Which accounts are affected by the depreciation entry?

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Multiple Choice

Which accounts are affected by the depreciation entry?

Explanation:
Depreciation allocates the cost of a fixed asset over its useful life and is recorded as a non-cash expense. The entry debits Depreciation Expense to reflect the expense on the income statement and credits Accumulated Depreciation, a contra-asset that reduces the asset's book value on the balance sheet. Since depreciation doesn’t involve cash and doesn’t directly affect revenue or inventory, those accounts aren’t part of the entry. Thus, the accounts affected are Depreciation Expense and Accumulated Depreciation.

Depreciation allocates the cost of a fixed asset over its useful life and is recorded as a non-cash expense. The entry debits Depreciation Expense to reflect the expense on the income statement and credits Accumulated Depreciation, a contra-asset that reduces the asset's book value on the balance sheet. Since depreciation doesn’t involve cash and doesn’t directly affect revenue or inventory, those accounts aren’t part of the entry. Thus, the accounts affected are Depreciation Expense and Accumulated Depreciation.

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