Recording an adjusting journal entry to recognize depreciation would cause which of the following?
A)An increase in liabilities and expenses,and a decrease in shareholders' equity.
B)A decrease in assets,and an increase in expenses.
C)A decrease in assets,an increase in liabilities,and an increase in expenses.
D)None of the answers are acceptable.

Question

Quizplus · Accepted Answer

Recording an adjusting journal entry to recognize depreciation would decrease the value of the asset (as it has now depreciated) and increase the expense (as depreciation is an expense). Therefore, the correct answer is B, a decrease in assets and an increase in expenses. Option A is incorrect because it suggests an increase in liabilities, which is not affected by the recognition of depreciation. Option C is also incorrect because it suggests an increase in both expenses and liabilities, neither of which is affected by the recognition of depreciation.

Recording an Adjusting Journal Entry to Recognize Depreciation Would Cause