Some people are confused by the accounts Depreciation Expense and Accumulated Depreciation, since they both contain the word “depreciation.” These accounts are quite different, however: Depreciation Expense belongs on the Income Statement, whereas Accumulated Depreciation belongs on the Balance Sheet. Whereas Accumulated Depreciation is a contra-asset that reduces a company’s assets (it is subtracted from Property, Plant, and Equipment), Depreciation Expense is an expense that reduces a company’s profit.