Which of the following would be included on an accrual income statement but not a cash income statement?

Which of the following would be included on an accrual income statement but not a cash income statement?

• A. Depreciation on Machinery
• B. Principal Payments on Debt
• C. Income From Other Investments
• D. Revenue From Customers

Answer: (A)

On an accrual income statement, expenses are recognized when they help generate revenue, not when cash is paid. Depreciation on machinery is a non-cash allocation of the asset’s cost over its useful life, so it lowers net income without any cash outlay in the period. A cash income statement records only actual cash receipts and payments, so no depreciation entry appears there because it doesn’t involve cash flows. The other options involve real cash movements or timing of cash receipts, so they don’t fit the idea of an item that appears on an accrual statement but not on a cash statement. Therefore, depreciation on machinery is the correct choice.

On an accrual income statement, expenses are recognized when they help generate revenue, not when cash is paid. Depreciation on machinery is a non-cash allocation of the asset’s cost over its useful life, so it lowers net income without any cash outlay in the period. A cash income statement records only actual cash receipts and payments, so no depreciation entry appears there because it doesn’t involve cash flows. The other options involve real cash movements or timing of cash receipts, so they don’t fit the idea of an item that appears on an accrual statement but not on a cash statement. Therefore, depreciation on machinery is the correct choice.