Depreciation Expense

question 28

Multiple Choice

Depreciation expense

• A) is subtracted from the statement of cash flows.
• B) is added to the statement of cash flows because it is not an expenditure.
• C) is listed on the income statement as a variable expense.
• D) appears only on the income statement.

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Definitions:

Factoring Arrangement Without Recourse

A financial transaction in which a business sells its receivables to a third party (a factor) at a discount, without the seller being responsible if the debtor fails to pay.

Loss on Sale of Receivables

A financial loss incurred when the sale price of accounts receivable is less than their carrying amount on the balance sheet.

Allowance for Doubtful Accounts

A contra-asset account that reduces the total accounts receivable on the balance sheet, accounting for estimated uncollectible debts.

Interest Income

The revenue earned from deposit accounts or investments through the receipt of interest payments.