Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 18 - No. 2)
Which of the following statements correctly describes the relationship between the adjusting entry for depreciation and the financial statements?
Depreciation expense increases, which reduces net income.
Accumulated Depreciation increases, which decreases net income.
Depreciation expense increases, decreasing assets.
Accumulated Depreciation increases, decreasing assets.
Explanation
Depreciation reduces net income, and accumulated depreciation reduces the asset value.
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