Question

Depreciation, in accounting, is a process that results in:

a) Increased expenses and decreased assets
b) Decreased expenses and increased liabilities
c) Increased revenue and decreased equity
d) Decreased revenue and increased expenses

Answer 1

Depreciation in accounting leads to increased expenses and decreased assets. Expected currency depreciation results in a decline in the currency's value due to increased supply and decreased demand.

Step-by-step explanation:

In accounting, depreciation is the process that leads to an increase in expenses and a simultaneous decrease in the value of assets on a company's balance sheet. Option (a) Increased expenses and decreased assets is the correct answer. As an asset depreciates, this cost is allocated over the useful life of the asset, and each accounting period charges a portion of the total cost to that period's expenses. The decline mirrors the use and wear of the asset over time.

When expected depreciation in currency occurs, such as with the British pound relative to the dollar, this generally results in a decline in the value of the pound, as investors anticipate a loss of value and reduce their holdings. The increase in supply of the pound and decrease in demand result in a lower exchange rate against currencies like the U.S. dollar