what is accumulated depreciation account

An accumulated depreciation account is a key component in accounting that tracks the total depreciation of a company’s fixed assets over time. This contra-asset account reduces the asset’s original cost to reflect its current book value, accounting for wear and tear, age, or obsolescence. By recording the cumulative depreciation, this account helps businesses maintain accurate financial statements and determine the asset’s remaining useful life. Understanding the accumulated depreciation account is essential for proper financial reporting, tax deductions, and asset management. Learn more about how this account impacts the financial health of a business and its reporting accuracy.