Dynamic Services Company purchased computers that are to be used in its consulting services.Based on the matching principle,the related account that should appear on the income statement for the year ended December 31,2018 is ________.
A) Depreciation Expense - Equipment
B) Service Revenue
C) Accumulated Depreciation - Equipment
D) Equipment Expense

Question

Quizplus · Accepted Answer

Depreciation is an expense that reflects the cost of using the computer equipment over its useful life. As the equipment is used to generate revenue in Dynamic Services Company's consulting services, its cost should be recognized as Depreciation Expense - Equipment on the income statement. Service Revenue would be an income account, Accumulated Depreciation - Equipment is a contra-asset account that appears on the balance sheet, and Equipment Expense is not an appropriate account as it does not reflect the cost of using the equipment over time.

Dynamic Services Company Purchased Computers That Are to Be Used