SAP Financial Accounting (SAP FI) Practice Exam

What types of entries are booked in the general ledger when an ordinary depreciation run is posted?

1. Postings to the accounts payable

2. Postings to the depreciation expense and accumulated depreciation accounts

3. Only postings to fixed asset accounts

4. Postings to tax accounts

The correct answer is: Postings to the depreciation expense and accumulated depreciation accounts

When an ordinary depreciation run is posted in the general ledger, entries are made to the depreciation expense and accumulated depreciation accounts. This is a critical process in financial accounting for accurately reflecting the use and wear of fixed assets over time. Depreciation expense represents the allocation of an asset's cost over its useful life, allowing businesses to match the cost of the asset with the revenue it generates over that period. By recording this expense, the financial statements accurately depict the expenses incurred in generating revenue, which is a fundamental aspect of accrual accounting. Accumulated depreciation, on the other hand, is a contra asset account that accumulates the total amount of depreciation expense that has been recognized against fixed assets over time. This account effectively reduces the book value of the asset on the balance sheet, providing stakeholders with a clear understanding of the asset's net value after accounting for depreciation. The other choices do not accurately represent the entries made during an ordinary depreciation run. Postings to accounts payable are typically related to amounts owed for goods and services, not depreciation. Only recording postings to fixed asset accounts does not capture the expense aspect that is necessary for understanding the financial impact of asset usage. Lastly, postings to tax accounts are unrelated to the ordinary depreciation run, as the depreciation process