BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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As depreciation is recorded, stockholders’ equity is reduced
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Depreciation is an estimated expense to be recorded over the buildings estimated useful life
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As depreciation is recorded, the net book value of the asset is reduced
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As the value of the building decreases over time, it “depreciates”
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Detailed explanation-1: -Depreciation is not a cash expense as there is no amount of cash outflow in depreciation, it is just a decrease in the value of the asset.
Detailed explanation-2: -Answer and Explanation: Answer: b) It has a debit balance. The accumulated depreciation is presented in the balance sheet, as a deduction to the cost of the property, plant and equipment and other depreciable assets.
Detailed explanation-3: -Which of the following statements best describes the process of accounting depreciation? A process for recognizing the cost of an asset that should be matched against revenue earned as a result of using the asset over a period of time.
Detailed explanation-4: -Answer: Over the useful life of the plant asset. Which accounting concept is being applied when depreciation expense is recorded for plant assets? Answer: Matching expenses with revenue Page 19 Audit your understanding Why is annual depreciation for land not recorded?