Depreciation Word Scramble
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Question | Answer |
Whether a company uses GAAP rules or tax rules to compute depreciation recorded in the financial statements dependson upon how the company uses its financial statements. True or false and why? | True. If a company does not need its financial statements reviews or audited by a CPA, it can use the tax depreciation amount on its financial statements. |
If a company's year-end financial statements are to be reviewed by a CPA, the depreciation amount for the statements is generally computed under GAAP rules. True or false and why? | True. If the financial statements are to be reviewed by a CPA, either depreciation must be computed under GAAP rules or the tax depreciation amount cannot differ materially from the GAAP depreciation amount. |
Even if a company's tax and GAAP depreciation expense are not materially different, a CPA conducting an audit will require the company to use the amount computer under GAAP. True or false and why? | False. If the difference between GAAP and tax depreciation is not material, the tax amount can be used for book purposes (this is, for the financial statements). |
The adjusting entry to record $5,000 of depreciation expense in the general ledger is. | Depreciation Expense $5,000 --- Accumulated Depreciation $5,000 |
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djarcadian
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