Question

Care Foundation is a voluntary health and welfare organization funded by contributions from the general public. In its Statement of Activities, the annual provision for depreciation should:A) be included as an expense and a reclassification of donor-restricted net assets. B) be included as an element of expense. C) be included as an element of support.D) not be included.

Answer 1

B) be included as an element of expense.

Step-by-step explanation:

Since Care Foundation is a voluntary health and welfare organization funded by contributions from the general public. In its Statement of Activities, the annual provision for depreciation should be included as an element of expense.

However, the provisions for depreciation has a credit balance because it is a contra asset.

In Accounting, depreciation is the decrease in the value of an asset over a period of time as a result of wear and tear. It is an expense charged from the income statement in the current year.