Recording an adjusting journal entry to recognize depreciation would cause which

Question

Recording an adjusting journal entry to recognize depreciation would cause which of the following? Answer An increase in liabilities and expenses, and a decrease in stockholders' equity. A decrease in assets and stockholders' equity, and an increase in expenses. A decrease in assets, an increase in liabilities, and an increase in expenses. An increase in assets, an increase in liabilities, and a decrease in expenses. Recording an adjusting journal entry to recognize depreciation would cause which of the following? Recording an adjusting journal entry to recognize depreciation would cause which of the following? An increase in liabilities and expenses, and a decrease in stockholders' equity. A decrease in assets and stockholders' equity, and an increase in expenses. A decrease in assets, an increase in liabilities, and an increase in expenses. An increase in assets, an increase in liabilities, and a decrease in expenses. An increase in liabilities and expenses, and a decrease in stockholders' equity. A decrease in assets and stockholders' equity, and an increase in expenses. A decrease in assets, an increase in liabilities, and an increase in expenses. An increase in assets, an increase in liabilities, and a decrease in expenses.

Explanation / Answer

When you make the adjusting journal entry to recognize depreciation, you

Dr Depreciation expense xx (expense item)

Cr Accumulated depreciation xx (contra asset)

So the answer is:

A decrease in assets and stockholders' equity, and an increase in expenses

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