Depreciation

question 206

Multiple Choice

Depreciation

• A) Is a process of asset valuation during the period of ownership by a company.
• B) Applies to land, land improvements, buildings, and equipment.
• C) Is accumulated and reported as a contra-asset on the statement of financial position.
• D) Is recognized as a way to accumulated cash for the eventual replacement of assets.

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Definitions:

Supplies Expense

An expense account that records the cost of consumable items used during an accounting period, such as office supplies.

Purchases

Transactions where goods or services are exchanged for money, typically recorded in the accounting period in which they occur.

Income Summary Account

An income summary account is an account used in the closing process that temporarily holds the balances of all income and expense accounts before transferring the net result to capital or retained earnings.

Net Loss

The amount by which company expenses exceed its revenues over a specified period, indicating a loss in financial performance.