Kittery Services 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

According to the matching principle, expenses should be recognized in the same period as the revenue they helped to generate. In this case, since the computers were purchased for use in consultancy services, they will most likely generate revenue over several years. To match the cost of the computers with the revenue they help generate, the cost of the computers should be recognized over their useful lives as Depreciation Expense on the income statement.

Kittery Services Purchased Computers That Are to Be Used in Its