Question

Kittery Services, Inc. purchased computers that are to be used in its consultancy services. Based on the matching principle, the related account that should appear on the income statement for the year ended December 31, 2016 is ________.

A. Equipment Expense
B. Accumulated Depreciation
C. Service Revenue
D. Depreciation Expense
E. None of the above

Answer 1

The related account that should appear on the income statement for the year ended December 31, 2016, is Depreciation Expense.

Step-by-step explanation:

The related account that should appear on the income statement for the year ended December 31, 2016, based on the matching principle, is D. Depreciation Expense.

The matching principle states that expenses should be recognized in the same accounting period as the related revenue. Since the computers were purchased for use in consultancy services, the depreciation expense associated with the computers should be recognized on the income statement in the same period in which the consultancy services revenue is recognized.

Therefore, option D, Depreciation Expense, is the correct answer as it represents the recognition of expenses related to the computers on the income statement.