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SSC Financial and Cost Accounting P-1
QUESTION #6065
Question 1
If an adjusting entry includes a debit or credit to the Accumulated Depreciation account, which type of adjustment is it?
Correct Answer Explanation
Depreciation is recorded through an estimate-based adjustment — the exact wear and tear on an asset cannot be measured precisely, so it is estimated using a method (SLM, WDV, etc.). Accumulated Depreciation is a contra-asset account updated through this estimated adjustment each period. It is not an accrual (which involves recognizing earned/incurred amounts) nor a deferral (which involves postponing recognition of cash already received/paid).
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