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depreciation

187 views 10 replies

sunil

executie

185 Points Joined March 2014

after depreciation asset value reduced and posted to PL accounts and reduce profits
but in actual it not affect cash balance
depreciation amount can be added to cash balance ?

Replies (10)

CA Neelima Kotha

Consultant

606 Points Joined August 2018

Depreciation is a non-cash expenditure. Cash balance will not be affected by depreciation

RAJA P M

"Do the Right Thing...!!!"

128116 Points Joined January 2015

No... Depreciation is applied in Fixed Assets value. The Asset value reduced as Depreciation and It's transferred to PandL Account ...

Cash Ledger is not involved in this Transaction.

sunil

executie

185 Points Joined March 2014

my confusion is supose 200000 profit before changing dep after depreciation profit 180000 but my cash remain 200000

Yes...cash balance will remain unchanged.
Depreciation is affected in P&L account and Fixed asset account. Profit is reduced in P&L account and also depreciation is deducted from Fixed asset balance.
There is no need to alter cash balance

sunil

executie

185 Points Joined March 2014

thanks to all for reply and information

RAJA P M

"Do the Right Thing...!!!"

128116 Points Joined January 2015

Yeah... Depreciation and It's value not affected in Cash Ledger...

Also You ll see Your book entry of Depreciation. It's as

Dr. Depreciation A/c - Rs. XXX
Cr. Fixed Asset A/c - Rs. XXX

See the entry it's from Fixed Asset value to Depreciation Value...