Which of the following journal entries correctly records the adjusting entry for annual depreciation on equipment?

Determine the correct adjusting entry: The adjusting entry for annual depreciation involves debiting Depreciation Expense to recognize the cost and crediting Accumulated Depreciation to reflect the reduction in the asset's value.

Eliminate incorrect options: Debit Equipment and Credit Depreciation Expense is incorrect because Equipment is not directly credited for depreciation. Similarly, Debit Accumulated Depreciation and Credit Depreciation Expense is incorrect because Accumulated Depreciation is credited, not debited.