Which of the following statements is TRUE?
A)The depreciation expense reported on external financial statements prepared for shareholders is guided by generally accepted accounting principles.
B)The depreciation expense reported on a federal income tax return is guided by generally accepted accounting principles.
C)The depreciation expense reported on the income statement must match (the matching principle)the depreciation expense reported on a Federal income tax return.
D)MACRS is an accelerated depreciation method that can be used for financial reporting.

Question

Quizplus · Accepted Answer

Generally accepted accounting principles (GAAP) guide the depreciation reported on external financial statements prepared for shareholders. The depreciation reported on a federal income tax return may be different due to tax rules and regulations. The matching principle requires that expenses be matched with the revenue they help generate, so the depreciation reported on the income statement should match the depreciation expense reported on the balance sheet, not necessarily the one on the tax return. MACRS is an accelerated depreciation method that is usually used for tax purposes, not financial reporting.

Which of the Following Statements Is TRUE