On a worksheet,the adjusting entry to account for depreciation of equipment consists of
A) a debit to Depreciation Expense and a credit to Equipment.
B) a debit to Depreciation Expense and a credit to Accumulated Depreciation.
C) a debit to Equipment and a credit to Accumulated Depreciation.
D) a debit to Accumulated Depreciation and a credit to Equipment.

Question

Quizplus · Accepted Answer

The adjusting entry to account for depreciation of equipment involves recognizing an expense (Depreciation Expense) and reducing the value of the asset (Equipment). However, since depreciation is an ongoing process of gradually reducing the value of the asset over time, we need to also show how much has already been depreciated up to this point. That is where Accumulated Depreciation comes in - it is a contra asset account that shows the total amount of depreciation taken on an asset since it was acquired. Therefore, the entry should be a debit to Depreciation Expense (an income statement account) and a credit to Accumulated Depreciation (a balance sheet contra asset account). This reduces the carrying value of the asset on the balance sheet, but does not affect the company's overall net income because the expense was already incurred when the asset was initially acquired.

On a Worksheet,the Adjusting Entry to Account for Depreciation of Equipment