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kae0420
Mar 31, 2009, 01:25 PM
Hi - I'm new here, so I am sorry if I'm going about this in the wrong way.

I have a question about recording depreciation.

The example I was given shows a debit to depreciation expense and a credit to the cash account. The depreciation is for equipment, so I don't believe the cash account should be effected at all.

I'm not really sure what the effect would be of this error as far as total assets and value of depreciable assets.

Please let me know if this makes any sense!
ROLCAM
Apr 1, 2009, 02:47 AM
You are quite right.
There is NO connection with the Cash Account here.

The entry should be:-
DEBIT Depreciation Account.
CREDIT Provision for Depreciation of Asset A/c

You are again right.
If the credit to the Provision is not made
the balance of the net asset would be incorrect.
pready
Apr 4, 2009, 04:27 PM
Your Cash will be understated, and your depreciable assets will be overstated.
ROLCAM
Apr 4, 2009, 09:34 PM
pready,

When it comes to DEPRECIATION, CASH does
not come into the picture at all.
Cash flow is not interrupted whatsoever
pready
Apr 5, 2009, 02:23 PM
I KNOW THAT!!! I answered KAE0420 about the error of the transaction.