When a business charges depreciation on its non-current assets, what are the effects on its assets, capital and liabilities?
A)Assets - no change; capital - increases; liabilities - decrease.
B)Assets - no change; capital - no change; liabilities - no change.
C)Assets - decrease; capital - decreases; liabilities - no change.
D)Assets - decrease; capital - no change; liabilities - increase.

Question

Quizplus · Accepted Answer

When a business charges depreciation on its non-current assets, the value of the assets decreases because they are being consumed over time. This decrease in asset value affects the capital of the business, which also decreases as a result. However, this does not have an effect on the liabilities, which remain the same.

When a Business Charges Depreciation on Its Non-Current Assets, What