Which financial statement(s) is (are) affected when depreciation expense is recognized?
A) Income statement
B) Balance sheet
C) Statement of cash flows
D) Income statement and balance sheet
E) Income statement, balance sheet, and statement of cash flows

Question

Quizplus · Accepted Answer

Depreciation expense is recognized on the income statement, which reduces net income. At the same time, it also reduces the value of the fixed assets on the balance sheet through accumulated depreciation. Therefore, both the income statement and balance sheet are affected. The statement of cash flows is not affected by depreciation expense recognition.

Which Financial Statement(s) Is (Are) Affected When Depreciation Expense Is