Question

A company purchases software; it has an estimated useful life of three years. The adjustment to recognize amortization for the use of software would cause which of the following?

Group of answer choices

An increase in assets, an increase in liabilities, and a decrease in expenses

A decrease in assets, an increase in liabilities, and an increase in expenses

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

An increase in liabilities, an increase in expenses, and a decrease in stockholders' equity

Answer 1

A company purchases software; it has an estimated useful life of three years. The adjustment to recognize amortization for the use of software would cause which of the following?

The answer is

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

Decrease in asset because the value of intangible asset reduces every month with the monthly amortization value

A decrease in stockholders' equity because amortization value will be expense and this will reduce the earning and the owners equity.

Increase in expenses because amortization value will be charged to profit and loss account.