Qualification > Commerce

Accounting please answer

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fireburner:

--- Quote from: Monica on May 25, 2009, 06:33:50 pm ---ya ur right but i guess he meant Provision for depreciation....

--- End quote ---

tell me about their differences

angell:
Depreciation is an expense which has to be charged due to factors such as wear and tear,etc.

Provision for depreciation is when u make a future allowance for depreciation and create it before hand - so it has not happend or occurred yet - hence, following the accruals/matching concept - it is an asset!

Monica:

--- Quote from: fireburner on May 25, 2009, 06:49:45 pm ---
--- Quote from: Monica on May 25, 2009, 06:33:50 pm ---ya ur right but i guess he meant Provision for depreciation....

--- End quote ---

tell me about their differences

--- End quote ---

ok I don't know how to explain...but

Provision for depreciation is the total amount of depreciation deducted from the total amount of for example machinery or vehicles under the fixed asset column in the balance sheet, WHILE depreciation is the the depreciation of that financial year that is added in the profit and loss as an expense.... hope u understood... :)

lil^$tar:

--- Quote from: angell on May 25, 2009, 06:51:47 pm ---Depreciation is an expense which has to be charged due to factors such as wear and tear,etc.

Provision for depreciation is when u make a future allowance for depreciation and create it before hand - so it has not happend or occurred yet - hence, following the accruals/matching concept - it is an asset!

--- End quote ---

provision for deprn has a credit balance and assets have a debit balance so provision for deprciation is a liability...however it bcams an income wen it is overvalued

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