2-4DQ What is the difference between a... [FREE SOLUTION]

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Foundations Of Financial Management

Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen

Business Studies

16th Edition 路 768 pages

ISBN: 9781259277160

Chapter 2: 2-4DQ (page 46)

What is the difference between accumulated depreciation and depreciation expense? How are they related?

Short Answer

Expert verified

Accumulated depreciation is defined as the total depreciation charged on the asset of the company since the asset was purchased and used. The depreciation expense is used to compute the accumulated depreciation.

Step by step solution

Difference between the accumulated depreciation and the depreciation expense

Depreciation expense is referred to the depreciation of one period, and accumulated depreciation is referred to the aggregate depreciation of all the periods during which the asset is held by the company.

Relation between the accumulated depreciation and the depreciation

Depreciation is charged to record the usage cost of the asset with the benefit gained from its use.And the accumulated depreciation is the total of all the recorded depreciation charged on the asset on a specific date.

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Stud Clothier
Balance sheet 20X1
Assets		Liabilities and Equity
Cash	\)60,000	Account payable	\(220,000
Account receivable	240,000	Accrued taxes	30,000
Inventory	350,000	Bonds payable (long term)	150,000
Plant and equipment	410,000	Common stock	80,000
		Paid in capital	200,000
		Retained earnings	380,000
Total assets	\)1,060,000	Total LIbilities and Equity	$1,060,000

Retained earning	Bond payable
Accounts payable	Accrued wages payable
Prepaid expenses	Accounts receivable
Plant and equipment	Capital in excess of par
Inventory	Preferred stock
Common stock	Marketable security

Stud Clothier
Balance sheet 20X1
Assets		Liabilities and Equity
Cash	\)60,000	Account payable	\(220,000
Account receivable	240,000	Accrued taxes	30,000
Inventory	350,000	Bonds payable (long term)	150,000
Plant and equipment	410,000	Common stock	80,000
		Paid in capital	200,000
		Retained earnings	380,000
Total assets	\)1,060,000	Total LIbilities and Equity	$1,060,000

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What is the difference between accumulated depreciation and depreciation expense? How are they related?

Short Answer

Step by step solution

Difference between the accumulated depreciation and the depreciation expense

Relation between the accumulated depreciation and the depreciation

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