Accumulated depreciation is considered a contra asset, appearing as a negative balance underneath the asset to which it is assigned in the asset section on the balance sheet. However, accumulated depreciation cannot be considered neither a true asset nor a true liability as it does not meet the qualifications for either category.Know More
Accumulated depreciation cannot be considered an asset, because the balance(s) stored in the account do not represent something that will produce an economic value in the future. Instead, the balance represents an amount of economic value that has already been consumed.
Accumulated depreciation cannot be considered a liability, either, because the balance is not representative of anything owed to a third party. Rather, the accumulated depreciation line on a spreadsheet is for purely internal use and represents nothing of value to a party outside of the organization.Learn more about Accounting
Appliance depreciation refers to the calculation that determines the loss of value of an appliance, usually on an annual basis. Depreciation can be claimed by individuals and businesses who own rental properties as a business deduction on tax returns.Full Answer >
The order of liquidity plays a part in the balance sheet by determining which assets are listed first. This order determines which are more useful on an immediate basis.Full Answer >
According to generally accepted accounting principals (GAAP), increases to the retained earnings account on the balance sheet are reflected with a credit entry. Decreases to returned earnings, as might be found with a net loss, are accounted for with a debit entry into the accounting journal.Full Answer >
The purpose of closing entries is to transfer financial data from temporary accounts to the balance sheet or income statement. As part of this, the temporary accounts are balanced to zero so that data is not carried over to the next accounting period.Full Answer >