Question

The effect of recording depreciation for the year is a(n)

a. decrease in net income and no change in assets.
b. decrease in assets but no change in owners' equity.
c. decrease in assets and a decrease in net income.
d. increase in assets and an increase in net income.

Answer 1

Recording depreciation results in a decrease in both assets and net income. It is the process of allocating the cost of tangible assets over their useful life, affecting the balance sheet and income statement.

Step-by-step explanation:

The effect of recording depreciation for the year is a decrease in assets and a decrease in net income. Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life. By recording depreciation, the book value of the asset decreases, which is reflected on the balance sheet as a lower asset value. Concurrently, the depreciation expense is recognized on the income statement, which reduces the net income for the period.