What Is the Effect of the Adjusting Entry for Depreciation

question 13

Multiple Choice

What is the effect of the adjusting entry for Depreciation expense?

• A)The entry decreases total liabilities and increases total expenses.
• B)The entry decreases total assets and increases total expenses.
• C)The entry increases total assets and increases total expenses.
• D)The entry increases total liabilities and increases total expenses.

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Definitions:

Functional Currency

The currency of the primary economic environment in which an entity operates, usually the currency in which it generates and spends cash.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in its net income or loss for that period.

Exchange Rates

The rate at which one currency can be exchanged for another, a key factor affecting international business and finance.

Depreciation Expense

Depreciation Expense represents the systematic allocation of the cost of a tangible asset over its useful life, reflecting the usage and wear and tear of the asset.