Princeton Financial Services Company purchased computers that are to be used in its consulting services.Based on the matching principle,what account,other than Computers,should appear on the balance sheet as of December 31,2018?
A) Depreciation Expense - Equipment
B) Service Revenue
C) Accumulated Depreciation - Equipment
D) Equipment Expense

Question

Quizplus · Accepted Answer

Since Princeton Financial Services Company purchased computers to be used in its consulting services, it must account for the depreciation of those assets. As per the matching principle, depreciation expense should be recognized in the same period as the revenue earned by using those assets. Therefore, Accumulated Depreciation - Equipment is the account that should appear on the balance sheet as of December 31, 2018. Option A (Depreciation Expense - Equipment) is an income statement account, not a balance sheet account. Option B (Service Revenue) is a revenue account and does not relate to the purchase and use of assets. Option D (Equipment Expense) is not a standard accounting term and does not accurately reflect the nature of the account needed for depreciation expenses.

Princeton Financial Services Company Purchased Computers That Are to Be