Question

The effect of recording depreciation for the year is a(n): Group of answer choices decrease in assets but no change in equity. decrease in assets and a decrease in equity. decrease in net income and no change in assets. increase in assets and an increase in net income.

Answer 1

decrease in assets and a decrease in equity.

Step-by-step explanation:

Depreciation can be defined as the reduction of cost of a fixed asset systematically until the value of the asset becomes zero.

The Modified Accelerated Cost Recovery System (MACRS) can be defined as a depreciation system that avails business owners or companies the ability and opportunity to recover or recoup the cost basis of physical assets that have experienced deterioration over a specific period of time.

In the United States of America, the Modified Accelerated Cost Recovery System (MACRS) is used mainly for tax purposes because it gives room for faster depreciation of a physical asset in its first years or initial usage and reduces depreciation as it is being used over a long period of time.

Generally, the effect of recording depreciation for the year in a financial statement is a decrease in assets and a decrease in equity or net income for the business firm or organization.