Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 21 - No. 8)
What is the impact on the financial statements when adjusting for depreciation?
Increases accumulated depreciation, decreases net profit and increases the value of non-current assets.
Increases accumulated depreciation, decreases net profit and decreases the value of non-current assets.
Decreases accumulated depreciation, increases net profit and increases the value of non-current assets.
Decreases accumulated depreciation, increases net profit and decreases the value of non-current assets.
Explanation
Depreciation expense increases, which decreases net profit. Accumulated depreciation, which is a contra-asset account, is also increased which reduces the value of the non-current assets in the statement of financial position.
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