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 assets,liabilities,equity,net income,and cash flows.

Question

Quizplus · Accepted Answer

Depreciation expense decreases assets (by increasing accumulated depreciation, a contra asset account) and stockholders' equity. It increases expenses (depreciation expense) and decreases net income. It does not affect the statement of cash flows.

Chubb Company Paid Cash to Purchase Equipment on January 1,Year