What is the effect of the adjusting entry for Depreciation Expense?
A) It increases total liabilities and increases total expenses.
B) It increases total assets and increases total expenses.
C) It decreases total assets and increases total expenses.
D) It decreases total liabilities and increases total expenses.

Question

Quizplus · Accepted Answer

The adjusting entry for Depreciation Expense records the decrease in value of long-term assets over time. This decrease is reflected as a decrease in the asset account (usually Property, Plant, and Equipment) and an increase in the expense account (Depreciation Expense). Therefore, the effect of this entry is a decrease in total assets and an increase in total expenses. It does not affect liabilities.

What Is the Effect of the Adjusting Entry for Depreciation