Kittery Services,Inc.purchased computers that are to be used in its consultancy services.Based on the matching principle,the related account that should appear on the income statement for the year ended December 31,2016 is ________.
A)Depreciation Expense
B)Service Revenue
C)Accumulated Depreciation
D)Equipment Expense

Question

Quizplus · Accepted Answer

The matching principle requires that expenses be matched with the revenues they helped generate in the same accounting period. Since the computers are assets that will be used to generate revenue over multiple periods, they need to be depreciated over their useful lives, and the Depreciation Expense account should be used to allocate a portion of the cost of the computers as an expense in the income statement for each period.