please tell me that depreciation is in which nature of account and while posting the accounting entries how we follow the 3 golden rules of accounting?
please answer these two questions,
thanking you
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Depreciation entry
Replies (2)
Depreciation is in the nature of nominal account, For ex. while posting the entry for depreciation on computer
Depreciation A/c Dr
To Computer A/c
Because depreciation is non monetory expenses & it is nominal account, its accounting rule is "debit all Expenses & Losses Credit all incomes & gains". Depreciation is an expense so we have to debit it.
Computer is in the nature of real a/c, its rule is "Debit what comes in Credit what goes out". When reduction in the Value of asset we have to credit it th e asset A/c.
The main concept behind to provide depreciation is revenue matching concept... Means income is earned due to use of particular asset.
so we have to provide depreciatuon on asset.
I totally agree with anand
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