Concept of depreciation along with journal entries.

Question

Accepted Answer

Depreciation is the decrease in value of an asset over time. Journal entries are made to record the depreciation expense.

Depreciation is a non-cash expense that reduces the value of an asset over its useful life.
The journal entry for depreciation includes a debit to Depreciation Expense and a credit to Accumulated Depreciation.
Accumulated Depreciation is a contra asset account that shows the total amount of depreciation taken on an asset.
For example, if a company purchases a machine for $10,000 with a useful life of 5 years and no salvage value, the annual depreciation expense would be $2,000 ($10,000/5).
The journal entry for the first year's depreciation would be a debit to Depreciation Expense for $2,000 and a credit to Accumulated Depreciation for $2,000.

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