What is Depreciation?

Depreciation is an asset’s loss of value over time. 

How it Works

Most businesses own assets such as equipment, furniture, cars etc.

These assets will lose value over time.

This loss of value is known as depreciation.

In accordance with the matching principle, you need to keep a record of this depreciation in your accounts.

This way, you can match it against revenue for each accounting period. 

© R.J. Hickman 2020