Which type of account would depreciation expense be categorized under?

Depreciation expense is categorized under an expense account because it represents the systematic allocation of the cost of a tangible asset over its useful life. This accounting method reflects the wear and tear or reduction in value of an asset like machinery, buildings, or vehicles due to usage, age, and obsolescence.

When a business recognizes depreciation as an expense, it affects the income statement by reducing net income for the period, which accurately represents the economic reality of the asset's usage. Recording depreciation in this manner adheres to the matching principle in accounting, where expenses are matched with the revenues they help generate in the same period.

Categorizing depreciation as an expense also helps businesses understand the true profitability of their operations, as it ensures that the cost associated with utilizing the asset is recognized during the accounting period when the asset contributes to revenue generation. This provides stakeholders with a clearer picture of the financial performance of the organization.