On January 1,Year 2,Ruiz Company spent $850 on a plant asset to improve its quality.Which of the following correctly shows the effects of the Year 2 expenditure on the elements of the financial statements?

Question

Quizplus · Accepted Answer

The expenditure, which improves an asset's quality, decreases assets (cash) by $850 and increases assets (equipment) by $850. It is reported as a cash outflow for investing activities.

On January 1,Year 2,Ruiz Company Spent $850 on a Plant