When a Company Records Depreciation It Debits

question 142

Multiple Choice

When a company records depreciation it debits:

• A)liabilities and credits expenses.
• B)expenses and credits cash.
• C)expenses and credits a contra-asset account.
• D)long-lived assets and credits expenses.

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Definitions:

Shareholders' Equity

The residual interest or ownership value remaining in a company's assets after deducting liabilities, representing the shareholders' stake in the company.

Statement Of Financial Position

Statement of Financial Position, commonly known as a balance sheet, is a financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Net Working Capital

An indicator of an organization's short-term financial stability, operational effectiveness, and ability to cover short-term obligations, determined by subtracting current liabilities from current assets.

Long-Term Debt

Financial obligations that are due more than one year in the future or beyond the normal operating cycle.