Final answer:
Expensing the full cost of a new delivery vehicle when it is purchased doesn't make sense because the vehicle will contribute to the company's operations over many future periods, and the cost should be spread across its useful life through depreciation to reflect accurate profits.
Step-by-step explanation:
If an entity purchases a new delivery vehicle, it doesn't make sense to expense the full cost of the vehicle at the time it is purchased because it will be used for many subsequent periods. The principle of matching expenses with revenues in the period in which they are incurred and earned directs that the cost of the vehicle should be spread over its useful life. Doing so allows the profits to reflect the true cost of operations for a given period.
Expensing the full cost immediately would result in an inaccurate representation of profitability, as choice (a) suggests, with profits being too low in the period of purchase. On the other hand, the vehicle will not necessarily be worth more each subsequent period as suggested in choice (b), and whether it will eventually be sold as mentioned in choice (c) does not have a bearing on how the purchase should be expensed. Therefore, the cost of the vehicle should be allocated over the time it contributes to the company's operations, which is known as depreciation. This accounting treatment aligns with the concept of accrual accounting and helps in providing a more accurate financial picture of the company.