Question

When a company purchases equipment which will be used over many years to generate revenue, the company should make an adjusting journal entry at the end of the period which reduces the equipment account.

Answer 1

The company should make an adjusting journal entry at the end of the period to reduce the equipment account.

Step-by-step explanation:

When a company purchases equipment that will be used over many years to generate revenue, it is considered a long-term asset.

At the end of the accounting period, the company should make an adjusting journal entry for depreciation expense to reduce the value of the equipment account.

This adjusting entry recognizes that the equipment will gradually lose value over time as it is used in the company's operations.