Question

Depreciation expense on sales equipment appears in a separate line on which of the following budgets?

a) Production budget
b) Cash budget
c) Sales budget
d) Selling and administrative expenses budget

Answer 1

Depreciation expense on sales equipment is recorded in the Selling and administrative expenses budget, as it represents a non-cash, administrative expense spread over the useful life of the equipment.

Step-by-step explanation:

The depreciation expense on sales equipment appears in a separate line on the Selling and administrative expenses budget. This budget details the expenses not directly tied to producing goods or manufacturing but associated with selling the goods and managing the business. Depreciation on sales equipment is a non-cash expense representing the cost of the equipment spread over its useful life, and it is an administrative expense because it pertains to assets that assist in the operation of the business rather than the direct production of goods.