When recording depreciation in QuickBooks Online, which journal entry is correct?

• A. Debit Accumulated Depreciation; Credit Depreciation Expense
• B. Debit Depreciation Expense; Credit Accumulated Depreciation
• C. Debit Cash; Credit Depreciation Expense
• D. Debit Depreciation Expense; Credit Fixed Asset

Answer: (B)

Depreciation is recorded by recognizing an expense for the period and increasing the accumulated depreciation, a contra-asset, to reflect the asset’s reduced value over time. The correct entry debits Depreciation Expense to acknowledge the cost as an expense in the income statement and credits Accumulated Depreciation to accumulate the depreciation against the fixed asset.

This matches how depreciation works: it raises expenses without cash changing hands, and it reduces the asset’s net book value by increasing the accumulated depreciation balance.

Why the other approaches don’t fit: debiting the contra-asset and crediting the expense would decrease the accumulated depreciation and reduce the expense, which is the opposite of how depreciation should affect the books; there is no cash transaction in depreciation, so debiting cash is incorrect; and debiting the expense while crediting the fixed asset would directly reduce the asset value without using the accumulated depreciation contra-asset account, which isn’t the usual GAAP presentation for depreciation in most systems like QuickBooks Online.