Question

At the end of every year the balance on depreciation account is transferred to the __________ account.

• A. Balance Sheet
• B. Profit and Loss account
• C. Trading Account
• D. Manufacturing Account

Answer 1

The correct option is B Profit and Loss account

Depreciation is defined as the reduction in the value of asset due to normal wear & tear, usage and obsolescence. Depreciation is a loss and debited to profit & loss account.

Following journal entry is passed for depreciation:

Depreciation A/c Dr.

To Asset A/c

At the end of every financial year. balance of depreciation a/c is transferred to profit & loss account by passing the below journal entry:

Profit & Loss A/c Dr.

To Depreciation A/c