When equipment accumulates depreciation, it causes:
A)equity to decrease and expenses to increase.
B)assets to increase and liabilities to increase.
C)assets to decrease and expenses to increase.
D)assets to decrease and revenues to decrease.

Question

Quizplus · Accepted Answer

Depreciation is the allocation of the cost of an asset over its useful life, and it reduces the value of the asset over time. This reduction in value results in a decrease in assets on the balance sheet. Additionally, depreciation is an expense, and an increase in expenses decreases net income or the bottom line of the income statement, thereby reducing equity. Therefore, option C is correct.

When Equipment Accumulates Depreciation, It Causes