The entry to record amortization:
A) increases total assets and decreases total equity.
B) decreases total assets and increases total equity.
C) decreases both total assets and total equity.
D) increases both total assets and total equity.

Question

Quizplus · Accepted Answer

Amortization is the gradual write-off of an asset over its useful life. As a result, it reduces the value of the asset (total assets) and decreases the value of the related liability or equity account, such as Accumulated Amortization (total equity). Therefore, the correct option is C, which states that amortization decreases both total assets and total equity.

The Entry to Record Amortization