What do you think of the meaning of this entry?

 

From deep, expense

To account accumulated depreciation Acc, dep

In order to understand how we operate depreciation of fixed assets

First of all, let us agree that what distinguishes your work as an accountant is that you know how the recognized the basics and accounting principles are applied.

One of the most important accounting principles that we apply in order to occupy us and disclose them explicitly and cause us problems with non-accountants is #the basis of accrual

What is the basis for this entitlement?

 

The basis of accrual is that the accountant carried your fiscal year with its related expenses and the income related to it, regardless of whether you paid your expense in cash or it was charged to you ... and regardless of whether you got your revenues in cash or carried it to the customer's account for the sake in the end, a net amount The profit that comes out of the income statement is the net profit # due for the year
 

When we the sale entry it will be as follow

From the customer's account

To the sales account

 

I disclose the revenue that I have entered this year even though I did not get it, and this is because this year I investigated the sale

 

And when we operate this entry:
 

From the depreciation expense account

To the accumulated depreciation account.

 

I Disclose the bond's fixed assets depreciation expense and deduct it from the revenue even though I have not taken any money from the safe or the bank.

 

When we buy a fixed asset so that we can use it in our work, for example, at 100,000 EGP

 

100,000 from the fixed asset account

100, 00 To the cash account or creditors

 

There is no effect on the financial statements except that the money came out from the current assets item in the form of money and we moved it to the fixed assets item in the form of cars or machines in the same budget.

 

It is assumed that the 1,000,000 EGP of money came out of me so that he could benefit from it for later periods. For the sake of justice, I distribute these costs over the years of benefiting from them, not the first year only

 

Means, in the first year, by saying that I benefited from the original that I was buying with 10,000 of this by 10%

 

10,000EGP from the depreciation expense account

10,000 EGP to the accumulated depreciation account.

 

Depreciation expense by throwing it into the income statement and the depreciation accumulator by deducting from the original value in order to bring to its book value, which is equal to 90000 EGP in the last first year, as striking two birds with a stone

 

# The first, I did not see the bond and carried it with 100000 all of them. I am saying that the bonds benefited from 100% of the original, so that they bear 10% of its cost, and so on for the rest of the years.

 

Thus, I have applied the basis of merit, well

 

# Secondly, the most important thing is to say that the net value of the asset from my collector after I took from it the accumulated balance of its depreciation remained at 90000 EGP, and I began to work and pay attention to the original so that I do not forget that I will need to renew this asset or exclude it and carry others before its balance reaches zero and fall into a crisis and I can prepare for the replacement and renewal

 

Do you know now why do we calculate the depreciation of fixed assets?

 

 

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