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 account is debited in an adjusting entry to record depreciation on machinery?

Accumulated Depreciation

Cash

Machinery

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.

Recognize the accounts involved: Depreciation Expense is an expense account that records the periodic cost of using the asset, while Accumulated Depreciation is a contra-asset account that reduces the value of the asset on the balance sheet.

Determine the adjusting entry: Adjusting entries are made at the end of an accounting period to update accounts for transactions that have occurred but are not yet recorded. For depreciation, the expense must be recorded.

Identify the debit and credit: In the adjusting entry for depreciation, Depreciation Expense is debited to increase the expense account, and Accumulated Depreciation is credited to increase the contra-asset account.

Write the journal entry: The adjusting entry would be formatted as follows: Debit Depreciation Expense and Credit Accumulated Depreciation. This ensures the expense is recognized in the income statement and the reduction in asset value is reflected on the balance sheet.