Non-Cash Accounting Items and Depreciation

B

The correct answer is A. Income statement.

An income statement is a financial statement that shows a company's revenues and expenses over a specific period of time, usually a quarter or a year. It is also known as a profit and loss statement (P&L statement) or statement of operations.

The income statement takes into account some non-cash accounting items such as depreciation because it includes the company's expenses, including the depreciation of fixed assets. Depreciation is a non-cash expense that reduces the value of a fixed asset over its useful life. The income statement subtracts this non-cash expense from revenue to arrive at the company's net income.

On the other hand, the cash flow statement is a financial statement that shows the inflows and outflows of cash during a specific period of time. It does not include non-cash items such as depreciation, but it does provide information on the company's cash position and its ability to generate cash from operations.

The balance sheet is a financial statement that shows the company's assets, liabilities, and equity at a specific point in time. It does not take into account non-cash items such as depreciation, but it does provide information on the company's financial position and its ability to meet its financial obligations.

The statement of owner's equity is a financial statement that shows the changes in the owner's equity over a specific period of time. It does not take into account non-cash items such as depreciation, but it does provide information on the owner's investment in the company and the company's earnings or losses.