Depreciation
What is Depreciation?
Depreciation is an asset’s loss of value over time.
![dep 1](https://seeaccountingnow.online/wp-content/uploads/2021/08/dep-1.jpg)
How it Works
Most businesses own assets such as equipment, furniture, cars etc.
![dep 2](https://seeaccountingnow.online/wp-content/uploads/2021/08/dep-2.jpg)
These assets will lose value over time.
![dep 3](https://seeaccountingnow.online/wp-content/uploads/2021/08/dep-3.jpg)
This loss of value is known as depreciation.
![dep 4](https://seeaccountingnow.online/wp-content/uploads/2021/08/dep-4.jpg)
In accordance with the matching principle, you need to keep a record of this depreciation in your accounts.
![dep 5](https://seeaccountingnow.online/wp-content/uploads/2021/08/dep-5.jpg)
This way, you can match it against revenue for each accounting period.
![dep 6](https://seeaccountingnow.online/wp-content/uploads/2021/08/dep-6.jpg)
© R.J. Hickman 2020