Why accumulated depreciation a/c has credit balance?
Dear Student
Accumulated Depreciation is an account which shows all the Depreciation charged to an asset in its lifetime Since Depreciation is the estimation of Wear and tear of the asset, Depreciation credited in accumulated depreciation account can be understood as creating a provision for normal wear and tear.
Therefore accumulated depreciation acts as a Provision account and we know that provision has a credit balance same as a liability. Also, increase in an asset is debited while a decrease in asset is credited. Accumulated depreciation represents total depreciation charged on the asset till date and therefore represents a decline in asset balance, hence credited.
Hope this helps
Regards
Accumulated Depreciation is an account which shows all the Depreciation charged to an asset in its lifetime Since Depreciation is the estimation of Wear and tear of the asset, Depreciation credited in accumulated depreciation account can be understood as creating a provision for normal wear and tear.
Therefore accumulated depreciation acts as a Provision account and we know that provision has a credit balance same as a liability. Also, increase in an asset is debited while a decrease in asset is credited. Accumulated depreciation represents total depreciation charged on the asset till date and therefore represents a decline in asset balance, hence credited.
Hope this helps
Regards