Glossary
Depreciation
Depreciation spreads the price of a long-lived asset, like a fridge or van, over the years you use it instead of charging it all to the year of purchase.
What it means for a shop owner
It is a cost with no cash leaving, yet it lowers profit and lowers the asset value on the balance sheet. Pick a sensible life for the asset. Land is normally not depreciated.
A worked example
A fridge costing 1,200 with a life of 5 years. Depreciation is 240 each year.
Related
Try it in your shop, free, no card.
The free plan: the whole shop for one branch, an offline cashier with stock, debts and accounting, with a daily limit on invoices, expenses and purchase orders. What it includes