What Is the Effect of the Adjusting Entry for Depreciation

question 181

Multiple Choice

What is the effect of the adjusting entry for depreciation on the accounting equation?

• A)No effect on assets;Decrease liabilities;Increase stockholders' equity
• B)Decrease assets;No effect on liabilities;Decrease stockholders' equity
• C)Increase assets;No effect on liabilities;Increase stockholders' equity
• D)Decrease assets;Decrease liabilities;No effect on stockholders' equity

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Definitions:

Total Cost

The total amount of money spent on producing goods or services, encompassing both constant and fluctuating expenses.

ATC

Average Total Cost, which is the total cost of production divided by the number of units produced, encompassing both fixed and variable costs.

TC/q

Total cost divided by quantity; a formula to calculate the average total cost.

Average Total Cost

The sum of all production expenses divided by the quantity of products made, indicating the per-unit cost.