What Happens to the Accounting Equation When the Adjustment for Depreciation

question 122

Multiple Choice

What happens to the accounting equation when the adjustment for depreciation expense for the accounting period is recorded?

• A)Assets decrease and stockholders' equity decreases.
• B)Assets increase and stockholders' equity increases.
• C)Assets decrease and liabilities decrease.
• D)Liabilities increase and stockholders' equity decreases.

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Definitions:

Balance Sheet

A financial statement that shows a company's assets, liabilities, and equity at a specific point in time.

Financial Document

Written records that contain important financial information pertaining to a person or entity.

Owned And Owed

Refers to assets or resources that an entity possesses (owned) and obligations or debts that it is responsible for (owed).

Gross Margin

A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage.