Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

3. Accrual Accounting Concepts

Adjusting Entries: Depreciation

Financial Accounting

3. Accrual Accounting Concepts

Adjusting Entries: Depreciation

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Multiple Choice

Which of the following is the correct adjusting journal entry to record depreciation expense for the period?

Debit Accumulated Depreciation; Credit Depreciation Expense

Debit Depreciation Expense; Credit Accumulated Depreciation

Debit Depreciation Expense; Credit Equipment

Debit Equipment; Credit Depreciation Expense

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Verified step by step guidance

Understand the concept of depreciation: Depreciation is the allocation of the cost of a tangible asset over its useful life. It represents the wear and tear or obsolescence of the asset over time.

Identify the accounts involved: Depreciation Expense is an income statement account that records the expense for the period, while Accumulated Depreciation is a contra-asset account on the balance sheet that reduces the value of the asset.

Determine the correct journal entry: The adjusting journal entry for depreciation involves debiting Depreciation Expense to record the expense and crediting Accumulated Depreciation to increase the contra-asset account.

Understand why other options are incorrect: For example, debiting Accumulated Depreciation and crediting Depreciation Expense reverses the correct entry, and debiting Equipment and crediting Depreciation Expense incorrectly reduces the asset account directly instead of using Accumulated Depreciation.

Apply the correct journal entry format: The correct adjusting journal entry is: Debit Depreciation Expense; Credit Accumulated Depreciation. This ensures proper financial reporting and compliance with accounting principles.