Which accounts can be affected by recording depreciation?

When considering which accounts can be affected by recording depreciation, it's important to understand what depreciation represents in accounting. Depreciation is a method used to allocate the cost of tangible assets over their useful lives. This affects several key accounts.

Recording depreciation directly impacts the Depreciation Expense account, which reflects the expense incurred for the use of the asset during a specific period. This account increases each time depreciation is recorded.

Additionally, it influences the Accumulated Depreciation account, which is a contra-asset account that accumulates the total depreciation taken on an asset over time. This account decreases the book value of the Property, Plant and Equipment, showing the total cost that has been allocated as an expense.

While inventory is important in a business's overall operations, it typically does not directly reflect the depreciation of property and equipment. Thus, depreciation itself will not usually affect inventory levels directly but is related to the assets used in producing or providing services that could affect inventory indirectly through overall production costs.

Other choices that mention revenue or accounts payable do not pertain to how depreciation is treated in financial statements. When depreciation is recorded, cash is not directly affected since it does not involve a cash transaction at that moment; rather, it is an accounting entry.

Thus