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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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(a) Explain the purpose of the two accounts: Depreciation Expense and Accumulated Depreciation. (b) What is the normal balance of each account? (c) Is it customary for the balances of the two accounts to be equal in amount? (d) In what financial statements, if any, will each account appear?

(a)

To determine

Depreciation expenses:

Depreciation expenses refer to the amount of depreciation that is reported (expenses) on the income statement.

Accumulated depreciation:

Accumulated depreciation refers to the amount of depreciation that is subtracted from the value of assets in the balance sheet over a period of time.

To explain: The purpose of the depreciation expense and accumulated depreciation.

Explanation

The purpose of the depreciation expense and accumulated depreciation are as follows:

Depreciation expense is the part of the cost of asset for a particular period. Depreciation expense account appears in the income statement, and it increases the expenses and reduces the income of the business...

(b)

To determine

To describe: The normal balance of the depreciation expense and accumulated depreciation.

(c)

To determine

To indicate: Whether it is customary for the balances of depreciation expense, and accumulated depreciation to be equal in amount.

(d)

To determine

To indicate: The financial statement in which each of the given accounts would be appeared.

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