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:

Public Goods

Goods which are both non-excludable and non-rivalrous, meaning they can be used simultaneously by more than one person and individuals cannot be effectively excluded from using them.

Market Failure

A situation in which the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.

Nonexcludable

A characteristic of a good or service that prevents individuals who have not paid for it from being easily excluded from its use or benefit.

Nonrival

A characteristic of a good or service where one person's use does not diminish its availability to others.