1.Golden rules of accounting 2.Depreciation and amortization

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Golden rules of accounting and depreciation/amortization

Golden rules of accounting are the basic principles that guide the accounting process
There are three golden rules of accounting: debit the receiver, credit the giver; debit what comes in, credit what goes out; debit expenses and losses, credit income and gains
Depreciation is the decrease in value of an asset over time due to wear and tear or obsolescence
Amortization is the process of spreading the cost of an intangible asset over its useful life
Depreciation and amortization are non-cash expenses that reduce the value of an asset on the balance sheet
Example of depreciation: A company buys a machine for $10,000 and expects it to last for 5 years. Each year, the company records $2,000 in depreciation expense
Example of amortization: A company buys a patent for $100,000 and expects it to last for 10 years. Each year, the company records $10,000 in amortization expense

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