Which statement relating to the accumulated depreciation account is correct?
A) It normally has a debit balance.
B) It reflects the portion of the cost of the asset that has been assigned as an expense since purchase.
C) It provides information on the market value of the asset.
D) It is classified as a liability in the balance sheet.

Question

Quizplus · Accepted Answer

Accumulated depreciation is a contra-asset account that represents the total amount of depreciation expense recognized on an asset from the date of acquisition to the reporting date. It has a credit balance and reflects the portion of the cost of the asset that has been assigned as an expense since purchase. Option A is incorrect as it does not normally have a debit balance. Option C is incorrect as it does not provide information on the market value of the asset. Option D is incorrect as it is not classified as a liability, but rather as a contra-asset account.

Which Statement Relating to the Accumulated Depreciation Account Is Correct