Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 11 - No. 6)
What is the effect on the accounting equation when recording depreciation expense?
Increase assets and decrease equity.
Decrease assets and decrease equity.
Increase assets and increase equity.
Decrease assets and increase equity.
Explanation
Depreciation expense reduces net income and owner's equity, while accumulated depreciation (a contra-asset) reduces the net book value of the asset.
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