If a year's depreciation is charged on a piece of equipment,the effect on the accounting equation is that:

Question

Quizplus · Accepted Answer

Depreciation is the allocation of the cost of a long-term asset to an expense over its useful life. This results in a decrease in the value of the asset (an asset decreases) and a decrease in shareholders' equity (as a result of the recognition of an expense). Therefore, the correct answer is B - an asset decreases and shareholders' equity decreases.

If a Year's Depreciation Is Charged on a Piece of Equipment,the