Question

When recording depreciation, which of the following statements is true?

A. Total assets increase and stockholders' equity increases.

B. Total assets decrease and total liabilities increase.

C. Total assets decrease and stockholders' equity increases.

D. None of the above are true.

Answer 1

D. None of the above are true.

Step-by-step explanation:

As while recording depreciation, the total assets is decreased and the stockholder equity is also decreased as depreciation is a contra asset account

In the side of stockholder equity, the net income, the retained earning and the stockholder equity is decreased

whereas, the total asset is decreased as the amount of asset is reduced by deducting the accumulated depreciation amount

The journal entry is shown below for better understanding

Depreciation Expense A/c XXXXX

To Accumulated Depreciation XXXXX

(Being depreciation expense is recorded)