Instead of expensing the purchase of the vehicle, the business records it as an asset on the
Balance Sheet. It then records depreciation
expense as it uses the car in its daily
Ioperations. From the material covered in the
accounting course, which concept is represented
with depreciation expense?
Going Concern (when financial statements are
prepared with the expectation that a business will
remain in operation indefinitely.
Objective Evidence (when a source document is
prepared for each transaction).
Adequate Disclosure (when financial statements
contain all information necessary to understand a
business's financial condition.
The Matching Principle (matching revenue with
expenses).