{"id":209210,"date":"2025-04-28T16:18:32","date_gmt":"2025-04-28T16:18:32","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=209210"},"modified":"2025-04-28T16:18:34","modified_gmt":"2025-04-28T16:18:34","slug":"is-depreciation-a-permanent-account-or-temporary-account","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/04\/28\/is-depreciation-a-permanent-account-or-temporary-account\/","title":{"rendered":"Is depreciation a permanent account or temporary account"},"content":{"rendered":"\n<p>Is depreciation a permanent account or temporary account? Explain?<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\"><strong>The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n<p>Depreciation is considered a <strong>temporary account<\/strong>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation:<\/h3>\n\n\n\n<p>Depreciation is recorded through an account called <strong>Depreciation Expense<\/strong>. Although depreciation is related to long-term assets, the <strong>Depreciation Expense<\/strong> account is classified as a temporary account because it is used to track the depreciation for a specific period of time. Temporary accounts, such as revenue, expense, and dividend accounts, are used to record financial transactions within a specific accounting period (usually a fiscal year). At the end of each period, the balances in temporary accounts are closed out to permanent accounts (specifically to retained earnings, which is a permanent account in equity).<\/p>\n\n\n\n<p>Here\u2019s a breakdown of why depreciation is a temporary account:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Expense Recognition<\/strong>: Depreciation is the process of allocating the cost of a fixed asset over its useful life. For each accounting period, depreciation is recognized as an expense, which reduces the book value of the asset on the balance sheet.<\/li>\n\n\n\n<li><strong>Recording Depreciation Expense<\/strong>: Depreciation Expense is recorded on the <strong>income statement<\/strong>. Since the income statement only reflects the activities of a specific accounting period, depreciation expense is a temporary account. It is reset to zero at the end of the period and does not carry forward to the next period.<\/li>\n\n\n\n<li><strong>Permanent Account Link<\/strong>: While depreciation expense is temporary, the <strong>accumulated depreciation<\/strong> account, which represents the total depreciation recorded against an asset since its purchase, is a <strong>permanent account<\/strong>. Accumulated depreciation is subtracted from the asset\u2019s original cost on the balance sheet and carries over from period to period.<\/li>\n<\/ol>\n\n\n\n<p>In summary, <strong>Depreciation Expense<\/strong> is temporary because it is recorded during a specific accounting period and closed out at the end of the period. However, <strong>accumulated depreciation<\/strong> is permanent as it reflects the ongoing reduction in the value of an asset.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Is depreciation a permanent account or temporary account? Explain? The correct answer and explanation is : Depreciation is considered a temporary account. Explanation: Depreciation is recorded through an account called Depreciation Expense. Although depreciation is related to long-term assets, the Depreciation Expense account is classified as a temporary account because it is used to track [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-209210","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/209210","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=209210"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/209210\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=209210"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=209210"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=209210"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}