In which financial statement do adjustments for depreciation appear?

Adjustments for depreciation appear in both the income statement and the balance sheet, making that the correct answer.

On the income statement, depreciation expense is recognized as an expense for the period, reducing the overall profit for that time. This reflects the wear and tear or usage of long-term assets, which is an essential part of determining net income.

On the balance sheet, accumulated depreciation is recorded as a contra asset account against fixed assets. This account reduces the book value of the assets to reflect their current worth after accounting for depreciation over time. Thus, the asset values presented on the balance sheet provide a more accurate representation of the company’s financial position.

By including depreciation adjustments in both statements, financial reports offer a comprehensive view of how asset usage impacts profitability and the valuation of assets owned by the company.