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

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Quizplus · Accepted Answer

Depreciation expense is an expense that reduces the value of an asset over time. When the adjustment for depreciation expense is recorded, it decreases the value of the asset and, therefore, decreases the total assets of the company. At the same time, it reduces the net income, which reduces the retained earnings and, in turn, decreases the stockholders' equity. Therefore, both the assets and the stockholders' equity decrease.

What Happens to the Accounting Equation When the Adjustment for Depreciation