Depreciation of the business is recorded in which of the following financial statement
Question
Depreciation of the business is recorded in which of the following financial statement
Solution
Depreciation of a business is recorded in the Income Statement and the Balance Sheet.
-
Income Statement: Depreciation is an expense, and like all other expenses, it is deducted from the revenue when calculating the net income of the business in the income statement.
-
Balance Sheet: Depreciation is also recorded in the balance sheet. It is subtracted from the total value of the business's assets. Over time, as assets are used, they depreciate, or lose value. This decrease in value is recorded as depreciation in the balance sheet.
So, the correct answer is that depreciation is recorded in both the Income Statement and the Balance Sheet.
Similar Questions
Depreciation is an accounting method used to:a.Calculate the net profit of a companyb.Determine the market value of assetsc.Allocate the cost of an asset over its useful lifed.Calculate the total liabilities of a company
what is depreciation in accounts
How would you account for depreciation on an asset that has been revalued upward? What are the implications for the financial statements?
What is the purpose of the depreciation accounting concept?Question 5Answera.Helps businesses accurately reflect the wear and tear or loss in value of their assetsb.Ascertains initial purchase pricec.All the optionsd.The estimated duration the asset will be in servicee.The expected value of the asset at the end of its useful life
A company commenced business on 1 July 2022. On 30 June 2023, an extract of the statement of financial position prepared for internal purposes, but excluding the effect of income tax, disclosed the following information: AssetsLiabilitiesCash$20,000Accounts Payables$50,000Inventories60,000Provision for annual Leave8,000Plant200,000 Accumulated Depreciation(20,000) Additional information: The plant was acquired on 1 July 2022. Depreciation for accounting purposes was 10% (straight-line method), while 20% (straight-line) was used for tax purposes. The tax rate is 30%.The deferred tax liability and deferred tax asset are:Group of answer choicesDTL = $2,400 and DTA = $6,000DTL = $20,000 and DTA = $8,000DTL = $8,000 and DTA = $20,000DTL = $6,000 and DTA = $2,400
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.