What is the primary purpose of depreciation in accounting?

What is the primary purpose of depreciation in accounting?

Step 1: Understand that depreciation is a way to account for the decrease in value of an asset over time.
Step 2: Recognize that assets are things a business owns, like buildings or equipment, that help generate income.
Step 3: Realize that as these assets are used, they lose value, which is called consumption.
Step 4: Learn that depreciation spreads the cost of the asset over its useful life, matching it with the income it helps produce.
Step 5: Conclude that the primary purpose of depreciation is to accurately reflect the cost of using an asset in financial statements.

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