Depreciation of a vehicle is an adjusting-entry item that can be recorded in the accounts.

Depreciation of a vehicle is an adjusting-entry item that can be recorded in the accounts.

• A. Depends on method
• B. True
• C. Not applicable
• D. False

Answer: (B)

Depreciation is recorded as an adjusting entry in accrual accounting. It represents allocating part of the vehicle’s cost to expense over its useful life, matching the expense to the periods it helps generate revenue. The adjusting entry typically debits depreciation expense and credits accumulated depreciation, which reduces the asset’s net book value over time. The exact amount depends on the depreciation method used (straight-line, declining balance, etc.), but the practice of recording depreciation as an adjusting entry remains standard. Hence, the statement is true.

Depreciation is recorded as an adjusting entry in accrual accounting. It represents allocating part of the vehicle’s cost to expense over its useful life, matching the expense to the periods it helps generate revenue. The adjusting entry typically debits depreciation expense and credits accumulated depreciation, which reduces the asset’s net book value over time. The exact amount depends on the depreciation method used (straight-line, declining balance, etc.), but the practice of recording depreciation as an adjusting entry remains standard. Hence, the statement is true.