Mac’s Computer Skills Training, purchased equipment for $30,000 on January 1, 20X8, and believes the equipment has a useful life of 36 months. What will be the effect of the equipment’s depreciation on the balance sheet equation?

A) Decreases Equipment account and increases Stockholders’ Equity
B)  Decreases Equipment account and decreases Stockholders’ Equity
C) Increases Equipment account and decreases Stockholders’ Equity
D) Increases Equipment account and increases Stockholders’ Equity
E) There is no effect on the balance sheet equation.

ANSWER:

B)  Decreases Equipment account and decreases Stockholders’ Equity