Question

Depreciation expense

	a.	increases when the monthly adjustment for depreciation is recognized
	b.	decreases when the monthly adjustment for depreciation is recognized.
	c.	is reported on the balance sheet with the expense accounts.
	d.	is allocated as a liability during future periods.

Answer 1

Depreciation expense :-

The correct answer is Option A - Increases when the monthly adjustment for depreciation is recognized. Depreciation expense is a charge on the assets of the company that is reported on the income statement. When a depreciation adjustment is recognized it increases the depreciation expenses for the period.

Option B is incorrect. When the depreciation expense is recognized it increases the monthly adjustment and does not decrease it as mentioned within the option. Hence, this option is incorrect.

Option C is incorrect. Depreciation expense is not reported on the balance sheet but is reported on the income statement.

Option D is incorrect. Depreciation expense is an income statement item and is not a liability as mentioned in this option. Hence this is not a valid answer.

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