Depreciation Provision

Introduction
Depreciation is the systematic allocation of the cost of an asset over its useful life. It is an important concept in accounting as it helps in determining the true profit or loss of a business and also reflects the wear and tear or obsolescence of the assets used in the business operations. In order to account for the depreciation of assets, a provision for depreciation is created.

Creation of Depreciation Provision
The provision for depreciation is created by debiting the Profit and Loss Account. It is important to note that the provision for depreciation is not created by debiting the machinery account or profit and loss appropriation account.

Machinery Account
- Machinery account is a nominal account that records the cost of machinery purchased or acquired by a business.
- The machinery account is not directly involved in creating the provision for depreciation.
- The machinery account is debited with the cost of machinery and credited with any depreciation charged on the machinery.

Profit and Loss Account
- Profit and loss account is a nominal account that records the revenues and expenses of a business.
- The provision for depreciation is created by debiting the profit and loss account.
- This ensures that the depreciation expense is properly recorded and deducted from the revenues to determine the net profit or loss.

Profit and Loss Appropriation Account
- Profit and loss appropriation account is a nominal account that records the distribution of profits or losses among partners or shareholders.
- The provision for depreciation is not created by debiting the profit and loss appropriation account.
- The profit and loss appropriation account is concerned with the allocation of profits and losses, while the provision for depreciation is related to the recognition of the depreciation expense.

Conclusion
In conclusion, the provision for depreciation is created by debiting the profit and loss account. The machinery account and profit and loss appropriation account are not directly involved in the creation of the depreciation provision. It is important for businesses to account for depreciation as it helps in determining the true profitability and the value of assets used in the business operations.