Final answer:
The effect of recording depreciation expense through an adjusting entry is to reduce total assets on the balance sheet. This accounting process reflects the loss of value of a tangible asset over its useful life.
Step-by-step explanation:
When an adjusting entry is made to record depreciation expense, the effect on the balance sheet is to reduce total assets. This is because depreciation is an accounting method used to allocate the cost of a tangible asset over its useful life. As the asset is used and loses value, its book value on the balance sheet is reduced through depreciation expense, which is recorded on the income statement. This reduction in asset value concurrently decreases the net income, which in turn reduces retained earnings. However, this does not directly affect the liabilities on the balance sheet.