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

The journal entry to record depreciation on factory equipment is to:

Debit Factory Equipment; Credit Depreciation Expense

Debit Depreciation Expense; Credit Accumulated Depreciation

Debit Depreciation Expense; Credit Factory Equipment

Debit Accumulated Depreciation; 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 reflects the wear and tear or obsolescence of the asset over time.

Identify the correct accounts involved: Depreciation Expense is an expense account that records the periodic depreciation cost, and Accumulated Depreciation is a contra-asset account that accumulates the total depreciation recorded for an asset.

Determine the correct journal entry: Depreciation Expense is debited to increase the expense, and Accumulated Depreciation is credited to increase the contra-asset account, reducing the book value of the asset.

Understand why other options are incorrect: For example, debiting Factory Equipment directly would incorrectly increase the asset's value, which is not the purpose of recording depreciation.

Apply the correct journal entry format: The journal entry should be written as follows: Debit Depreciation Expense; Credit Accumulated Depreciation. This reflects the periodic depreciation cost and the reduction in the asset's book value.