Can accumulated depreciation ever have a debit balance?

• A. Yes
• B. Only for certain assets
• C. No
• D. Depends on depreciation policy

Answer: (C)

Accumulated depreciation is a contra-asset account used to record how much of an asset’s cost has been allocated to depreciation. Its normal balance is a credit because it offsets the asset and lowers its carrying value. Depreciation increases this account (credit) each period, while disposing of an asset debits the accumulated depreciation to remove it from the books. Because it’s built to hold credits that reduce asset value, it should not carry a persistent debit balance—if a debit balance ever appears, it indicates an error that would need correcting.