Are you a small business owner trying to wrap your head around the world of accounting? One term that might have you scratching your head is “depreciation.” So, we’re here to break it down in an easy-to-understand way. But, let’s start with the official way this concept is explained.

Depreciation – definition

Depreciation is a concept in accounting that reflects the decrease in value of an asset over time. It’s a way for businesses to allocate the cost of an asset, like equipment or machinery, over its useful life. This is super important for tax purposes and understanding the true value of your assets.

The best part? Mastering depreciation can give you a serious leg up in the world of business finance. So let’s dive in and make sense of this essential accounting term together – you’ve got this!

Accounting jargon explainer

Reading the above may not be enough to firmly grasp the idea of depreciation. It may actually even be discouraging, especially if you’re a beginner in the world of finance. That’s why, the video included contains lots of examples from real business situations – all with the objective to make this term crystal clear.

So, watch the video below. It will help you to find the answers to the following questions:

  1. What is depreciation?
  2. Why is depreciation relevant?
  3. Why isn’t it relevant sometimes?


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