An end-of-period adjustment for depreciation of fixed assets involves an entry to an expense and
Click on the arrows to vote for the correct answer
A. B. C. D.A
An adjustment for depreciation expense matches expenses with revenues for the period. An expense is incurred and the asset is reduced by increasing the contra account.
An end-of-period adjustment for depreciation of fixed assets involves an entry to an expense and:
Answer: A. the increase of a contra account
Explanation: When recording the end-of-period adjustment for depreciation of fixed assets, the entry involves two accounts: an expense account and a contra account.
Expense Account: Depreciation Expense Depreciation expense represents the allocation of the cost of a fixed asset over its useful life. It is recorded as an expense on the income statement. Depreciation expense reduces the net income of a company and reflects the wear and tear or obsolescence of its fixed assets over time.
Contra Account: Accumulated Depreciation Accumulated Depreciation is a contra account to the fixed asset account. It represents the cumulative amount of depreciation expense recorded over the life of the fixed asset. Contra accounts are used to offset the balance in another account. In this case, Accumulated Depreciation offsets the cost of the fixed asset on the balance sheet, resulting in a net carrying value.
The end-of-period adjustment for depreciation involves increasing the Depreciation Expense by the amount of depreciation incurred during the period. This expense is debited, reducing the net income. At the same time, the Accumulated Depreciation is credited, increasing its balance. The contra account, Accumulated Depreciation, offsets the cost of the fixed asset, resulting in a net carrying value or book value.
Therefore, the correct answer is A. the increase of a contra account.