Which of these correctly shows the effect of charging depreciation on equipment for the period?
A) increase in accumulated depreciation; decrease in the carrying value of equipment
B) decrease in accumulated depreciation; decrease in the carrying value of equipment
C) increase in accumulated depreciation; increase in the carrying value of equipment
D) none of the above

Question

Quizplus · Accepted Answer

Charging depreciation on equipment reduces the carrying value of the equipment and increases the accumulated depreciation account. This is because depreciation represents the decrease in the value of the equipment over time due to wear and tear, obsolescence or any other factors that reduce its usefulness or value. As a result, the carrying value of the equipment on the balance sheet is reduced, since it reflects the net value of the equipment after accounting for depreciation. At the same time, the accumulated depreciation account on the balance sheet is increased, as it represents the total amount of depreciation charged over the life of the equipment.

Which of These Correctly Shows the Effect of Charging Depreciation