All 25 Trial Balance questions
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How do you locate the difference when a trial balance does not balance? What is the difference between a trial balance and a balance sheet? Why do assets and expenses have debit balances while income, liabilities, and capital have credit balances? How do accruals and prepayments affect the figures taken to the financial statements from the trial balance? What is the difference between a trial balance error being 'in the trial balance' versus 'in the ledger'? What is an extended trial balance (ETB)? How does closing inventory appear in relation to the trial balance? How do compensating errors affect the trial balance? How is a suspense account shown if the trial balance still doesn't balance at reporting time? How do you incorporate a correction of a prior error into the trial balance / statement of corrected profit?
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Bookkeeping › Trial Balance

What is the effect of depreciation on the trial balance and statements?

Intermediate

Answer

Depreciation is a period-end adjustment: debit depreciation expense (income statement) and credit accumulated depreciation (a contra-asset in the balance sheet). If already posted, both appear in the trial balance; if not, it's added as an adjustment. Net book value = cost less accumulated depreciation.
Depreciation 2,000: Dr Depreciation Expense 2,000; Cr Accumulated Depreciation 2,000.
Real-world example Annual depreciation reduces the asset's net book value and appears as an expense reducing profit.

Common follow-ups: What is accumulated depreciation? | How is net book value calculated?

Correcting Errors Control Accounts Trial Balance
All 25 Trial Balance questions