST @ 6% and SGST @ 6%:
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2018
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March 1
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Mahesh Chandra of Bihar purchased goods for ₹ 1,00,000 from Sunil Soren of Jharkhand and sold the same to Deepak Patnaik of Odisha for ₹ 1,50,000.
|
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March 5
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Deepak Patnaik sold goods to Suresh Yadav of Odisha for ₹ 1,80,000.
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March 10
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Suresh Yadav sold goods to Ravi Chakravarti of West Bengal for ₹ 2,50,000.
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March 14
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Ravi Chakravarti sold goods costing ₹ 2,50,000 to Sanjay Diwedi of West Bengal at a profit of 40% on cost.
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According to which concept, depreciation is to be charged as per one particular method year after year?