Accounting · Balance Sheet Equation
A corporation decides to write off a fictitious asset, such as Preliminary Expenses, which has been appearing on the balance sheet for several years. According to accounting principles and the balance sheet equation, what is the immediate consequence of this write-off?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Total assets increase and total equity increases.
- 2Total assets decrease and total equity decreases.✓
- 3Total assets remain unchanged as one asset is replaced by another.
- 4Total assets decrease and total liabilities decrease.
Correct answer
Total assets decrease and total equity decreases.
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