On December 31, Year 1, Gaskins Co. owed $4,500 in salaries to employees who had worked during December but will not be paid until January, Year 2. If the year-end adjustment is properly recorded on December 31, Year 1, what will be the effect of this accrual on net income and cash flows from operating activities reported for Year 1?
A. Increase in net income; decrease in cash flow from operating activities
B. Decrease in net income; no effect on cash flow from operating activities
C. No effect on net income; no effect on cash flow from operating activities
D. No effect on net income; decrease in cash flow from operating activities
Answer: B
You might also like to view...
The Washington, D.C.-based Heritage Foundation survey consists of over 178 countries ranked by degree of economic freedom. The key economic variables considered for this ranking include all of the following except:
A) taxation policy. B) government consumption of economic output. C) percent foreign ownership. D) banking policy. E) wage and price control.
Contracts usually contain the following:
a. mutual consent. b. consideration. c. capable parties. d. legal subject matter. e. All of the above
Which of the following frameworks used to measure competitive advantage relies on both an internal and an external view of a firm?
A. the economic value creation model B. the shareholder value creation model C. the accounting profitability model D. the balanced-scorecard model
If either the goods or their tender fails to conform to the contract in any respect, the buyer or lessee must reject all of the goods
Indicate whether the statement is true or false