Accounting for IGCSE & O level - Accounting Procedures (Section 2 - No. 5)
What do the entries involve to make a journal for annual depreciation charge for the non-current asset?
Debit the income statement with the depreciation charge, debit the depreciation account
Debit the income statement with the depreciation charge, credit the provision for depreciation account.
Debit the income statement and the provision for depreciation account with the annual depreciation charge.
Credit the income statement and credit the provision for depreciation account.
Explanation
The journal entry should reflect that the depreciation charge is an expense, reducing profit, while the provision for depreciation is accumulated.
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