A company made the following entry in their books: Dr.Depreciation expense $15,000, Cr.Accumulated depreciation $15,000.What is the event that most likely occurred?
A)The company bought a capital asset.
B)The company sold a capital asset.
C)The company recorded that a portion of the capital asset that had been used during the period.
D)The company adjusted the capital asset to reflect the change in market value.

Question

Quizplus · Accepted Answer

The entry is a typical depreciation entry, indicating that the company recorded the expense for the usage of the capital asset during the period. The debit to Depreciation expense marks the expense incurred during the period, while the credit to Accumulated depreciation shows the increase in the total accumulated depreciation of the asset. Option A is incorrect since there is no purchase of capital asset involved. Option B is wrong because a sale would result in a credit to cash or accounts receivable, not accumulated depreciation. Option D is also incorrect because the market value does not directly affect the depreciation calculation.

A Company Made the Following Entry in Their Books: Dr