The adjusting entry to record depreciation for the company automobile would be
A) debit Accumulated Depreciation, Automobile; credit Depreciation Expense, Automobile.
B) debit Accumulated Depreciation, Automobile; credit Automobile.
C) debit Depreciation Expense, Automobile; credit Accumulated Depreciation, Automobile.
D) debit Depreciation Expense, Automobile; credit Automobile.

Question

Quizplus · Accepted Answer

Depreciation is the process of allocating the cost of a long-term asset over its useful life. In this case, the company automobile is a long-term asset that will lose its value over time.

To record the depreciation for the company automobile, we need to debit Depreciation Expense, Automobile and credit Accumulated Depreciation, Automobile. This entry reduces the value of the asset on the balance sheet and recognizes the expense on the income statement.

Option A is incorrect because it credits Depreciation Expense, Automobile instead of debiting it. 
Option B is incorrect because it credits Automobile, which is not a contra-asset account. 
Option D is incorrect because it only credits Automobile, which would not recognize the expense on the income statement.

The Adjusting Entry to Record Depreciation for the Company Automobile