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WAEC Financial Accounting 2014 Question 24

Question 24

Depreciation

When an asset is sold, the entries for the accumulated depreciation are: debit

  1. A.Asset Disposal Account; credit Provision for Depreciation Account
  2. B.Provision for Depreciation Account; credit Asset Disposal Account.
  3. C.Fixed Asset Account; credit Asset Disposal Account
  4. D.Asset Disposal Account; credit Fixed Asset Account.
Show the answer and explanation

Answer: B (Provision for Depreciation Account; credit Asset Disposal Account.)

Explanation

The provision for depreciation (a credit balance) is closed by debiting it and crediting the asset disposal account.