Accumulated depreciation, as used in accounting, primarily represents:
A) funds (or cash) set aside to replace the asset being depreciated.
B) earnings retained in the business that will be used to purchase another plant asset when the present asset becomes fully depreciated.
C) an expense that is shown in the statement of comprehensive income.
D) the portion of the cost of a plant asset written off as an expense since the asset was acquired.

Question

Quizplus · Accepted Answer

Accumulated depreciation represents the portion of the cost of a plant asset that has been written off as an expense since the asset was acquired. It is a contra asset account that is deducted from the cost of the asset to arrive at its book value. It reflects the decrease in the value of the asset due to wear and tear, aging, or obsolescence over its useful life. It does not represent funds or cash set aside, retained earnings, or an expense shown in the statement of comprehensive income.

Accumulated Depreciation, as Used in Accounting, Primarily Represents