How Is Depreciation Expense Reported in the Financial Statements

question 80

Multiple Choice

How is depreciation expense reported in the financial statements?

• A)Long-term liabilities section of the statement of stockholder's equity
• B)Financing activities section of the statement of cash flows
• C)Current assets section of the balance sheet
• D)Operating expenses section of the income statement

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Definitions:

Manufacturing Overhead Account

An accounting term that aggregates all indirect costs associated with manufacturing a product.

Adjusting

The process of making modifications to certain accounts through adjusting entries to reflect the true financial status of a business at the end of an accounting period.

Work in Process Inventory

This refers to the materials, labor, and overhead costs for products that are in the production process but not yet completed.

Overapplied Overhead

A situation where the allocated manufacturing overhead cost is more than the actual overhead incurred.