What are accruals and what is depreciation?

Question

Accepted Answer

Accruals are expenses incurred but not yet paid, while depreciation is the allocation of the cost of an asset over its useful life.

Accruals are expenses that have been incurred but not yet paid for, such as salaries, rent, or utilities.
Depreciation is the systematic allocation of the cost of a tangible asset over its useful life, reflecting its gradual wear and tear or obsolescence.
Accruals help match expenses with revenues in the same accounting period, while depreciation spreads the cost of an asset over its useful life.
Accruals are recorded as liabilities on the balance sheet, while depreciation is recorded as an expense on the income statement.
Examples of accruals include accrued wages, interest payable, and accrued taxes, while examples of depreciation methods include straight-line, double-declining balance, and units of production.

Accepted Answer

In appraisal, accrued depreciation is the loss in value from reproduction or replacement cost new due to all causes except depletion, as of the date of appraisal. This differs from accounting depreciation, which is the difference between the original cost and current book value of an item.

What are accruals and what is depreciation?

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