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 credited in a journal entry to record depreciation on machinery?

Machinery

Accumulated Depreciation—Machinery

Cash

Depreciation Expense—Machinery

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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 accounts involved: Depreciation affects two accounts—Depreciation Expense (an expense account) and Accumulated Depreciation (a contra-asset account). Accumulated Depreciation reduces the value of the asset on the balance sheet.

Determine the journal entry structure: In a journal entry, expenses are debited to increase them, and contra-assets are credited to increase their balance. This aligns with the accounting equation.

Apply the correct accounts: Depreciation Expense is debited to record the expense for the period, and Accumulated Depreciation—Machinery is credited to reflect the accumulated depreciation for the machinery.

Write the journal entry: The journal entry would be formatted as follows: Debit Depreciation Expense—Machinery and Credit Accumulated Depreciation—Machinery. This ensures proper recording of the depreciation transaction.