Chubb Company paid cash to purchase equipment on January 1, Year 1. Select the answer that shows how the recognition of depreciation expense in Year 2 would affect the financial statements. Balance Sheet Income Statement A. B. D. Assets = Liabilities + Equity + Not affected + Not affected Multiple Choice O O O Not affected Not affected O Option D Option C Option B Stockholders' Option A Revenue Not affected + Not affected Not affected Expense + Not affected Net Income Statement of Cash Flows Not affected +Operating activity -Operating activity Not affected
Chubb Company paid cash to purchase equipment on January 1, Year 1. Select the answer that shows how the recognition of depreciation expense in Year 2 would affect the financial statements. Balance Sheet Income Statement A. B. D. Assets = Liabilities + Equity + Not affected + Not affected Multiple Choice O O O Not affected Not affected O Option D Option C Option B Stockholders' Option A Revenue Not affected + Not affected Not affected Expense + Not affected Net Income Statement of Cash Flows Not affected +Operating activity -Operating activity Not affected
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter3: Basic Accounting Systems: Accrual Basis
Section: Chapter Questions
Problem 3.23E: Adjustment for depreciation The estimated amount of depredation on equipment for the current year is...
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Chubb Company paid cash to purchase equipment on January 1, Year 1. Select the answer that shows how the recognition of depreciation expense in Year 2 would affect the financial statements.
A.
B.
C.
D.
Balance Sheet
Stockholders'
Assets = Liabilities + Equity
+
Not affected
+
Not affected
Multiple Choice
Not affected
Not affected
Option D
Option C
Option B
Option A
Revenue
Not affected
+
Not affected
Not affected
Income Statement
Expense
+
Not affected
+
+
= Net Income
+
Statement of Cash Flows
Not affected
+Operating activity
-Operating activity
Not affected
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