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Depreciation
when we charge depriciation to provision account we do journal entry depriciation ac debit to provision
but charging to provision must lead to decrease in balance of provision as in case of bad debts being charged to provision for bad debts, provision balance decreases
but in charging dep to provision , depriciation balance increases why?
Replies (2)
Dear,
Depn -Dr Bala (Non-cash exps)
Depn Provision- Credit Bala (Provision created for depn instead of direct charge/ crdit to asset a/c) entry .depn dr to depn prov & depn prov stud in l/bty prov side & depn trf into p& l A/c.& no effect on asset.i.e it cnt be dr or crtd.
Bad Debt- dr bal ( Expense)
Bad debt provision- Credit bala (provision created for non-receipt of money from debtors i.e from P& L A/c) entry . P&l A/c dr to bad debt provision n stud in bs l/bty provision side or P&l A/c dr to bad debt provision n bad debt prov dr to debtors a/c (so bad debt prov trf into debtors a/c which we were doing in 11 & 12th std final a/cs.) hence impact of dr bala n credit balance are alws same.
I am unable to understand the explainAtion as well as the short form text
please elaborate
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