Double Entry Accounting, the Accounting Equation, and Debits and Credits
Q: How often is depreciation expense recorded?
A: Most companies post depreciation expense monthly, since virtually all companies keep their books on a monthly basis. They compile and report a monthly income statement and balance sheet for internal use – or for external use if a lender requires such documents.
Interestingly, a monthly accounting for depreciation expense is frequently overlooked in preparing monthly statements. It is easy to overlook because depreciation expense is a non-cash charge that has no associated invoice or documented transaction to enter into the accounting system. The bookkeeper needs to remember to post a debit entry to depreciation expense and a credit entry to accumulated depreciation without the benefit of any underlying document to remind him or her to do so.
Forgetting to post depreciation is not uncommon by any means.
Course overview: Double Entry Accounting, the Accounting Equation, and Debits and Credits