If adequate maintenance expenditure is incurred, depreciation need not be charged.

True

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False

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Solution

The correct option is B False
This statement is false. In Accrual accounting, matching principle states that the expenses should be recorded in the period in which the related revenues are earned. Depreciation is used to distribute the cost of an asset over its expected life span according to matching principle.

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Similar questions

Distinguish between capital and revenue expenditure and state whether the following statements are items of capital or revenue expenditure.
(a) Expenditure incurred on repairs and whitewashing at the time of purchase of an old building in order to make it usable.
(b) Expenditure incurred to provide one more exit in a cinema hall in compliance with a government order.
(c) Registration fees paid at the time of purchase of a building.
(d) Expenditure incurred in the maintenance of a tea garden which will produce tea after four years.
(e) Depreciation charged on a plant.
(f) The expenditure incurred in erecting a platform on which a machine will be fixed.
(g) Advertising expenditure, the benefits of which will last for four years.

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