5 depreciation depreciation is the process of

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5. Depreciation Depreciation is the process of allocating the cost of an asset, such as a building or a piece of equipment, over the serviceable or economic life of the asset. Adjusting entries are a little different for depreciation. Business owners have to take accumulated depreciation into account. Accumulated depreciation is just what it says - the accumulated depreciation of a company's assets over the life of the company. The accumulated depreciation account on the balance sheet is called a contra- asset account, and it is used to record depreciation expense. Increases are recorded as credits in contra-asset accounts. When an asset is purchased, it depreciates by some amount every month. For that month, an adjusting entry is made to debit depreciation expense - equipment and credit accumulated depreciation by the same amount.
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Prepare the Adjusted Trial Balance After you make your adjusted entries, you post your adjusted entries to your general ledger accounts. Prepare the adjusted trial balance. The process is just like preparing the trial balance except the adjusted entries are used. You correct any errors that you found.
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