Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 37 - No. 3)
What happens to the financial statements when a company records depreciation expense?
Assets decrease, and expenses decrease.
Assets decrease, and equity decreases.
Assets increase, and expenses increase.
Assets increase, and equity increases.
Explanation
Depreciation expense decreases net income, which reduces equity (retained earnings), and reduces the carrying value of the asset (assets).
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